The National Farmers’ Federation says today’s interest rate decision should be a warning to governments not to add avoidable costs to producing the food Australians put on their tables.
Annual inflation has accelerated to 4.3 per cent, while underlying inflation is running at 3.6 per cent, above the Reserve Bank of Australia’s 2 to 3 per cent target band. Housing costs rose 5.2 per cent over the year and transport costs 8.7 per cent, while food and non-alcoholic beverages rose 3.2 per cent.
Markets and all four major banks expect the Reserve Bank of Australia to lift the cash rate today from 4.60 per cent to 4.85 per cent, which would be the fifth interest rate increase this year.
NFF CEO Michael Guerin said Australian families were being squeezed from both directions.
“Families are paying more at the supermarket, more for housing, more for transport and more on their mortgages.
“The message for government should be pretty straightforward: stop making the things Australians need more expensive to produce.
“Government spending is part of the inflation equation, but so too are government policies that directly increase the cost of producing essential goods and services.
“Food is a perfect example.”
Food price pressures are uneven but significant. Over the year to September, fruit prices increased 10.2 per cent, beef and veal 5.8 per cent, and milk 5.4 per cent.
Mr Guerin said governments had limited control over the weather or international energy markets, but considerable control over domestic regulation and the availability and cost of critical farm inputs, including labour.
“In horticulture, labour can account for up to 60 per cent of the cost of production.
“At exactly the time households need downward pressure on their grocery bills, the Government is proposing to artificially constrain one of the most important sources of seasonal farm labour.”
The Government has announced plans to cap second-year Working Holiday Maker visas at 45,000 and third-year visas at just 5,000, compared with around 57,000 and 31,000 people respectively qualifying last year.
“On those numbers, up to 38,000 fewer experienced Working Holiday Makers could progress through the program.
“For agriculture, those workers represent at least 5.7 million days of regional work.
“And 5.7 million is the minimum. It captures only the specified work required to progress through the visa program. It does not capture additional days worked beyond those minimum requirements, or the experienced Working Holiday Makers who return to farms and regional communities in their third year despite there being no further specified-work requirement.
“These aren’t abstract migration numbers. They are millions of days of labour picking, packing and producing Australian food.
“At a time when Australians are struggling with higher grocery bills, deliberately constraining the workforce that produces their food makes no economic sense.”
The looming caps are being compounded by an immediate slowdown in Working Holiday Maker visa processing.
The Department of Home Affairs says it is now “normalising” processing times for most Working Holiday Maker visa applications to around three months.
“Farmers don’t produce food according to Canberra’s processing timetable.
“A crop does not stop ripening because a visa is sitting in a queue.
“For horticulture businesses with short and unpredictable harvest windows, restricting the supply of workers means higher labour costs, reduced production, or fruit and vegetables simply left unpicked.
“All three outcomes put upward pressure on costs. Ultimately, those pressures flow through the supply chain and households feel them at the checkout.”
Mr Guerin said the Pacific Australia Labour Mobility Scheme remained an important part of agriculture’s workforce but could not simply substitute for the mobile seasonal workforce provided through the Working Holiday Maker program.
“We accept the Government wants to reduce Net Overseas Migration. The question is how you achieve that without reducing the productive capacity of the economy.
“Taking workers away from businesses producing the food Australians need is the wrong answer.
“The NFF is calling on the Government to reverse its plans to artificially constrict the seasonal workforce and restore fast, predictable processing of Working Holiday Maker visas.
“Instead, government should sit down with industry and build a future agricultural workforce that improves productivity, better matches workers to genuine seasonal shortages and, through those productivity gains, puts downward pressure on Australia’s future migration requirement.
“That is a much better economic equation: a more productive workforce, more Australian food, less pressure on prices and less pressure on Net Overseas Migration.
“With Australians already suffering through a cost-of-living crisis and facing the prospect of still higher interest rates, governments should be looking at every policy lever available to take pressure off household budgets.
“Making it harder and more expensive to produce Australian food pulls that lever in exactly the wrong direction.”