Senator JOYCE—Has your group also done studies or does it have a view, even if it is only anecdotal, on the effects of forestry and the capacity for river systems to get the water that they formerly got? Would you have any concerns, for instance, if a large, tax-inspired forest were to set up upstream from you; would that have an effect on how you do business?

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Ms Newton—I do not believe that we have the evidence as yet to make a statement about that.

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Senator JOYCE—We have heard before in evidence that there is a belief by some in the timber industry that there is the capacity for interaction between forests and horticultural land. I know this is a very obvious question—and I am not being ridiculous; I think it is important to get it into the Hansard for people who will read it—but is there a capacity to grow horticultural products in an area where, for instance, there is growth of Australian eucalypts? Can you grow one underneath the other? Are they compatible in the same field? I think there is an obvious answer to that.

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Ms Newton—Yes is the short answer, I think, but obviously a lot more research would need to be undertaken for the technical aspects of that. I should point out that Horticulture’s NRM Strategy, under the Horticulture for Tomorow umbrella, has been working on a range of NRM research and practices for quite some time. In fact, we believe we are at the leading edge of this in Australia. One of the things that that has shown is that, for example, with the integrated pest management, most of our progressive growers, rather than relying on chemicals to eliminate pest issues, will use native vegetation in very close proximity, and retained wetlands are actually an advantage.

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Senator JOYCE—Yes. Close proximity is one thing, and I understand exactly what you are saying there. Having the hills or swamps with trees is one thing, but to have gum trees sitting in the middle of your cabbage patch is something completely different.

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Mr Swaddling—Absolutely. Whether it was possible would depend on the density of the plantings of either the commercial crop or the eucalypt.

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Senator JOYCE—You can only have one or the other. You cannot have them both in exactly the same location. If you look at wheat and barley, wherever there is open country there is a crop; wherever there is a tree, there is no crop. Of course—

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Senator HEFFERNAN—There might be a cow sitting under it.

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Senator JOYCE—Yes. Horticulturally, it is even more so. The capacity to hold moisture for the growth of the crop is absolutely fundamental, otherwise the crop does not grow.

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Ms Newton—And harvested in many cases. I should point out that many growers do use wind breaks and other protections for frost, wind et cetera. So that is possible.

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Senator JOYCE—And chemical drift and a whole range of other things—absolutely. Do you think there is the possibility where we could prescribe the legislation to say, ‘If you want to grow trees, that is fine, but you can’t grow them in these types of areas’? If they grow them in the middle of your cabbage patch, for want of a better term but to paint a picture, they will be in a tax-inspired advantage that forces your growers out of a job, because ultimately you will start losing economies of scale. How many of your growers would disappear before the packing house would say, ‘We have no reason to be here anymore because you don’t have the quantity of product to make us viable’?

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Ms Newton—I am not clear about your assumption, Senator. It sounds as though you are suggesting that a tax-inspired investment regime which might plant forestry, as you describe it, could have the say over someone’s land rights on their own property.

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Senator JOYCE—No—I am talking about when it comes to selling. As land comes on the market, someone says, ‘I’m going to get an up-front tax deduction—it says so under the legislation—for the capital expenditure involved in the planting of forests. I’ve got a billion-dollar tax problem.’ Tell me the area where you live, Ms Newton.

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Ms Newton—In Canberra.

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Senator JOYCE—I do not know—

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Mr Swaddling—Say, the Hawkesbury Valley.

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Senator JOYCE—Say I buy half of the Hawkesbury Valley and, after buying half of it, I have my tax deduction, but your growers, the ones that are left, will have a huge problem because they will be below the critical economies of scale.

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Mr Swaddling—Absolutely.

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Ms Newton—I can see that happening. On the other hand, I would have to say that in the lower Murray-Darling Basin, for example, where we have significant numbers of people who have already identified, through their own water budgeting and business planning practices, that they are basically not viable in the projected environment to come—and they are on soldier settlement, in many cases, which is a relatively small area of land—that may well be a positive outcome, a win-win all round—

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Senator JOYCE—But it might not necessarily be a positive outcome. A hectare of trees uses about 2.6 or 2.5 megalitres of water, so it might not necessarily be the outcome that the environment is looking for to get water back into the river.

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Ms Newton—A hectare of planted trees initially will take some water—there is no question about that—but a hectare of planted forestry type trees will take a great deal less than a productive hectare of citrus, wine grapes or whatever. It depends but, on average, we work on about 10 or 12 megalitres per hectare for productive horticultural plantings, permanent plantings. There is a distinct difference. The difference there is that, in our view, it would enable a grower who was, for example, willing to exit the industry to sell some of their water back for the environment, have an income stream from that, cease farming, engage in environmental plantings on their property, remove productive—

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Senator JOYCE—Ms Newton, as your horticultural people leave the industry, what happens to the Australian consumer with regard to the price of product at the shop?

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Ms Newton—Unfortunately, that is one of our difficulties at the moment. Horticultural growers, as you know, are price takers, not price makers. They are rarely able to pass on increases in production costs to the consumer.

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Senator JOYCE—Coles and Woolworths certainly do it for them, though, don’t they?

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Ms Newton—That may well be the case, and there is an inquiry about that at the moment. Growers rarely ever benefit from whatever happens in the supply chain between the consumer and themselves, at the farm gate. While I think I understand where you are coming from—are we going to see food shortages in Australia because there are going to be large numbers of—

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Senator JOYCE—Quite obviously, if you start taking out agricultural or horticultural land, Australians are going to eat horticultural product from somewhere else. You are intrinsically going to make your own position weaker and weaker.

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Ms Newton—It is an issue. Nevertheless, we are facing that issue with the drought whatever we do, it appears. So, whether o