'The department's broke': Agriculture expects $60 million deficit this financial year

Department officials told the Joint Public Accounts and Audit Committee the deficit for its biosecurity and export activities, which are intended to be cost recovered, was expected to reach $60.13 million in the 2022-23 financial year.

Chair of the committee, Labor MP Julian Hill said the figures clearly showed "the department's broke".

"It's pretty clear that when you look at the cash reserves and the fact that you're talking about a $60 million deficit this year in the lack of revenue to cover activities which should be cost recovered, that the department's broke," Mr Hill said.

"And there's just nothing left in the piggy bank and it seems the merry-go-round is about to stop."

Deputy secretary Cindy Briscoe said financial pressures were primarily linked to the agency's fees and charges.

"Up to 40 per cent of our revenue comes from our fees and charges and those fees and charges for the cost recovered services haven't been adjusted in line with what it actually costs to deliver those services."

Biosecurity threats and trade disruptions had also necessitated surge resources into those operational areas, contributing to the deficit.

The department did not provide a figure for its cash reserves, but did note cost-cutting measures.

"We believe we have available cash that will allow us to meet our obligations through to the end of the financial year, noting that we are very carefully managing our expenditure," chief finance officer Paul Pak Poy said.

Measures have included freezes on staff travel and training as well as cutting the number of contractors.

Asked about the impact on morale, Ms Briscoe said staff were resilient.

"We have put in place some pretty comprehensive engagement with staff through our senior executives, we regularly meet providing updates and information," she said.

"And also are really focused on the business at hand.

"We've got a hugely dedicated workforce and we still have around 5000 people who every day come to work to protect Australia's interest, so I think people are pretty resilient and get on with the job."

Department officials also contradicted comments from former agriculture minister David Littleproud, who said the agency had a net profit of $88.4 million in the 2021-22 year, just after the Coalition government was replaced by Labor.

Mr Pak Poy said the department's actual position was a loss of $119 million at the end of 2021-22.

A number of "technical non-cash accounting adjustments" were behind this, he said.

He referred to "make good provisions" under the former Department of Agriculture, Water and the Environment, which was broken up in June 2022, to dismantle Antarctic waste and stations at the Antarctic.

"So every time we revalue those 'make good' provisions that will have an impact," he said.

Minister for Agriculture, Fisheries and Forestry Murray Watt claimed the financial strain was a "mess left by the Nationals" for the government to fix.

"Evidence given to the committee this morning outlined the long-term financial issues that have plagued the Department of Agriculture, Fisheries and Forestry," Mr Watt said.

Mr Littleproud said the financial documents reported a net profit of $88.4 million in 2021-22, and the funding issues were due to machinery of government changes made under the Albanese government.

"They have taken all the resources and given it to the environment and put the costs onto agriculture," he said.

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Nationals senator Matt Canavan questioned why the department's costs had increased over the last eight years from $226 million to $348 million.

"The size of the task and the complexity of the task has been increasing, so that is the main contributor to the increasing cost," Mr Pak Poy said.

Senator Canavan also pressed officials on why costs increased by almost $30 million between 2020-21 to 2021-22.

"Ultimately what your department is asking for is Australian importers, and often people I represent, Australian farmers, pay higher costs to make your department whole," Mr Canavan said.

"And you can't even explain to me, give me a rough explanation of why you've had in the last couple of years (putting aside next financial year) you've had costs blow out by more than 10 per cent."

Ms Briscoe said changes in biosecurity risk profile such as Khapra beetles, foot and mouth disease and lumpy skin disease had contributed to cost hikes.

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