1 Regions between theory and reality: Agricultural policy and its impacts in Australia

This paper seeks to explain why rural policy based upon market economics cannot deliver appropriate rural policies to Australia in the 21st century. It also discusses why environmental policy and rural policy are on a collision course. Regions lie unappreciated in the middle. Three key themes are developed: • Rural policy is still entrenched in the policy debate of the third quarter of last century and cannot meet the policy needs of a rural sector in the twenty first century. • Environmental, conservation and resource depletion impacts of the production process are excluded from input pricing constructs of CGE modelling and of policy so informed. • In 1995 ratification by member countries of the WTO Agreement on Agriculture moved international trade in agriculture to a rules based system. Australia remains clinging to the Cairns Group agenda from the 1980s. For Australian regions the impacts have been varied but are often manifestly severe as can be seen from available statistics. If Australian regions are to develop to their due potential the roles of agriculture in regional development needs to be comprehensively and critically understood. Historically many Australian regions have advanced using agriculture and, we are told, this may occur again. Turning what are presently little more than pious hopes into successful regional realities requires considered, consistent policy and appropriately coordinated actions