AN injection of $594 million for advancing the long-awaited inland rail project and a new $2 billion water infrastructure fund loan facility were the highlights for agriculture in this year’s federal budget.
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However, Federal Treasurer Scott Morrison’s first budget has failed to respond to vocal demands by farm industry groups to relieve pressure on fragile seasonal workforces by back-flipping on the backpacker tax increase, set for July 1.
Any change in the tax measure was meant to be cost-neutral to the budget with the new 32.5 per cent tax rate set to raise $540m over the next three years.
However an industry proposal to reduce it to 15-19pc with no tax free threshold, along with changes to superannuation payments, failed to persuade the Treasurer and is now set to become an election battleground, leading into the July 2 double dissolution poll.
But Agriculture and Water Resources Minister Barnaby Joyce said the 2016-17 budget showed “clear” support for the farm sector and added another $88m to initiatives announced last year, in the $4b Agricultural Competiveness White Paper.
He said the $2b National Water Infrastructure Loan Facility would support the development of major projects through 10 year concessional loans to State and Territory governments.
Initiatives in line for the government loans include building dams, pipelines and managed aquifer recharge projects that can boost farm and economic activity.
While only mentioning agriculture once in his budget speech, despite a repeated message of diversifying the national economy, Mr Morrison said the $2b loan facility would “catalyse” new investment in dams and pipelines across Australia.
He said it would also add to the existing $500m National Water Infrastructure Development Fund delivered in the Agricultural White Paper and the Northern Australia Development White Paper’s $5b Northern Australia Infrastructure Facility.
Mr Joyce said the government was currently working with States and Territories on 60 potential water infrastructure project proposals that were seeking funding for feasibility studies.
He said the most prospective of those projects would soon have the opportunity to access limited grants and concessional loan funding, provided by the government.
“There are nationally significant water infrastructure projects that might not otherwise be built, or might not be built for many years, if this scheme is not in place,” he said.
Mr Joyce said the concessional loans would be provided at the lowest cost the Commonwealth could provide and must be repaid within 10 years of the project’s completion.
The $10b inland rail’s construction from Brisbane to Melbourne via regional NSW has been highlighted by the National Farmers Federation as a core priority to help deliver agricultural produce to market more efficiently and cut supply chain costs.
Despite suggestions from Shadow Transport Minister Anthony Albanese that the Australian Rail Track Corporation is set to be privatised by the Coalition government, it will now be used to keep the inland rail project on track.
The budget committed $593.7m in additional equity over three years from 2017-18 to the ARTC to progress the nation-building project including land acquisition, the continuation of pre-construction and due diligence activities.
The funding will be subject to an equity funding agreement to be developed between the ARTC and government.
“This will bring the government’s commitment to the project to a total of $893.7m,” the budget said.
“This measure includes $3.8m funding for market testing to examine opportunities to optimise private sector involvement in delivering and financing inland rail.”
Infrastructure and Transport Minister Darren Chester and Regional Development Minister Fiona Nash said the inland rail would deliver $22.5b of direct and indirect benefits to Australia and was a “huge boon” for agriculture.
They said after years of planning, funding was now set aside to for land acquisition to commence in 2017 while the ARTC was well advanced with planning pre-construction work across the 1700kms corridor.
“This decision provides a green light for the ARTC to advance the project,” they said.
On the near $600m allocation, Mr Morrison said an inland rail link would help to integrate domestic markets and bring global export markets closer to home.
“This is particularly important to leverage the benefits of our export trade agreements for Australian agriculture,” he said.
“That is why the Turnbull government will take the next step to realising an integrated inland rail link connecting Brisbane and Melbourne.”
This year’s budget also confirmed the government’s weekend announcement of a $15m National Carp Control Plan.
It also contained $15.9m over four years, to build a new Biosecurity Advanced Analytics system to increase the Department of Agriculture and Water Resources’ capacity to analyse intelligence and assess information on disease threats to the farm sector.
Another $7.1m was delivered over four years to boost the Rural Financial Counselling Service to assist drought support measures for farmers, which Mr Joyce said added to the $718m already provided in assistance.
The money will maintain additional rural financial counsellors in drought-affected areas funded through the White Paper last year which was a one-off measure to service providers in drought-affected areas.
The budget papers said continuing this funding would provide the equivalent of 15 extra counsellors each year to assist farming families manage issues associated with drought and drought recovery.
“The funding will be targeted to regions in need, assessed on the basis of prevailing drought conditions,” it said.
Mr Joyce said the Coalition government’s commitment to his Department’s portfolio was “clear” in this year’s budget.
“We have supported the core business of the portfolio, creating an environment to support profitable farm businesses, ensuring access to export markets for agricultural produce, managing biosecurity risk and investing in R&D to ensure our farmers remain world-class into the future,” he said.
Mr Joyce said the farm sector was one of the five pillars of the national economy, valued at $58.4b, employing about 315,000 people and feeding more than 60m people globally.
“The investments in the 2016-17 budget are targeted at the long-term future of Australian agriculture including building major water infrastructure, improving our biosecurity risk management and controlling carp in our waterways,” he said.
The budget also revealed changes to the Wine Equalisation Tax (WET).
The WET rebate cap will be reduced from $500,000 to $350,000 on July 1 next year and $290,000 the following year and then tightened eligibility criteria in July 2019.
As part of the changes, $50m will be provided from July 1, over four years, to the Australian Grape and Wine Authority, to promote local product overseas and attract tourism to bolster wine producing communities.
Assistant Agriculture and Water Resources Minister Anne Ruston said the wine industry had strongly advocated changes to the WET and the government had acted and listened.
The program came under pressure for reforms after moving beyond its original intent and being gamed by some to the detriment of industry, the government said.
Senator Ruston said final details of the WET’s tougher eligibility criteria – including the definition of a winery – would be resolved through further consultation.
The government is also extending the excise refund scheme to make domestic spirit producers eligible from July 1, like whisky, vodka, gin and liqueur.
South Australian rural Liberal MP Tony Pasin – who describes himself as the “Member for Wine” and has been vocal in advocating improvements to the system – said the budget’s WET reforms were not perfect but had reduced its limitations.
“Overall this is the medicine that the industry needs,” he said.
“It’s better to take that medicine now than a spoonful of arsenic later on.”
The addition of water policy to Mr Joyce’s portfolio responsibilities following the change of Liberal leadership last year – which the ALP have promised to return to the Environment Department if elected – has seen his Department gain an additional 267 staff, taking the budget total to 4517 .
An additional $9.5m was provided for the National Water Infrastructure Development Fund to fund additional water infrastructure feasibility studies in northern Australia on top of an existing $50m allocation, to assess project viability.
“The cost of the measure will be offset by redirecting funding from the Rural Research and Development for Profit program, the budget papers said.
The budget said it would also save $9.2m over four years by making changes to the $20m Managing Farm Risk Program delivered in the White Paper.
The government says it will introduce a means test to limit eligibility for the program to farm businesses with annual revenue of less than $2m.
The MFRP provides rebates of up to $2500 to help farm businesses with the costs of advice and assessments on eligibility for multi-peril crop insurance, to assist them managing drought and other production and market risks.
The budget papers said the program was now being delivered by the Department instead of by the State governments, providing administrative savings.
“Consultation with industry suggests that demand at the time of the White Paper may have been over-estimated,” it said.
“There are adequate funds available under the revised allocation to meet expected demand over the life of the program.
“The savings from this measure will be redirected by the Government to repair the Budget and fund policy priorities.”