Signs point to another year of delivery
17 February 2017
Series of announcements in agriculture this year to support farmers includes:
- changes to the Country of Origin Labelling laws completed
- changes to income averaging completed
- concessional loans interest rates dropped
- new Farm Management Deposit offset account available
- National Water Infrastructure Loan Facility open for business
It is already shaping up to be another strong year of delivery for the agriculture sector, with a swag of announcements only six weeks into 2017.
Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, said a lot of the momentum has come from the solid foundation the Coalition Government has established through its Agricultural Competitiveness White Paper.
“The $4 billion White Paper is already helping to create an environment in which farmers, producers, growers and exporters can thrive and seize opportunities. The White Paper underlines our willingness to back Australian agriculture and has helped foster greater confidence in the sector, increasing returns for our hard working farmers,” Minister Joyce said.
“This comes in stark contrast to the Labor Party’s approach to agriculture, which is to not have an approach. It was disappointing but not surprising to see agriculture completely forgotten when Labor launched its list of 100 policies in 2016.
“Rural Bank has launched its Farm Management Deposit (FMD) Offset Account, on the back of the Coalition Government’s changes to FMDs in the White Paper. FMD loan offset accounts allow farmers to reduce the interest owing on their business debt and improve their net cash position.
“This government recognises the challenges faced by modern farming businesses and is giving them the tools to better manage risk and plan for the future. Rural Bank is the first financial institution to offer such a product and I encourage other banks to offer FMD offset accounts.
“The Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016 was passed last week, which will soon allow primary producers to return back into income averaging 10 years after they opted out.
“Income tax averaging allows farmers to even out their income and the tax payable to allow for good and bad years and ensures they don't pay more tax over time than taxpayers on comparable but steady incomes.
“On 1 February 2017, the interest rate for Farm Finance Concessional Loans dropped from 3.55 per cent to 3.03 per cent, the Drought Concessional Loans interest rate fell from 3.05 per cent to 2.53 per cent, and the Drought Recovery and Dairy Recovery Concessional Loans rate decreased from 2.66 per cent to 2.07 per cent. This will deliver savings to those farm businesses who have taken out these concessional loans.
Minister Joyce said applications opened just last week for the government's $2 billion National Water Infrastructure Loan Facility, to fund priority water projects across the country and fast track construction.
“The loans are designed to help our agriculture sector reach its full potential and foster economic growth and prosperity in our rural and regional communities. The loan facility will complement the $500 million National Water Infrastructure Development Fund.
“Under the fund we have allocated $60 million to 39 feasibility studies across the country and three water resources assessments across northern Australia. We’ve committed $130 million to Rookwood Weir in Queensland, $75 million to Dungowan Dam in New South Wales and $20 million each to the Macalister Irrigation District and the South West Loddon Pipeline in Victoria.
“We are currently accepting expressions of interest from state governments for the remaining $192.5 million of funding. I want to see dirt moving as soon as possible.”
Another significant piece of legislation supporting the Country of Origin Labelling changes passed through the Senate, meaning businesses can now confidently begin rolling out the new labels on their products.
“The Country of Origin labels, a huge and hard fought win by the Coalition, make it easy for families to see how much of their food is Australia made or grown to support Australian farmers. This is something consumers and producers have been calling for and this government has made it happen,” Minister Joyce said.
“The signs are pointing to another year of strong delivery for our $58 billion agriculture sector because we have a vision, backed up by clear policies, practical actions and genuine investment.”
- Government launched the $4 billion Ag White Paper on 4 July 2015
- As of 1 July 2016, the government increased the cap on FMD holdings from $400,000 to $800,000 and re-established an ‘early access in drought’ provision which allows primary producers to withdraw their FMDs early without losing the tax concessions they have claimed.
- The government also amended the legislation that prevented FMDs being used to offset the costs of primary production business borrowings, meaning that banks can now offer primary producers the opportunity to use their FMDs to reduce the interest expenses on their farm business loans.
- Primary producers who opted out of income averaging for 2006-07, or an earlier financial year, will resume income averaging for the first financial year after 2016-17 in which their taxable primary production income is greater than that for the previous financial year.
- During the past 40 years, the value of agricultural output has been almost two and a half times more volatile than the average for all other major sectors of the economy. Australian farmers also contend with greater volatility in yield and price than farmers in most other parts of the world.