Agriculture Minister Barnaby Joyce: “The 2016–17 Budget will support the construction of essential water infrastructure into the future, ensuring we can boost Australia’s agricultural sector to drive economic growth.”
Cattle Council of Australia CEO Jed Matz: “Australian beef producers and the value they bring to the economy has not been recognised in this years budget.”
NFF president Brent Finlay: NFF welcomes key measures that will benefit agriculture but angered by the lack of any plan to address the controversial backpacker tax.
Headline announcements for agriculture:
- Water infrastructure: $2 billion in loans to the States and Territories for water infrastructure projects such as new dams and pipelines;
- Water project feasibility funding: $9.5 million for the National Water Infrastructure Development Fund, to fund water infrastructure feasibility studies in northern Australia, with the cost being met by redirecting funds from the Rural Research and Development for Profit program;
- Biosecurity upgrades: $15.9 million over four years to build an advanced analytics capability to improve biosecurity surveillance and analysis;
- Carp control: $15 million to control carp and help improve our waterways;
- Rural Financial Counselling: An extra $7.1 million in funding over four years for Rural Financial Counselling Services in drought affected regions.
More broader announcements:
- Company tax rate cut: The company tax rate will be cut to 25 percent over the next 10 years to 2016-27;
- Small business tax cut: Businesses turnover over less than $10 million per annum are now eligible for the 27.5pc tax rate, and are now eligible for all concessions and subsidies previously available to businesses turning over less than $2 million per annum;
- Inland rail: Up to $593.7 million in additional equity to the Australian Rail Track Corporation over three years from 2016-17 for land acquisition and pre-construction works on the inland rail project. This does not commit the Commonwealth to construction, which is likely to cost several billion dollars;
- Murray Basin rail project: $220 million for the Murray Basin rail project, upgrading grain lines in western Victoria, matching the Victorian Government contribution;
- Cooperatives pilot program: A two year pilot program to improve access for farmers to training and information about co-operatives collective bargaining and innovative business models, with the costs being met from existing departmental resources;
- Managing Farm Risk Program changes: Savings of $9.2 million to the Managing Farm Risk Program, with a means test limiting eligibility to farm businesses with annual revenue of less than $2.0 million;
- Ag levy changes: An extra $2 million annually from changes to agricultural levies from 1 July 2016, including a mandatory levy of $0.50 per tonne on all hay and straw prepared for export, replacing a voluntary levy;
- Super tax for high earners: A 30pc tax will be applied on superannuation for those who earn over $250,000 a year;
- Super contribution cap: A $25,000 annual cap will be applied to concessional superannuation contributions and a $500,000 lifetime cap;
- Tax avoidance penalty rate: A 40pc penalty tax rate will be imposed for tax avoidance. The new Diverted Profits Tax will apply to multinational companies that attempt to shift profits offshore;
- Tax avoidance taskforce: A tax avoidance taskforce will be established targeting multinational corporations, businesses and high wealth individuals.
Cattle Council of Australia reaction:
CCA chief executive officer Jed Matz says the Budget seemed to have little in it for Agriculture but even less focus directly for the beef industry.
“This is disappointing as we think investing in the beef industry is vital to building the Agricultural boom that will keep Australia’s economy moving forward as the mining industry falls away.
“Additional funding of $15.9 million over 4 years to develop an advanced analytics capability aimed at better targeting the Government’s biosecurity efforts is welcome, however there is very little detail within the information provided so we will be seeking further information about what that investment really means.
“As much of the North has seen its fourth poor wet season and other parts of the country struggle with dry conditions, the extra $7.1 million to fund the continuation of around 15 positions for Rural financial councillors is a positive. However, in light of the predicted continuation of poor seasonal conditions, a greater focus on the current issues facing the rural production zones would have been welcome.
“Beef seemed to miss out on the infrastructure front. Beef producers are crying out for greater connectivity so we were extremely disappointed to see no additional allocations to mobile black spot program.
“Many beef businesses will benefit from the reduction in tax rates for small business – 2.5% off the company tax rate (from 30 to 27.5%) which will help them invest back into their businesses.
“Cattle Council will be seeking further clarity on how the additional funding for the Reef Trust and Landcare will be invested. The beef industry is committed to working with Government on our industry impacts on the environment especially when it comes to one of our greatest national resources however this must be a collaborative approach.
“Though the Government has put resources in place to tackle issues around red tape in agriculture, of which Cattle Council has been very supportive, it is disappointing to see that the Government’s focus has been shifted away from putting financial support behind these initiatives.
“Further, while improved market access has been delivered in recent years there is still much work to be done, especially on technical trade barriers. Australian beef producers are turning more and more to export markets to remain viable and access is vital. It is unfortunate the Government has failed to recognise the value behind these initiatives in this years budget.”
NFF President, Brent Finlay said new initiatives which build on last year’s $4 billion Agricultural Competitiveness White Paper were excellent news for the sector but enthusiasm for the Budget was tempered by the damage that would be incurred at the hands of the controversial backpacker tax.
“There is no doubt we are delighted to see the tax burden on small business eased – with a 2.5 percent tax cut for small companies, an increase to the tax discount for unincorporated entities, and more generous deduction rules,” Mr Finlay said.
“Another cash injection of $594 million for Inland Rail is also warmly welcomed, but falls short of the funding needed to break ground on the project.”
Despite these positive elements, Mr Finlay said the Government must urgently act on the destructive backpacker tax to restore certainty and confidence to thousands of farm businesses and rural communities as well as industries such as tourism that rely on the backpacker workforce.
“There were literally thousands of farming families, agricultural businesses and tourism operators who were desperately hoping the backpacker tax, in its current form, would be abandoned in tonight’s Budget,” he said.
“We have received more than 31,000 signatures on a petition opposing this measure. We have banded together, both as an industry and across sectors, to show that the negative impacts will be wide-reaching and felt by thousands of Australian families. We have given clear examples of what this pain will involve.
“It is now time for the Government to respond to the risk imposed on the sector by a measure that will chase working holiday makers away from Australia and, in the process, decimate the agricultural workforce.”
Mr Finlay said tonight’s budget was a precursor to strong advocacy from the NFF, in the lead up to the imminent Federal Election, that would focus on policy that would underwrite a strong and prosperous rural sector.
“Never before has agriculture been so strongly positioned to grow the Australian economy and contribute to the prosperity of the entire nation,” he said.
“We look forward to hearing policies from both the Government and Opposition that will help us take hold of these opportunities and deliver economic and social returns for the nation.”
A good budget for business: Australian Industry Group
“Overall this is a measured budget that balances fiscal responsibility and a path to budgetary sustainability, with important measures to boost businesses competitiveness and reduce our high corporate tax burden; to continue efforts to make our education and training system more effective; to invest further in transport infrastructure and to improve job outcomes for young people,” Australian Industry Group Chief Executive, Innes Willox said.
“In an important boost to the capacity of businesses to invest and create jobs, the Budget sets a gradual path to restore the competitiveness of Australia’s company tax system. While the two-tiered company tax system will continue for a number of years and it will be a decade before the company tax rate will reach 25%, many small to medium-sized businesses will see more immediate benefits and face improved incentives to invest. The clear risk involved in such a gradual phase down is that the international competitiveness benchmark could well be closer to 20% by 2026-27.
“Extending eligibility to small business tax measures to companies with turnovers of up to $10 million a year will provide a shot in the arm for up to 60,000 small to medium-sized businesses and for the economy from 1 July this year. In addition, small businesses operating as companies and many unincorporated businesses will also enjoy tax relief. These measures, as well as the rise in the $80,000 personal tax threshold to $87,000 is a timely boost to the economy and will underwrite improved living standards.
“Ai Group welcomes new measures to address tax avoidance and aggressive tax planning. Businesses and individuals have an obligation to comply with the tax law and the vast majority do. It will be critical for the Government to consult widely over the proposed Diverted Profits Tax and the new Tax Transparency Code. A particular area of renewed focus should be on combatting the cash economy.
“Business will also welcome the development of new pathways helping young people enter the workforce. By making young people become more work-ready through pre-employment training and internships, the Youth Jobs PaTH initiative targets a leading concern of business around employability and backs these measures with accelerated and simpler wage subsidies. These measures will assist businesses make an important contribution to improving the lifelong employment prospects of eligible young people.
“The ongoing budget commitment to innovation is positive. Leaving the Research and Development Tax Incentive untouched is a crucial step in rebuilding business confidence in this important program.
“The further commitment to improving Australia’s urban and regional transport infrastructure including the early-stage work on the inland rail project is welcome.
“Ai Group also welcomes the continuation of a healthy permanent migration program with a strong focus on skilled immigration.
“The Government’s renewed efforts in higher education and its commitment to consultation with the higher education sector and with business are to be applauded. Its determination to fix the VET FEE HELP scheme is an important step in lifting the confidence in Australia’s Vocational and Training system. Without question a major challenge in Australia’s training system over the coming years will be to overhaul the Apprenticeship system.
“The biggest disappointment is the deep cut in funding for the Industry Skills Fund. This is a setback for improving workforce capability at a time of major changes in workplaces and the workforce,” Mr Willox said.
Never been a better time to be an SME: Kate Carnell
Australian Small Business and Family Enterprise Ombudsman Kate Carnell said the Federal Budget will give more than three million small-to-medium sized enterprises (SMEs) in Australia the confidence to invest their time and money in the long-term future of their business.
“For SMEs, certainty and the ability to confidently plan for your future is the key to success. The measures in the Federal Budget provide businesses with a framework to chart a way forward, and confidently make investments – in terms of money, staff, equipment and time – to grow their business,” Ms Carnell said.
Ms Carnell welcomed the reduction in the small business company tax rate to 27.5 per cent and said increasing the eligibility threshold to $10 million means tens-of-thousands more SMEs are now in a better position to grow and to employ.
“For more than 800,000 SMEs, these measures translate into two tax cuts in as many years, while a further 60,000 will see an instant tax reduction of 2.5 per cent,” Ms Carnell said.
“For SMEs, tax savings don’t go in their back pocket. Instead, mum and dad business owners reinvest this money into their enterprise; they buy more equipment, they hire more staff, and as big businesses continue to down-size and out-source, it’s the SMEs that are creating the new jobs, especially for the younger generation,” she said.
By lifting the eligibility threshold for unincorporated businesses to qualify for the increased 8 per cent tax discount, Ms Carnell said the Budget will help encourage more people to have a go at starting their own business.
“It’s about getting the risk and reward balance right; about incentivising entrepreneurial people to generate opportunities not just for themselves, but for their community, and the Budget’s tax measures certainly go a long way towards achieving this, with around 2.3 million businesses eligible for the unincorporated tax discount,” Ms Carnell said.
Ms Carnell said raising the threshold for the instant asset write-off for all small businesses will ensure that from 1 July 2016, an additional 100,000 business owners can confidently purchase or upgrade assets that will allow them to grow and to innovate well into the future.
“Businesses were quick to capitalise on this measure when it was announced in last year’s Budget, with more than 170,000 small businesses making claims since July 1, 2015, totalling almost $800 million; this has stimulated the sector and accelerated growth, which has obviously benefited the broader economy,” Ms Carnell said.
Ms Carnell said the Budget measures aimed at streamlining red tape compliance will free-up time for SMEs to focus on their core business.
“As I travel around the country listening to small business owners, the most common complaints are problems around red tape. Small business are in the business of growing, not doing the government’s paperwork, so by simplifying BAS reporting requirements, and committing to exploring ‘eInvoicing’ opportunities, the government is helping small business become more efficient in their day-to-day operations,” she said.
Ms Carnell said the $6 million in funding set aside in the Budget for the ASBFEO underscores the importance the government has placed on the SME sector in Australia, and its capacity to drive growth and innovation into the future.
“The funding is in recognition of the vital role this office can play in making a positive contribution to the SME landscape in Australia. It means we have the capacity to fully engage with the sector, conduct a thorough and comprehensive consultation process and in turn, ensure that the issues and ideas raised with us translate into meaningful policy outcomes,” Ms Carnell said.
“Running a small business can be a risk, but with the right settings in place, it becomes more of a calculated risk, and one that more and more Australians are willing to take if they can plan their way forward with confidence, and this year’s Budget certainly provides a framework for SMEs to grow and prosper,” she said.
Sources: Department of Agriculture and Water Resources, Cattle Council of Australia, National Farmers Federation, Nab Agribusiness, Australian Industry Group, Australian Small Business and Family Enterprise Ombudsman