Budget 2017: Farming and Regional Australia | KPMG | AU
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Federal Budget 2017 Insights: Farming and Regional Australia

Budget 2017: Farming and Regional Australia

We outline the key implications for the the farming sector and regional Australia announced in the 2017 Federal Budget.


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Budget 2017 Insights: Farming and Regional Australia

Farmer groups and regional communities have generally welcomed the 2017 budget. For example the extension of the immediate asset write-off for small business serves the farm sector and regional business sector well - but there were three other elements of the budget that KPMG sees as landmark announcements for the industry.

Connecting regions through rail

The Government has committed $8.9 billion to fully fund Inland Rail – surpassing the expectations of proponents. This freight rail link will connect regional Australia from Melbourne to Brisbane and is a major national infrastructure project. Beyond improved transport productivity, the commitment to develop Inland Rail will provide a platform to attract investor attention, support economic and jobs growth in regions along the route, safety and environmental impact.

The exact route is not finalised but in essence will head west from Brisbane to Toowoomba where the Wellcamp airport is demonstrating how transport infrastructure can stimulate investment. It is worth noting that a feasibility study is also underway to determine the viability of extending the inland rail up to Gladstone in Central Queensland.

From Toowoomba the rail link is proposed to head south through major NSW regional centres including Parkes, Narromine, Wagga Wagga, and Moree. The Queensland and NSW section takes in most major bulk commodities including grain, cotton and wool. Furthermore it likely reduces pressure on the Newell Highway which on average sees one truck per minute pass through major towns. Crossing into Victoria at Albury/Wodonga – the link uses several sections of existing rail but with a proposal to upgrade to ensure higher productivity including the capacity to take double stack containers.

Companies transporting goods from Victoria to Queensland – and distributing from the Murray-Darling agricultural region will be preparing to examine cost savings from rail. Regional councils will be looking to attract investment to their regions based on this new transport option.

The cost-benefit estimates and the priority for development will no doubt be debated, but generally speaking this critical long-term infrastructure is a necessary investment. It’s just a question of where it sits as a national infrastructure priority.

(View the map of the Inland Rail Alignment updated December 2017 – source Inland Rail project website https://inlandrail.artc.com.au)

Recommitment to the National Landcare Program

A feel good element of the 2017 budget was the announcement of funding and future certainty for the National Landcare Program. Until budget night, funding was only assured to 30 June 2018 creating concern amongst farmers and communities. However minds are now at ease with $1bn now committed for a further seven years out to 2023. The National Landcare Program underpins important local volunteer movements and also typically provides funding towards river health, soil health, biodiversity as well as pest, weed and animal control. Landcare is a unique Australian icon and has helped rescue and transform many parts of the sensitive Australian landscape. KPMG congratulates Landcare and the Australian Government on the ongoing care of the rural environment.

A new era for delivery of Commonwealth farm risk services

There will be significant changes to the delivery support services around farm risk management, including drought assistance, with the commitment to establish the Regional Investment Corporation (RIC). The establishment of the RIC as a separate entity to administer farm business concessional loans, flags a new era in a move away from state and territory based delivery to a federal delivery model. The RIC will also enable access to loans by state and territory governments for the construction of water infrastructure where it is of national significance. The RIC is expected to be operational from 1 July 2018.

In the past, Commonwealth programs such as drought assistance were delivered via state agencies. This caused challenges including inconsistency in application, timeliness and cost of delivery. The Commonwealth has made the call to deliver these services themselves and also commit to the strategy of low interest loans to address key risk factors and reduce interest costs. Drought policy in Australia has been a difficult policy area and the current Government is looking to provide certainty in this regard.

While these are the headline items in the budget, there are a number of other initiative for

  • Livestock Exports Global Assurance Program – $8.3m contribution towards the Livestock Exports Global Assurance Program including assessment and certification being developed by industry.
  • Imported Food Safety– food importers into Australia will be required to provide documented evidence of compliance with internationally recognised food safety controls.
  • New Production levies – The thoroughbred research and development levy will be introduced with the Australian Government committed to matching industry contributions up to $1.6million over 4 years. Up to $0.7million in funding has also been committed towards the new tea tree oil research and development levy.
  • Farm Business Concessional Loans Scheme - Extension of eligibility to include those with a Farm House Allowance entitlement due to be exhausted on or before 30 June 2018. This extension aims to support farmers as they to transition towards financial self-reliance.

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