Building up opportunities

From my perspective, Treasurer Joe Hockey’s Budget on Tuesday night was a package of unexpected surprises among a swag of policy initiatives that he had already allowed to leak out.

From the farmer’s point of view, it became a good Budget because of those surprises, which ran quite counter to what he had been advocating just 12 months ago. For Tasmanian farmers it was particularly good.

If we look first of all at the national measures, all primary producers will be able to immediately deduct capital expenditure on fencing and water facilities such as dams, tanks, bores, irrigation channels, pumps, water towers and windmills for income years beginning on or after July 1, 2016.

That is slightly confusing but it means the allowance begins in 2016 and will have immediate effect from then.

This is how the Budget papers explained it:

“Doug installs 25 kilometres of fencing, at a cost of $25,000, on his cattle farm in 2016-17. Currently, he is able to depreciate his fencing costs over 30 years and claims a depreciation deduction of $833 each year.

“Now, Doug will be able to deduct the full cost of $25,000 in the 2016-17 income year, giving him $24,167 more in tax deductions in the first year.”

Farmers will also be allowed to depreciate over three years all capital expenditure on fodder storage assets such as silos and tanks used to store grain and other animal feed. Currently, the effective life for fodder storage assets is up to 50 years.

There is a tax cut to all small businesses of 1.5 per cent for small companies and a five per cent tax discount on income from unincorporated small business activity.

All small businesses, including farms, get an immediate tax deduction for any individual business asset they buy costing less than $20,000. The way I read it that applies to any number of new assets under that value.

The Budget confirmed the Australian Government’s $60 million over four years towards the development of Tranche Two irrigation projects in Tasmania. There appeared to be some confusion in the Budget papers about whether that was for four or five schemes, given some uncertainty about what was going to happen up at Circular Head. However, Tasmanian Irrigation has developed a new scheme for the Duck irrigation district and that will be going to renewed water sales in June.

The Budget locks in the announced change to the Tasmanian Freight Equalisation Scheme from January 2016 to include a subsidy at a flat rate of $700 per twenty-foot equivalent unit for exports. It was the tweak we needed. It had been an anomaly of the system that we have not been able to get freight equalisation on goods trans-shipped through Australian ports from Tasmania but bound for export.

All round this was a good result for us and, as others have said, it establishes the fact that agriculture is one of the pillars of the Australian economy. From Tasmania’s point of view it means that we are being encouraged to maximise our role.
TFGA president Wayne Johnston