Agribusinesses stand to benefit from the Australian government’s latest budget, particularly in light of recent extreme weather concerns, according to advisory firm BDO’s national agribusiness lead partner David Krause.
“The news from long-range weather analysts that we are heading into an El Niño event will have sent a shudder up the spine of every farmer in the country,” said Krause. “But the announcement in last night’s budget that fence and water facilities will be deductible from 1 July 2016 [tax bills] will at least give them increased confidence about their ability to prepare for the tough conditions ahead.”
The National Farmers Federation (NFF) also welcomed the tax breaks and A$83 million in drought assistance funding announced earlier this week, alongside the government’s commitment to develop northern Australia, although NFF president Brent Finlay described the budget as delivering “modest gains for the farm sector”.
Dams, tanks, bores, irrigation channels, pumps, water towers and windmills will all be eligible as tax-deductible investments under the new rules.
“In addition the Government will also allow primary producers to depreciate over three years all capital expenditure on fodder storage assets, such as silos and tanks,” said Krause in a statement. “These changes will come as welcome relief to the many farmers who have already struggled through drought and now face the prospect of even worse conditions ahead.”
Krause said that these changes could provide a significant boost to rural economies in Australia and have a genuine positive impact on the agribusiness sector.
The government’s financial commitment to northern Australia through the recently-announced beef roads fund and also through a $5 billion concessional loan facility is also great news for the sector, he added. The government is set to partner with the private sector and the governments of Western Australia, Northern Territory and Queensland to provide large concessional loans for ports, pipelines, electricity and water infrastructure projects.
“The sum total of these various programs and initiative should provide a much needed confidence boost to a sector that has been facing huge array of economic headwinds,” he added.
Overall the government promised around A$2 billion of funding to the agriculture sector through initiatives that will assist cashflow on farms, lower business taxes, boost bilateral trade agreement outcomes and recognise challenging seasonal conditions facing parts of the sector, according to the NFF.
“This recognises that the agriculture sector is a source of economic strength, linked to growing appetites for safe, clean and sustainable Aussie produce in key Asian markets,”said Finlay. “The measures announced tonight on trade, tax breaks and small business measures will be welcome news for Australian farmers.”
Finlay added that all eyes were now on the Agricultural Competitiveness White Paper and the Northern Australia White Paper. “Together, these policies will be the measure of this Government’s commitment to, and vision for, the success of the agriculture sector,” he said in a statement.