Scott Buchholz (Wright, Liberal Party) Share this | Hansard source

I welcome the opportunity to follow the speaker from the opposition, the shadow ag minister—thanks, Joel—who is probably one of the few members on the other side of the House who understands the complexities of this bill that is before the House today. The Tax Laws Amendment (2014 Measures No. 1) Bill 2014 quite simply has two parts to it. There is schedule 1, which speaks to the farm management deposits scheme which the previous speaker went some way towards addressing. He spoke about the bipartisan spirit that exists in the House around farm management deposits schemes. For that, I thank the member. It was a far cry from the speaker before him, who had absolutely no content in his speech that spoke to farm management deposits schemes. The second schedule in the bill basically speaks to overpaid GST by mischaracterisation. I will speak to both parts of the bill in due course.

Firstly, my electorate's major revenue source is predominantly agriculture, horticulture and cattle. Farm management deposits schemes are a tool used across a number of sectors in my electorate. It gives me great pleasure to stand and support the tax law amendments here today in the House because they go a long way towards assisting people in a real fashion. This is a sector that has continually said that it does not want handouts; it just wants a level playing field. This is a sector in regional and rural Australia that unfathomably has some of the toughest competitive restraints in the way it has to do business.

First, they have to battle weather conditions. If you could forecast when the rain was going to come or when labour forces were going to arrive at your place to pick vegetables and know that you were going to be unencumbered by weather conditions, you would be an extremely rich man. But unfortunately we as humans do not have an exact science for predicting the weather.

In addition, there is the uncertainty that they have with their market prices. Once they have gone through the arduous process of planting a crop there is no guarantee that they will receive their yield. They take that yield—whether it is a crop, a litre of milk or a beast—to the market, but they are not able to know at the time of the planting of that crop or the starting of that entrepreneurial chain what the final dollar amount will be. What happens in this sector is that they are subjected to price taking. Those prices are determined not by local markets but by global commodities. The prices are driven by supply and demand. In addition to that, on occasion growers in my area then compete against other nations who have some of the most heavily subsidised agricultural industries in the world. When you take that into consideration, our farmers in Australia, without a doubt, are a most resilient mob, fighting weather, fighting commodity prices and competing in a global market against industries that are heavily subsidised. We should bow down every day and thank our agricultural sector in regional Australia for the contribution that they make, for finding the energy every day to get out of bed and putting food on the table for our nation so that we can grow and become a stronger nation. The unsung heroes are the farmers of this nation, and I am proud that in my electorate I have multiple farming sectors.

I will put into context the value of the Farm Management Deposits Scheme across the sector. In totality, we are looking at $3.2 billion currently being tied up in farm management deposit schemes. Before I take you there, I may as well for the Hansard record give you a bit of an overview of what a farm management deposit is. It is about volatility in revenue. Most people in this place get paid weekly, fortnightly or monthly, but on the farm the only source of revenue for your enterprise in some circumstances may only arrive once a year or sometimes in extreme circumstances twice every three years—it could be a cattle enterprise or a horticulture enterprise. With a cereal crop, where you are relying on a summer crop, you may only get paid once a year. If you are lucky enough and live in an area where you have suitable rainfall, you may be able to put in a summer and a winter crop, giving you two revenue streams. If you are a smaller grower in agriculture, with more intense farming, you may get four cheques a year. You need to fathom this: every week you are having to eat, every week you are still having to service your standard household expenditure, plus put fuel in your tractors. So, to put it into perspective, the expense side of your operation still has to be serviced, but your revenue side can be sparse from one cheque every two years to a cheque every quarter. In the case of the dairy sector, it is a little more fluent with the cash flow; they can get cheques on a monthly basis.

There is $3.2 billion currently tied up in the Farm Management Deposits Scheme. In the horticultural sector, in my state, we have got just over $109 million. In the grains and cereals sector, we have about $66 million tied up in the Farm Management Deposit Scheme. The largest area where the money is consolidated is in the beef sector. There are about 2,000 participants, or 2,000 management schemes, totalling just over $200 million. In the dairy sector, it is around the $21 million mark. Predominantly, these guys, with bipartisan support—support from both sides of the House—take the opportunity to utilise farm management deposit schemes, because not every year is going to be identical to the one that preceded it; not every year is identical. If it were, it would be considered easy and everyone would be doing it. The fact is that it is not an easy sector to compete in for the reasons that I outlined earlier. What these guys do is when they have the opportunity in a good time they take some of that revenue and, without paying a tax increment on it, the government provides this instrument whereby they can place that revenue into a farm management deposit scheme. There is no tax liability. In the case of a grain operator whose crop may have failed but who is still incurring all the expenses—the diesel cost and the fertiliser cost for putting in the crop—those expenses still need to be met. So the premise of a farm management deposit scheme is that in the good year you put the money away and, in the times when things are tough, you are then able to go into that specialised bank account, pull that money back out, actualise the tax on it for that year—not the year in which it was earned—as revenue, bring it into your system and pay your expenses. It is not a new phenomenon.

What this amendment seeks to do is to increase the cap from $65,000 through to $100,000 for all farm income in terms of access to a farm management deposit scheme. Most farmers are trying to offset risk management. They may have a warehouse or a shop that they lease in town. They might own a farm out of town or own several pieces of real estate in a nearby town. These are referred to as off-farm investments. If the rent on those reaches in excess of $65,000, it would not allow a farming operation, a primary industry operation, to take advantage of a farm management deposit scheme. What the amendment seeks to do is to increase that revenue cap from $65,000 to $100,000. That is not clear. That is not net gain; that is gross. If the revenue on your warehouse is $65,000 and you still have to make payments to the bank for $65,000, it is neutral. Where you get your rent and you make your payments to the bank on it, that precludes you from getting access to the farm management scheme. It is not the net gain; it is the gross gain. I need to make that clear. This amendment allows us to go from $65,000 to $100,000.

The bill also seeks to allow you to consolidate farm management deposits up to a total of $400,000. For example, if you had a good year and put $100,000 away—and you may have been able to lock that in at five per cent—and the following year you had another good year and put away another $100,000—and locked that up in a term deposit and you may have got six on that—previously they would have all been treated separately. What this bill seeks to do now is allow consolidation of that and work on an amortised value of up to $400,000.

The second schedule speaks about overpayments of GST by mischaracterisation. Predominantly, in a nutshell, if I as a business have purchased something and paid the GST at the point of purchase and if, inadvertently, the person I have made the payment to is unable to claim the GST, this provision does allow me to claim that back from the tax department because that money is not subject to GST. It is a housekeeping measure. Again, I suspect that this has bipartisan support. In fact, I am more than confident that it has because I believe that the Treasurer and the Assistant Treasurer announced in a joint media release that the government would proceed with the previous announcement measures with some amendments. I think the Labor Party did some earlier work on this in the last parliament, to stand corrected. I do not suspect for a moment that we will have any problem pushing these very logical and measured amendments through the House.

The previous speaker, the member for Hunter, who I regard as well grounded in the area of agriculture, spoke about ways that he could assist the sector, particularly the agriculture sector. He spoke about reverse mortgages and how he genuinely thought that would assist the sector. If he and the opposition truly wanted to help this sector, if they truly wanted to understand the hardship that this sector wake up and face every day of every year and if they truly wanted to assist then they should have thought a lot longer and a lot harder about their actions and performance. When they were in government they woke up one morning and had an absolute brain-snap and decided to shut down the entire live cattle export system and decided to shut down the entire protein source to—

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