Tuesday, 23 February 2016
Tax and Superannuation Laws Amendment (2016 Measures No. 1) Bill 2016; Second Reading
Really? Well, I have learnt to fight. In the choice between fight or flight, I am pleased to say it is fight and fight and fight. In any event, I am here because the coalition and only the coalition can deliver the best outcomes for rural, regional and remote Australians. My electorate of Barker is the engine room of the South Australian agricultural industry. It produces some 50 per cent of the value of all agricultural products of my great state of South Australia. Whilst this government has delivered significant opportunity through the free trade agreements with China, Japan and Korea and signed up to the Trans-Pacific Partnership, there is more that needs to be done to secure the future of agriculture in this nation. Decisions made here in Canberra have a massive effect on the ground in my electorate, particularly when it comes to agricultural policy. Many of us on this side of the chamber have grown up in regional Australia and understand the challenges faced by our farming families and primary producers. That is why we consistently deliver better policy in this space. That is why we would never have taken the measures that resulted in the prohibition of the live export trade. But I will not go back there.
Whether it is drought, bushfires, flood or extreme weather, farmers and primary producers feel the variable effects of climate more acutely than most. Indeed, in few industries is the success of an enterprise as tied to variables out of the control of human agency as it is in farming and primary production. Across my electorate, from Renmark to Angaston, from Karoonda to Loxton, from Lucindale to Lameroo, I consistently hear the same themes arising when it comes to equity in farms and the pressure that climatic conditions puts on households budgets, especially with respect to small- and medium-size farms.
I myself am the son of farmers and understand the difficulties that often plague farm financing. It is from this position of firsthand experience and through a long engagement with the vast agricultural community in Barker that I can unreservedly say that the legislation before the House, particularly in relation to part 3, is a big win for farmers and primary producers. Today, obviously, I rise to speak in favour of it. I do so because the bill strikes at the very heart of the issues confronting our agricultural sector. I am particularly supportive of the changes to the Farm Management Deposits that are delivered in schedule 3 of the bill, changes that will deliver better outcomes for farmers. This will relieve the pressures they often face in tough years when growing is hard and budgets inevitably tighten.
I rise today from a position of experience in the agricultural sector, informed by an extensive and longstanding dialogue with farmers across my electorate. From such a position I say that today's legislation is squarely in their interests. This bill will deliver better outcomes to farmers across my electorate of Barker, from Naracoorte right across to Riverland and down to Penola and Nangwarry. The bill will deliver some real and meaningful options when it comes to financial security for small- and medium-size enterprises.
This bill will deliver more opportunities, particularly for younger farmers seeking equity in their property. If you speak to farmers across my electorate, indeed across the nation, they will tell you that there is a dire need to get more young Australians into the agricultural sector—more young people like Christian Biele from Loxton High School. Christian was this year's Australian school-based trainee runner-up at the Riverland and Mallee Vocational Awards for his efforts in translating his theoretical understanding of agriculture into good practical skills. We need generational renewal in the agricultural sector but, as you can appreciate, farmers and aspiring farmers today face significant challenges when it comes to financial pressures.
I came to this place to make it easier for young Australians like Christian to get into the agricultural sector, because I know that the prosperity of my electorate, and indeed the nation, is inextricably linked to the engagement with agriculture and primary production. I have long fought in this place for greater opportunity for regional Australians. Opportunity is a core coalition value, and we believe in our very heart that, through making room for the individual, industry flourishes.
This bill delivers on that commitment to the individual. We in the coalition understand that through ensuring greater autonomy and increasing farm equity our hardworking farmers and primary producers will succeed. Farmers know best how to spend their own money, but it is imperative that the government take steps to unlock the full financial potential of our farming sector—steps taken considerably forward through this bill.
Our financial system, when it comes to loans, is fundamentally set up in a way that demands absolute consistency. Each and every month we are expected to pay interest on our debt. Day in, day out, rain or shine, interest is charged. Whilst this is the reality which cannot be changed it is the reality which is often incongruent with the cycles of agricultural production. The ever-marching and ever-compounding interest on loans often has a massive impact on our farming communities, especially as they face natural disaster and global market pressures which are increasingly beyond their control.
The problem facing many younger farmers, in particular, is acquiring equity in their property. It is against such challenges that the mechanism of farm management deposits seeks to deliver some certainty to our farming sector, particularly to those young producers. Farm management deposits are primarily a risk management tool that enables primary producers to deal with the often uneven income between years. Eligible primary producers utilise these deposits to set aside pre-tax income from their primary production in a special account for use when times are tough or through, for example, periods of drought.
It is a sensible approach to easing the inconsistency between the often uber-variable outcomes of farming enterprise with the ever-consistent demands of financial institutions placed on those who borrow to invest in their farms. This approach is one which takes into account the importance of the long-term perspective required when it comes to growth in the agricultural sector. It is an approach which has worked and it is an approach which the bill seeks to expand upon, both to capture more farmers and to assist them in delivering greater equity in their property.
This bill delivers three key changes to farm management deposits, with each delivering excellent results for farmers and primary producers. Firstly, the bill doubles the maximum amount that can be held in farm management deposits from $400,000 to $800,000, capturing more farmers in need and reflecting the reality of modern farming practices. Secondly, the bill allows primary producers experiencing severe drought conditions to withdraw an amount that has been held in a farm management deposit for less than 12 months without affecting the income tax treatment of the farm management deposit. Thirdly, the bill allows amounts held in farm management deposits to offset a loan or other debt relating to the deposit holder's primary production business.
This bill takes steps to deliver more equity to farmers in delivering them a more secure future when it comes to their finances. The ability to offset loans and decrease the pressure of interest costs to our farmers is a measure of such importance that I cannot overstate it. It is an excellent policy. Indeed, it is a measure which gets me particularly excited because I know how positive an impact this will have on our young farming sector in particular. The reality is that in the hard times—a time which some and, indeed, much of my electorate is currently experiencing because of drought—those interest payments can often be the difference between a full pantry and an empty one.
There is a perception, of course, that surfaces from time to time that farmers are well off or, indeed, are extremely well off—that they always have food on the table and that they do not face the same day-to-day challenges that those in the cities do in making ends meet. It is a perception which is wholly out of touch, and it is most certainly out of touch with the reality in my electorate today as it grapples with a one-in-100-year rainfall deficiency. The truth is that farmers and primary producers may be asset rich but they are very often cash poor, especially when it comes to dealing with drought or low commodity prices. It is in such times that interest payments really bite. As such, I am proud of the steps this government is taking to alleviate the pressures through the offset measures in this bill.
Of course, during periods of drought, the likes of which my electorate is experiencing, farmers will not have the capacity to deposit significant sums in their farm management deposits. But by this bill—and particularly part 3 of it—we are establishing the architecture for the good times, to ensure that young farmers in particular, but all those across the farming sector, can invest in their farm management deposit, offset their debt, achieve a higher level of equity in their property and, in that sense—pardon the pun, Mr Deputy Speaker—'drought-proof' their enterprise. As I have conveyed in this place before this will be particularly important to my electorate, because it is experiencing a rainfall deficiency that is not only starting to pinch but is really starting to hurt.
It is excellent to see a focus on delivering equity to our farmers. And whilst I understand that in the short term, as I have explained, this will be of limited benefit, in the medium to long term it will be a measure that will be most useful. This bill is particularly good news, as I said, for young farmers experiencing disruption to growing cycles due to poor weather conditions—drought or other intervention. This bill will ease the financial burden through delivering more reasonable and up-to-date provisions when it comes to farm management deposits. Measures delivered in this bill will make the lives of farmers and primary producers easier through delivering financial peace of mind.
Whilst these changes were announced in the agricultural competitiveness white paper, the legislation before the parliament today must be passed before 1 July this year in order to deliver the changes for the next financial year—something that is, of course, an absolute priority. I am very pleased to see this piece of legislation before the House today, because it delivers farmers and primary producers in my electorate some much-needed certainty when it comes to farm management deposits. It provides a ray of hope for them in what are clearly difficult times.
These changes are the product of an extensive process of consultation across the spectrum of stakeholders in the agricultural and primary production sectors. The substance of this bill is surely an endorsement of the effectiveness of that process. This bill is a win for farmers, it is a win for primary producers and it is a win for Barker. It is a bill of which I am particularly proud and I commend it to the House.