Wednesday, 19 September 2018
Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018; Second Reading
I move the second reading amendment circulated in my name:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House makes note of the Government's lack of long term policy and planning to assist primary producers and rural Australians facing drought conditions".
Labor will be supporting the Treasury Laws Amendment (Supporting Australian Farmers) Bill 2018, which amends the Income Tax Assessment Act 1997 to allow immediate deduction rather than deduction over the course of three years of the cost of fodder storage assets, such as silos and hay sheds, used to store grain and animal feed. The government has made the case that this will assist primary producers by making it easier to invest in these assets. The measure was announced on 19 August 2018 and applies to fodder storage assets first used or installed ready for use on or after that date. The fiscal impact of the measure is $75 million over the forward estimates.
While we are supportive of this measure, we do note the haphazard approach which the government has taken to the drought that many Australian farmers are suffering from. First, there was the increase in the farm household allowance payments from three years to four years, effective on 1 August 2018. Then, a few days later on 5 August, the government announced a $190 million drought package, claiming that it provided immediate additional financial support to help farming families and their communities, which is a bit of a stretch given that the additional funding did not start flowing on 5 August. We're yet to see how many farmers will actually access the farm household allowance supplementary payments. And, as the member for Hunter, the shadow minister for agriculture, has pointed out, there is a real risk that farming families will miss out on the full $12,000 because the government insists on splitting the payment and denying farmers the possibility of getting a lump-sum payment.
Then, in his second reading speech introducing this bill, the Assistant Treasurer made mention of increased funding for mental health support, something which should of course be welcomed by both sides of this House. Yet, it was just later that week that the new Prime Minister tweeted an extremely insensitive video that claimed that drought is 'a necessary evil' that 'can help cut out the bottom 10 per cent that probably shouldn't be there anyway'. That isn't what struggling farmers need to hear at this time of crisis. Labor has called on Prime Minister Morrison to apologise and to remove the video, but he refuses to do so.
Then we have the fact that, on 19 August 2018, former Prime Minister Malcolm Turnbull announced the appointment of Major General Stephen Day as the National Drought Coordinator. But then, interestingly, in introducing this bill in the House, the Assistant Treasurer made no mention of support for the appointment of the drought envoy position by the current Prime Minister, so the status of that envoy is unclear. We also know that, as the former agriculture minister, the member for New England did very little to address the long-term systemic challenges of the agriculture sector. We all sadly remember his failed white paper, which was full of short-term initiatives so poorly designed that most are yet to be implemented.
This House will recall that one of the first acts of the member for New England as Minister for Agriculture was to dismantle the Standing Council on Primary Industries as part of the COAG council. That body, the so-called SCoPI, worked on longer-term drought reform measures, and its abolition means that we have one less avenue through which to pursue long-term reform. And, of course, we had the member for New England doctoring the Hansard. Everyone in this place will remember his doctoring of the Hansard, which ended up with the unprecedented firing of his departmental secretary, but some may have forgotten exactly the topic on which he was caught out doctoring the Hansard. It was his attempt to exaggerate the Abbott-Turnbull-Morrison government's drought assistance measures. Farmers have not experienced any meaningful relief from drought in the time since.
As the shadow agriculture minister has said, the Morrison government must immediately take action to restore the COAG drought policy reform process, to respond to the review into the intergovernmental agreement on drought reform and update the parliament on the progress of the new agreement, and to help farmers better adapt to climate change and embrace best practice regenerative farming methods to combat drought—a topic that I will return to.
To go to the tax aspect of this measure, we on the Labor side support the principle that more rapid depreciation—what's known in the US literature as 'immediate expensing'—can be good policy. Labor has supported the government's instant asset write-off. We did so noting that the government had scrapped Labor's instant asset write-off and then put in place their own instant asset write-off. Much like the low-income superannuation contribution, they scrapped the policy, railed against it and then restored Labor's policy when finally they saw sense.
On top of the instant asset write-off, Labor has announced an Australian investment guarantee. That delivers for all companies investing in Australia and is a much more targeted policy than an across-the-board company tax cut. Work carried out by Victoria University suggests that, if you're after investment, then the bang for your buck of an investment guarantee of more rapid expensing is three times larger than a company tax cut. Labor's Australian investment guarantee has the benefit too for firms that it is permanent, permanently accelerating depreciation for all companies and thereby ensuring that we're able to improve the investment pipeline that businesses deliver. This is responding to a concern that many economists have raised about the level of business investment in Australia. As the shadow Treasurer has noted, business investment in Australia has fallen by 20 per cent. The Reserve Bank of Australia has recently commented that non-mining business investment has been 'disappointingly low' in recent years. Our support for more rapid depreciation schedules, as a long-term growth measure, is something that is important to put on record.
This measure is using accelerated depreciation as a form of fiscal stimulus, if you like, and as a way of getting farmers through the drought. In this exercise, it's less clear whether that will have a strong benefit for farmers. The benefits of more rapid depreciation only come to firms that pay tax. If you're not paying tax, then being able to depreciate does not necessarily boost your growth prospects. It's a long-term policy and it has no end date, but it's couched very much by this government as a crisis response. While Labor recognises the economic value of more rapid depreciation schedules, we do put on record at this stage our concerns about the benefits that this measure will bring in helping farmers tackle drought.
To that end, I do want to put on record that Labor intends, if we win government, to review this measure to ensure that it's having the intended effect. We've taken such an approach with other measures that we have supported in this House, such as the measures contained in the Treasury Laws Amendment (Black Economy Taskforce Measures No. 1) Bill 2018 that passed the House earlier this week. A careful, independent review is warranted in a context such as this to ask questions such as whether providing the benefit to all firms but restricting it to fodder storage assets is the best use of resources. We need to make sure that we are safeguarding taxpayer money, particularly at a time when under this government we've seen net debt almost double since the coalition came to office and at a time in which Australian debt is rising more rapidly than it did even during the global financial crisis. That was when Australia was taking on debt not through government mismanagement, as we are under the Abbott-Turnbull-Morrison government, but to deal with the greatest economic downturn since the Great Depression and to save 200,000 jobs and tens of thousands of small businesses.
It's important too that, in order to tackle drought, we address climate change. We've seen, as the shadow minister for climate change and energy has pointed out, the fact that the Liberals have no climate policy, and no measures to contain, let alone reduce, Australia's rising carbon pollution. A number of Morrison government ministers continue to repeat the lie that Australia is on track to meet its international climate commitments, but we're simply not. They have a target of a five per cent cut in emissions by 2020, but the coalition government's own data, snuck out in the days before Christmas, showed there would be a zero per cent cut in pollution by 2020. The Liberals have committed to the Paris Agreement with a 26 to 28 per cent reduction by 2030 from 2005 levels. But the same government data—again, snuck out before Christmas 2017—showed there would only be a four per cent cut in pollution by 2030. That means Australia is on track to miss its carbon abatement targets by a whopping 24 per cent. And this was all at a stage when the National Energy Guarantee still had a possibility of garnering bipartisan support. Since the junking of the National Energy Guarantee, the new energy minister seems to take it as a virtue that the coalition has no plans to reduce emissions.
Australia's emissions are substantial. The electricity sector is responsible for a third of all Australia's emissions and has the lowest cost of cutting pollution. That's why Labor has been willing to work with the coalition on their various plans—the emissions intensity scheme, the clean energy target, the National Energy Guarantee. And that's why we're so disappointed at the government's decision to entirely walk away from meaningful action on climate change. This is a great concern to our Pacific neighbours and to the European Union, but it's also a concern to Australia's farmers, who are suffering the impact of drought.
As we know from the scientific evidence, extreme weather events will become more frequent as unchecked climate change continues. In South Australia, there's the famous Goyder's Line, the line which demarcates the boundary of sustainable agriculture. We've seen Goyder's Line shifting towards the coast, shrinking the area of viable agriculture in South Australia: an impact which has been traced directly back to climate change. A government with no plan to tackle climate change cannot be a government that is doing everything to tackle the scourge of drought and the impact of drought.