What the 2019 Federal Budget means for the Australian horticulture industry
On Tuesday 2 April 2019, the government delivered the 2019-20 Federal Budget. There were a number of measures that were announced that have implications for the Australian vegetable industry and its members, including in the areas of export development, business support, innovation and industry development, and labour.
As it was in last year’s budget, Export development was a major focus for the Budget, which includes $29.4 million over 4 years to enhance agricultural exports and trade, including $11.4 million to improve technical market access for horticultural exports and $6.1 million to extend the Package Assisting Small Exporters program to continue to provide support for small exporters. Additional export assistance announced by the Government included $60 million in increased funding for the Export Market Development Grants scheme and a further $1 million to promote Australian export industries to overseas markets.
Business support, particularly small- and medium-sized businesses, was a key theme throughout the Budget. Key initiatives included:
- Increasing and expanding access to the instant asset write-off – the Government is increasing the instant asset write-off threshold from $25,000 to $30,000, and medium-sized businesses will have access to the instant asset write-off.
- Amendments to the Luxury Car Tax – For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000, up from a maximum of $3,000.
There were a number of budget measures that will help develop the Australian agriculture industry and support its producers to operate profitable businesses and boost the sector’s planning and leadership for the future. These included:
- $2.9 million funding boost for agricultural innovation to support cross-commodity research and the future of the agriculture sector.
- $2.7 million to continue the operation of the Agriculture Unit in the Australian Competition and Consumer Commission.
While there was no mention of an Agriculture Visa in the Budget, the government has also committed funding for farm labour and labour hire including $2.9 million to implement a 12 month pilot program to improve small farmers’ access to workers through the Seasonal Worker Programme and $26.8 million to establish a National Labour Hire Registration Scheme to protect vulnerable workers.
There were also a number of infrastructure initiatives that were announced that will have positive benefits for growers and their communities, including the Roads of Strategic Importance initiative and additional funding to many state and territory infrastructure projects. It was also pleasing to see the level of support to farmers and regional communities affected by drought and natural disasters.
We were pleased to see these important areas receive funding in the Federal Budget. These issues affect vegetable and potato growers and their inclusion demonstrates the government’s commitment to helping our industry remain productive and profitable. Below is a more detailed breakdown of the budget measures that affect our industry.
If you have any questions please do not hesitate to contact AUSVEG on 03 9882 0277 or via email at email@example.com.
Agriculture and Water Resources
Agriculture Stewardship Package
The Government will provide $34.0 million over four years from 2019-20 to grow stewardship and biodiversity practices in the agriculture sector.
The measure includes funding of:
- $30.0 million over four years from 2019-20 to develop a national policy on agriculture biodiversity and trial a grants program to increase the adoption of biodiversity practices to deliver business production improvements and biodiversity outcomes; and
- $4.0 million over three years from 2019-20 to develop and trial a farm biodiversity certification scheme.
Enhancing Australia’s Agricultural Trade
The Government will provide $29.4 million over four years from 2019-20 (and $2.6 million per year ongoing) for a package of measures to enhance agricultural exports and trade.
The package provides funding to increase industry access to export markets and capitalise on emerging export opportunities, including:
- $5.1 million over four years from 2019-20 (and $0.2 million per year ongoing) for actions to reduce the impact of policies other than tariffs that affect trade on agriculture and food exports;
- $11.4 million over four years from 2019-20 (and $2.4 million per year ongoing) to improve technical market access for horticulture exports, including by addressing pest and disease risk and import risk analysis;
- $6.8 million over four years from 2019-20 to extend the Agricultural Trade and Market Access Cooperation program to assist Australian industry in breaking down technical barriers to trade for Australian agricultural exports, and to secure new and improved access to premium markets; and
- $6.1 million over four years from 2019-20 to extend the Package Assisting Small Exporters program to continue to support small exporters to overcome barriers to their participation in the export sector.
National Agricultural Workforce Strategy
The Government will provide $1.9 million over four years from 2019-20 to develop a national agricultural workforce strategy.
National Drought Map and Indicators
The Government will provide $4.2 million over four years from 2019-20 (and $0.5 million per year ongoing) to improve and maintain the National Drought Map.
The National Drought Map brings together information on drought conditions and support measures across Australia to assist drought relief responses. Additional work to develop a drought indicators system will also be undertaken. This measure delivers on the Government’s obligations under the intergovernmental National Drought Agreement.
National Leadership for Agricultural Innovation
The Government will provide $2.9 million over three years from 2019-20 to drive national leadership for agricultural innovation.
Red Imported Fire Ants Eradication Program — acceleration
The Government will provide $18.3 million over three years from 2018-19, by bringing forward money from 2021-22 and beyond, from the National Partnership on Pest and Disease Preparedness and Response Programme, to support the immediate commencement of fire ant eradication in newly defined areas.
Stronger Regional Connectivity Package
The Government will provide $220.0 million over four years from 2019-20 to the Department of Communications and the Arts to improve regional telecommunications, including:
- $160.0 million for grants under Rounds 5 and 6, and additional funding for Round 4, of the Mobile Black Spot Program; and
- $60.0 million for a Regional Connectivity Program that will provide grants to improve mobile and broadband services in regional areas, online telecommunications advice to regional users, trials of innovative solutions for providing voice services to remote Australia and support the development of the Universal Service Guarantee.
Funding of $160.0 million for this measure has already been provided for by the Government.
North Queensland Flood Recovery Package
The Government will provide $3.1 billion over five years from 2018-19 to support North Queensland’s livestock industry and associated communities to recover from the impacts of the 2019 flood event.
The package includes:
- $32.9 million over five years from 2018-19 (including $1.0 million in capital funding) to establish the North Queensland Livestock Industry Recovery Agency in the Prime Minister and Cabinet portfolio. The Agency will coordinate the Commonwealth’s efforts to support North Queensland’s livestock industry and affected communities, with a focus on long-term recovery to complement existing Disaster Recovery Funding Arrangements;
- making available up to $1.75 billion in loans to authorised deposit-taking institutions to support interest rate relief for existing and new business loans to eligible flood affected primary producers (sheep and cattle primary producers in the first instance);
- – $0.7 million over three years from 2019-20 will be provided to the North Queensland Livestock Industry Recovery Agency and the Treasury to administer the loan facility from 1 July 2019.
- making available up to $1.0 billion for loans through the Regional Investment Corporation to assist farm businesses with restocking, replanting and refinancing existing debt, with farm businesses suffering extreme hardship able to refinance up to 100 per cent of their commercial debt;
- $300.0 million for grants of up to an interim cap of $400,000 across two programs for primary producers to help rebuild their businesses and assist with the costs of:
- restocking or replacing damaged crops (or permanent plantings), including associated transport costs ($150.0 million); and/or
- repairing or replacing damaged on-farm infrastructure ($150.0 million).
- $5.0 million over five years from 2019-20 (including $1.0 million in 2023-24) to manage the spread and severity of the prickly acacia weed;
- $4.0 million in 2018-19 for Special Circumstances funding for eligible North Queensland schools experiencing financial difficulties, to help ensure the viability of these schools, with $1.0 million to be met from within the existing resources of the Department of Education and Training; and
- $0.8 million in 2018-19 to assist isolated families through a one-off payment of $1,000 per student currently receiving support through the Assistance to Isolated Children Scheme or ABSTUDY.
Supporting Australian Exports
The Government will provide $61.0 million over three years from 2019-20 to support Australian businesses to export Australian goods and services to overseas markets, comprising:
- $60.0 million over three years from 2019-20 in increased funding for the Export Market Development Grants scheme to boost reimbursement levels of eligible export marketing expenditure for small and medium enterprise exporters; and
- $1.0 million in 2019-20 to further promote Australian export industries to overseas markets.
Health Star Rating System
The Government will provide $1.1 million over two years from 2019-20 to continue Commonwealth support for the Health Star Rating system, in collaboration with the States and Territories, while an evaluation of the system is completed.
The cost of this measure will be met from within the existing resources of the Department of Health.
Prioritising Mental Health — natural disaster assistance
The Government will provide $5.5 million over four years from 2018-19 for additional mental health services and support for communities impacted by natural disasters in Victoria, Queensland and Tasmania. This will include $1.3 million for the Centre for Post-traumatic Mental Health to develop and implement online training tools to assist health practitioners to better support communities affected by disasters.
The Government will also introduce Medicare items to allow General Practitioners to provide telehealth services to flood affected communities in Queensland until 30 June 2019.
Disaster Recovery Funding Arrangements — funding for Northern Queensland floods
The Government will provide up to $232.0 million in 2018-19 under the Disaster Recovery Funding Arrangements (DRFA) for those affected by flooding associated with the North and Far North Monsoonal Trough event occurring on 25 January 2019 in Queensland.
The assistance includes:
- grants for flood affected primary producers, small businesses and non-profit organisations, provided under Category D of the DRFA and will be matched dollar for dollar by the Queensland Government;
- a comprehensive package to support longer term recovery, under Category C and D of the DRFA, matched dollar for dollar by the Queensland Government and focused on the built, economic, environmental, and human and social recovery domains and also including measures to build resilience within affected communities; and
- $11.0 million (100 per cent funded by the Commonwealth) to 11 local government areas to assist in recovery efforts.
The assistance outlined in this measure is in addition to other assistance provided by the Commonwealth government for this and other natural disasters in the form of Australian Government Disaster Recovery Payments, Disaster Recovery Allowance and other payments made through the DRFA.
New Regional Visas — Population Package
The Government will provide $49.6 million over five years from 2018-19 (including $15.3 million in capital funding) to introduce new visas to better support the needs of regional Australia.
From November 2019, two new regional visas will be implemented: the Skilled Work Regional (Provisional) visa, and the Skilled Employer Sponsored Regional (Provisional) visa, which will replace the existing Regional Sponsored Migration.
Scheme (subclass 187) visa, and the Skilled Regional (Provisional) visa (subclass 489). The new visas will permit skilled migrants to stay and work in regional Australia for a period of five years.
From November 2022, the Government will also introduce a new Permanent Residence visa for regional Australia.
The Government will also implement enhanced compliance activities to support the new visas.
Assistance for Farmers and Farm Communities in Drought — additional funding
The Government will provide an additional $20.2 million over two years from 2018-19 to support farmers and farming communities in drought, including:
- $15.0 million in 2019-20 for the Drought Communities Programme to deliver local infrastructure and drought-relief projects in a further 15 drought-affected councils across Australia; and
- $5.0 million in 2018-19 for the Country Women’s Association of Australia to provide assistance to drought-affected communities.
This measure will be offset by redirecting funding from existing resources.
Establishment of the North Queensland Water Infrastructure Authority
The Government will provide $9.6 million over five years from 2018-19 to establish the North Queensland Water Infrastructure Authority to support the development of water infrastructure, including for the Hughenden Irrigation Scheme and the Hells Gates Dam Scheme (including Big Rocks Weir).
Harvest Labour Services — reforms to encourage Australian jobseekers to take up seasonal work
The Government will provide $24.1 million over four years from 2019-20 (and $6.8 million per year ongoing) to reform the Harvest Labour Services (HLS) to encourage more Australian jobseekers to take up seasonal harvest jobs. The reform will commence from 1 July 2020, and includes:
- expansion of current HLS regions from 11 to 16 rural and remote regions where there is significant demand for seasonal work;
- improving the accessibility of the Harvest Trail website and providing more information on the local job opportunities and services available for employers and jobseekers; and
- incentivising HLS providers to place Australian jobseekers into seasonal work by introducing 4-week, 12-week and 26-week outcome payments.
The Government will also work with industry to promote seasonal work opportunities
Protecting Vulnerable Workers — National Labour Hire Registration Scheme and other measures
The Government will provide $26.8 million over four years from 2019-20 (and $6.2 million per year ongoing), including $1.0 million over four years in capital funding, to establish a National Labour Hire Registration Scheme (the Scheme) to protect vulnerable workers, including migrant workers.
The Scheme will make it mandatory for labour hire operators in high-risk sectors, such as horticulture, cleaning, meat processing and security sectors, to register with the Australian Government as a labour hire operator. The Scheme will provide visibility of businesses operating in the labour supply industry, introduce a pre-entry requirement to those operating as a labour hire business, help to reduce worker exploitation, and drive behavioural change in the industry.
The cost of administering the Scheme will be recovered from the registered labour hire operators through prescribed annual fees and charges.
The measure also includes $10.8 million over four years from 2019-20 to enhance the Fair Work Ombudsman’s capacity to conduct investigations into underpayment and related issues, and deliver information and education activities. This will raise vulnerable workers’ awareness of their rights and of the Government help available to them, and will also raise employers’ awareness of their responsibilities under the workplace laws.
Seasonal Worker Programme — pilot to address regional workforce shortages
The Government will provide $2.9 million over two years from 2018-19 to implement a 12-month pilot program (the Pilot) to improve small farmers’ access to workers through the existing Seasonal Worker Programme (SWP). The Pilot will simplify SWP requirements to make it easier and quicker for labour hire approved employers under the SWP to recruit and move seasonal workers between smaller farms. The Pilot will be implemented in up to three regions.
The measure includes $1.6 million over two years from 2018-19 for the Fair Work Ombudsman to increase education, monitoring and investigation activities relating to SWP employers participating in the Pilot.
Australian Competition and Consumer Commission Agriculture Unit — continuation
The Government will provide $2.7 million in 2019-20 to the Australian Competition and Consumer Commission to continue the operations of its Agriculture Unit. The Unit is responsible for enforcement and compliance activities to promote competitive agricultural markets.
Strengthening Adoption of the Food and Grocery Code of Conduct
The Government will provide $0.8 million over four years from 2019-20 to establish an Independent Reviewer of arbitration decisions as part of its response to the review of the Food and Grocery Code of Conduct.
Under revisions to the Food and Grocery Code of Conduct, which will be subject to public consultation, each signatory will be required to appoint an independent Code Arbiter to consider disputes between the signatory and suppliers. Suppliers will be able to request that the Independent Reviewer review the process leading to the decision of a Code Arbiter.
The cost of this measure will be met from within the existing resources of the Department of the Treasury
Increasing and expanding access to the instant asset write-off
From 7:30 PM (AEDT) on 2 April 2019 (Budget night), the Government is increasing and expanding access to the instant asset write-off.
The Government is increasing the instant asset write-off threshold from $25,000 to $30,000. The threshold applies on a per asset basis, so eligible businesses can instantly write off multiple assets.
Medium sized businesses will now also have access to the instant asset write-off.
The increased and expanded instant asset write-off will apply from Budget night until 30 June 2020.
Small businesses (with aggregated annual turnover of less than $10 million) will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.
Medium sized businesses (with aggregated annual turnover of $10 million or more, but less than $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020. Medium sized businesses must also acquire these assets after Budget night to be eligible as they have previously not had access to the instant asset write-off.
This measure is estimated to reduce revenue by $400.0 million over the forward estimates period.
This measure will improve cash flow for small and medium sized businesses, providing a boost to business activity and investment.
Small businesses can continue to place assets which cannot be immediately deducted into the small business simplified depreciation pool (the pool) and depreciate those assets at 15 per cent in the first income year and 30 per cent each income year thereafter. The pool balance can also be immediately deducted if it is less than the applicable instant asset write-off threshold at the end of the income year (including existing pools). The current ‘lock out’ laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out) will continue to be suspended until 30 June 2020.
Medium sized businesses do not have access to the small business pooling rules and will instead continue to depreciate assets costing $30,000 or more (which cannot be immediately deducted) in accordance with the existing depreciating asset provisions of the tax law.
Arrangements prior to Budget night
The Government has already legislated a $20,000 instant asset write-off for small businesses. Eligible small businesses can already immediately deduct purchases of eligible assets costing less than $20,000 that are first used or installed ready for use by 30 June 2019.
On 29 January 2019, the Government announced that it would increase the instant asset write-off threshold for small businesses from $20,000 to $25,000 and extend the instant asset write-off for an additional 12 months to 30 June 2020.
These changes interact with the changes being announced as part of Budget. This means that, when legislated, small businesses will be able to immediately deduct purchases of eligible assets costing less than $25,000 that are first used or installed ready for use over the period from 29 January 2019 until Budget night.
The changes announced on 29 January 2019 were estimated to reduce revenue by $750.0 million over the period from 2018-19 to 2021-22. Provision for this revenue reduction has already been included in the forward estimates.
Luxury Car Tax — increased refunds for eligible primary producers and tourism operators
The Government will provide further relief to farmers and tourism operators by amending the luxury car tax refund arrangements. For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000. This measure is estimated to reduce revenue by $11.0 million over the forward estimates period.
Currently, primary producers and tourism operators may be eligible for a partial refund of the luxury car tax paid on eligible four-wheel or all-wheel drive cars, up to a maximum refund of $3,000. The eligibility criteria and types of vehicles eligible for the current partial refund will remain unchanged under the new refund arrangements.
Biosecurity imports levy — revised start date
The Government will change the start date of the 2018-19 Budget measure titled Agriculture, Food and Biosecurity — biosecurity imports levy from 1 July 2019 to 1 September 2019. This change will allow an industry steering committee to make recommendations to the Minister for Agriculture and Water Resources on the design and implementation of the levy. This change is estimated to reduce revenue by $20.0 million over the forward estimates period.
Increasing Work and Holiday Visa Cap for Indonesia
The Government will seek to increase the annual cap for Work and Holiday (subclass 462) visas available to Indonesian citizens from 2,500 to 5,000 over a six year period from 2019-20 to 2024-25. This measure is estimated to have a gain to the budget of $40.4 million over the forward estimates period.
This is part of the Indonesia-Australia Comprehensive Economic Partnership Agreement.