The 2016 Federal Budget seems more like an entrée than the main course voters have traditionally expected to be served up at this time each year. The big issues – such as the measures that will be needed to reduce the long-term budget deficit now running at an estimated $37 billion per year – have been left for a future date, as have decisions on issues such as university funding, the tax system, and the major infrastructure investment that will be required to lift national productivity.
For the farm sector, issues such as measures to address mobile phone blackspot funding and the backpacker tax are two issues that both fall into this category. On the latter, Andrew Broad, Nationals member for Mallee said on Tuesday that he is “fairly confident there will be outcome that will be to the satisfaction of horticulture producers”.
Budget measures for the inland freight rail project from Melbourne to Brisbane are welcome, but really do little more than keep the project in an exploratory hold pattern. The $594 million announced for the project is only 6% of the estimated completion cost and there is still no start date for construction.
The loan funding for water infrastructure projects is also welcome, although will likely require commitments from state governments, who are already loaded with debt, which means any new water infrastructure will take some time to be developed.
While the small business income tax cut is the headline act this will only have a limited impact for farm businesses, as most are structured as either a trust or a partnership, and there is no tax change proposed for these business structures. There are other small business tax provisions that many farm businesses will benefit from, including the lifting of the threshold definition for small business to $10 million. The most relevant small business provision that more farm businesses will now be able to access will undoubtedly be the accelerated depreciation write off for assets worth up to $20,000 introduced in the 2015 budget.
The $22 million over three years announced in the budget for Landcare is a welcome tranche of additional funding, as is the additional spending on biosecurity analytical capacity, and the funding to eradicate carp from inland waterways.
What is equally pleasing about the measures announced in the budget is the measures that were not announced. The fact that no cuts were proposed to rural R&D programs, rural research and development corporations and the CSIRO is a welcome change from the relentless budget reductions that have been announced over recent years.
Ultimately, the announcements made in this budget are perhaps what could be expected given the close proximity of the federal election, but they do little to directly address some of the major challenges facing the national economy or indeed any significant agricultural policy.
While the budget entrée that has been delivered has some tasty elements, the main dish is yet to be served up, and of necessity it will have some less pleasing ingredients. What is worse is the fact that the longer the main dish is delayed, the more unpleasant it will taste.