Overview Summary - 2020-21 Federal Budget

Budget highlights

  • $10 billion increase in infrastructure investment, including $7.5 billion on roads.
  • $328 million Busting Congestion for Agricultural Exporters Package to digitise export certification and reduce the cost of certification for industry.
  • A suite of regional economic development programs including the $100m Regional Recovery Partnerships Program and the Modern Manufacturing Package.
  • $3.5 billion water infrastructure program.

Economic Overview

The 2020-2021 Federal Budget confirms the need to cushion Australia's economy from the impacts of COVID-19 with an additional $98 billion in new recovery measures.

The Budget strategy is to prioritise economic and jobs recovery via the COVID - 19 Economic Recovery Plan, while bringing budget deficits and government debt down will be phased-in at the point when unemployment falls below 6% (forecast in 2023-2024)

Net debt will reach to 51.6% of GDP by 2024, still well below historical averages of other OECD countries.

Tax receipts over the forward estimates are expected to drop significantly, reduced by $283.5 billion over the forward estimates, hence the Budget's focus on jobs creation in the short to medium term. The budget deficit will peak at $213.7 billion in 2020-2021.

Outside the focus on Budget repair, the dual centrepieces of the Budget are tax cuts, and infrastructure spending.

Other government measures announced, include:

  • the extension of the JobKeeper Payment announced on 21 July 2020;
  • personal tax income cuts worth $17.8 billion;
  • two additional payments of $250 to those on pensions and other eligible payments ($2.6 billion);
  • a new hiring credit of up to $200 per week for businesses hiring eligible employees; and
  • increasing Australia's infrastructure investment pipeline by $10 billion to $110 billion over ten years.

Extract from NFF Media Statement:

“Budget backs farmers and the bush to get Australia growing.

Tonight’s Federal Budget recognises the fundamental role agriculture and the regions are poised to play in Australia’s COVID-19 recovery and affirms the Government’s support for the farm sector’s goal to achieve $100 billion in farm gate output by 2030.”

We also applaud what is a pillar of tonight’s Budget, a $328 million congestion busting package for agricultural exporters.  Making it easier for Australia’s export-dependent agriculture sector to export our sought after products to the world, will be integral to agriculture achieving the growth needed for agriculture to tally $100 billion in farm gate output by 2030.

The package earmarks $222 million to modernise digital services for agricultural exporters and $35.2 million to reduce the constraints of red tape on seafood, meat, live animals and plant exporters.

Exporters welcome the Government’s commitment to address outdated, frustrating regulations and to streamline the compliance process. A $317 million continuation of the COVID air freight assistance package is also good news for exporters, as is an extra $51 million in grants to assist exporters with the cost of reaching new international markets.

Key environmental announcements include: $36.6 million to progress the statutory review of the EPBC Act; $2.5 million to develop natural capital markets; and $10.6 million for the negotiation of bilateral agreements with the states. 

Tonight, the Government has delivered a plan to help farmers kick-start our nation’s recovery, a plan which has agriculture and regional Australia at its heart.” 

Others key measures include:

  • $30.3 million to improve mobile and broadband services through the Regional Connectivity Program.
  • $19.6 million to extend the drought function of the National Drought and North Queensland Flood Response and Recovery Agency.
  • $250.7 million for fuel security planning with a goal to increase Australia’s onshore diesel storage by 40%.
  • $25 million to haul salvaged logs from fire-affected areas to timber mills.
  • $141.1 million for the National Skills Commission to provide on Australia’s future workforce needs.
  • $269.6 million for the Murray Darling Communities Investment package to implement Murray Darling Basin Reforms that are community-led.
  • $95.4 million for further soil carbon research and methodology.
  • $31.5 million towards improving the regime for ag vet chemical access and approvals.
  • $28 million over four years to strengthen biosecurity technologies to enhance the scanning of imported products.

 

Customers and the Value Chain

Trade and market access

The $328 million Busting Congestion for Agricultural Exporters Package aims to modernise and digitise Australia's export certification system. Measures include;

  • $222.2 million over four years for the digitisation of export certification;
  • $14.3 million over three years to streamlining trade regulations in a post COVID-19 environment;
  • $10.9 million over three years to build a more competitive export meat industry;
  • $10 million over four years to streamline clearances for plant exports; and
  • $71.1 million towards the cost recovery of export certification to reduce the financial impost on industry.

$317 million in additional funding has been provided for the International Freight Assistance Mechanism million to ensure air freight access for Australian exporters/importers until June 2020.

$14 million Dairy Export Assurance Reform to facilitate export opportunities and streamline processes for the dairy industry.

Biosecurity

$28 million over four years to strengthen biosecurity controls including investment in automated technologies to scan imports.

Ag-vet chemicals

  • $29.1 million over six years has been allocated for the environmental management of chemicals to improve the control of the introduction of chemicals of high concerns and align the Australian regime with that of key trading partners.
  • $2.4 million has been provided to extend the Improved Access to Agricultural and Veterinary Chemicals program to help farmers gain improved access to safe and effective agvet chemicals.

Regional economic development

The Budget provides new funding for regional economic development by targeting measures to bushfire and COVID-19 affected regional communities, and via the focus on the development of food and beverage manufacturing. Measures include:

  • $100 million Regional Recovery Partnerships Program to assist with economic recovery and diversification of regional communities impacted by bushfire and COVID -19;
  • $1.5 billion (over four years) Modern Manufacturing Strategy to prioritise the development of competitive advantage across six areas, including food and beverages;
  • $41 million for the Research and Development Program to shape the Government's regionalisation and decentralisation agenda; and
  • $5.7 million for the Resilient Regional Leaders Program to develop leaders in our regional communities.

Top-up for the Building Better Regions Fund

An additional $200 million will be injected over 4 years into the Building Better Regions Fund – to enable a further round of community infrastructure and capacity building projects ($100 million) and develop dedicated tourism related infrastructure.

Transport infrastructure

The Budget details a significant number of road upgrades including $7.5 billion of new road funding, and additional expedited funding for Inland Rail, including complementary local infrastructure.

 

Growing Sustainably

Murray-Darling Communities Investment Package

$269.6 million over four years for a package of measure to achieve a sustainable and certain future for the Murray-Darling Basin and associated communities and industries. Measures relevant to agriculture include:

  • Significant funding for planning and delivering basin related projects ($98.5 million over four years in total);
  • $37.6 million over two years for the Murray - Darling Basin Plan Economic Development program to support economic development programs in areas impacted by the MDBA Plan;
  • $38.7 million over four years to establish a new statutory authority – the Inspector General of Water Compliance then $9.8 million/year ongoing ;
  • $25 million over four years to improve metering systems;
  • $6 million over four years to improve access to water information, such as water management and trading.

These programs are being funded through existing funding, and the diversion of funding from programs such as the Water Fodder Program and the Sustainable Rural Water Use and Infrastructure Program.

Improving the timeliness of environmental assessments

$36.6 million over two years has been provided to maintain and further reform the assessment process under the EPBC Act, and to work with state and territory governments to develop single touch approvals process. 

$3.5 billion Rolling Water Infrastructure Fund

The Rolling Water Infrastructure Fund provides $1.5 billion for water infrastructure and an $2 billion from the National Water Infrastructure Development Fund over ten years for a long-term focus on building dams, weirs and pipelines across the National Water Grid.

Investment in soil carbon methodology

The King review Technology Co - Investment Fund will contribute $95.4 million over six years to incentivise farmers to adopt technologies to reduce emission, including abatement technologies and data collection that increase soil carbon and carbon storage in vegetation.

 

Unlocking Innovation

Digital infrastructure strategy

As part of the Digital Infrastructure Strategy, funding and investment has been allocated to improve regional connectivity, including:

  • $30 million additional funding for the Regional Connectivity Program competitive grants.

    Energy

  • $1.9 billion over twelve years on new energy investments, including $1.62 billion over ten years to the Australian Renewables Energy Agency for the emission reduction Technology Investment Roadmap (facilitate investment in energy efficiency, hydrogen, energy storage and other enabling technologies). Energy storage, including hydrogen, will be key to the sustainability and affordability of regional electricity and provides a viable pathway to reduce the agricultural sector’s reliance on liquid fuels.
  • $211m federal government plan to build domestic storage facilities to secure liquid fuel security (noting that farmers are heavily reliant on the use of liquid fuels). This is in line with the NFF’s liquid fuel policy and we welcome the government’s responsiveness on this issue.

Improving connectivity in the Western Australian Grain Belt Region

  • $1.8 million over two years to allow wireless internet service providers to improve internet and telecommunications access.

    Research and Development Tax Incentive

  • Rolling back cuts to R&D Tax Incentive program ($980 million over four years)
  • For companies with an annual turnover below $20 million the refundable R&D tax offset is being set at 18.5 percentage points above the claimants' company tax rate and the $4 million cap on annual cash refunds will not proceed;
  • For companies above $20 million annual turnover, the Government will reduce the number of intensity tiers from three to two.

 

People and Communities

Workforce related announcements include:

  • $17.4 million for $6000 grants for relocation cost of workers to the bush.
  • Temporary changes to Youth Allowance and ABSTUDY to allow demonstration of independence by demonstrating three months of farm work
  • Support for 500 VET courses including agricultural courses.
  • JobMaker Hiring Credit – provide up to $200 a week (depending on eligibility) for employers who hire workers. The scheme will commence 7 October 2020.

No other new agricultural specific announcements were made with relation to seasonal workers. The Government has previously announced extension of seasonal worker and backpacker visa. 

 

Capital & Risk Management

Ongoing funding for the Future Drought Fund

The Budget provides ongoing funding of $100 million per annum over the forward estimates for the Future Drought Fund.

$155.6 million towards drought response, resilience and preparedness

$155.6 million over four years has been allocated to a package of measures to ensure farming resilience and preparedness including:

  • $50 million for the Emergency Water Infrastructure Rebate Scheme, with an additional $50 million allocated to farmers for eligible water infrastructure;
  • $19.6 million in additional funding in 2021-22 to the National Drought and North Queensland Flood Response and Recovery Agency to coordinate the Government response to community and industry engagement on the recovery response; and
  • Various measures under the Future Drought Fund.

Instant asset write-off increased and expanded

The asset write-off measure will provide all businesses instant asset write offs for two years (starting 6 October 2020), and does not have the cap of $150,000 like the Instant Asset Write Off Scheme.

 

Sourced from National Farmers Federation Overview Summary.