2021 Federal Budget: What it means for Agribusiness
A welcome extension to tax schemes was announced in the 2021 Federal Budget – along with biosecurity and water funding.
The budget includes several initiatives for the agricultural sector, but the key focus is in the following areas:
- Agriculture 2030 – $850m over the forward estimates to support the National Farmers Federation’s (NFF) ambition of a $100b industry by 2030;
- A one-year extension to the instant asset write-off, to June 2023;
- Redirected $1.5b in already-announced water efficiency funding to Murray Darling basin water projects, as well as continued drought funding; and
- Changes to visa arrangements to allow temporary visa holders to undertake more farm work, although the budget forecasts the borders will remain closed until mid-2022.
The NFF’s goal for a $100b target for Australia’s agricultural sector by 2030 has been around for some time. The 2020-21 budget explicitly addresses this commitment, with additional funding for biosecurity, soils, biodiversity, export and production. The budget provides $850m over the forward estimates.
Just under half of the funding under Agriculture 2030 (some $411.4m) is directed to biosecurity and pest management and was largely leaked before budget night. There is also $147.9m for soil programs, $102.1m for production and trade, $67m for organic waste, $36.8 for biodiversity and $50.3 for forestry and fisheries, with the balance of funds in the package to support agricultural employment and innovative agricultural practices.
Instant asset write-off extension
The instant asset write-off was expanded substantially in last year’s budget to $150,000, largely as a COVID stimulus measure. The scheme has been extended for one year to 30 June 2023. Treasury estimates that this will reduce revenue by $17.4b over the forward estimates. The temporary loss carry-back was also extended at a cost of $2.8b.
Drought and water infrastructure projects, other sundry measures
The budget provides funding for drought support, although some of this is existing funding, as well as redirected $1.5b from the Water Efficiency Program to improvement works in the Murray Darling basin. The budget also provides $29.3m for timely environmental assessments.
Visa changes and border reopening timing
A key challenge for agricultural businesses, particularly in horticulture, has been lack of labour availability with closed borders. While the budget includes a measure (announced in January 2021), to allow temporary visa holders to work more hours in the agricultural sector, the major challenge remains closed borders. The budget sees negative net migration to the tune of almost 100,000 by mid-year and does not forecast the border reopening until well into 2022. This is likely to present an ongoing challenge to industry.
One silver lining is that the budget includes the assumption that the vaccination rollout will be completed this year, if this transpires it is likely borders can reopen earlier.
Read more in our Federal Budget 2021: What it means for Agribusiness report