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Tuesday, 7 February 2017
Page: 89


Mr RICK WILSON (O'Connor) (17:39): It is a real privilege to follow my colleague, the member for Grey, today to speak on the Tax and Superannuation Laws Amendment (2016 Measures No. 2) Bill 2016. As the member for Grey outlined, as a farmer himself he very much appreciates some of the measures contained in this bill. I will speak specifically about schedule 2, which increases the flexibility around income tax averaging. I want to start by reiterating the strong support for agriculture that this government has shown. One of the key planks of that support has been encouraging farmers to be self-reliant. As the member for Grey mentioned, farming is a very variable game when it comes to income. We are at the vagaries of the season and we also suffer from the vagaries of world commodity prices. Sometimes they can both go against you and you can have very poor returns and it can turn around very quickly when you have a good season and good prices. Then, all of a sudden, you are faced with not only this year's tax liability but also provisional tax, and that creates a big burden for farmers, particularly when they are trying to get some fat into the system and provide for the lean years that are coming up. This measure came out of the ag white paper. In a moment, I will touch on some of the other measures that the ag white paper has delivered.

Dealing with the specifics of schedule 2, it increases the flexibility and fairness of income tax averaging for individual primary producers by allowing them to re-access income averaging 10 years after they have chosen to opt out. Currently, if a primary producer elects to opt out of income averaging in circumstances other than where their income is permanently reduced, they can never re-access these benefits. An estimated 12,000 primary producers opt out of income averaging every year, the vast majority because they are going into retirement. This change will benefit those who opt out for other reasons and are currently permanently excluded from re-accessing tax averaging. As I said previously, the government announced this change in the Agricultural Competitiveness White Paper released in July 2015. The inflexibility of averaging rules was raised by many stakeholders throughout that process.

Income averaging smooths out the tax liability of primary producers over a maximum of five years by creating a rolling average which takes into account good and bad years. Its objective is to ensure that primary producers are not penalised for their fluctuating incomes by paying more tax than those on a comparable steady income. Generally, primary producers will receive a tax offset in years when their income is above average and they pay extra tax in years when their income is below the average. Income averaging will apply automatically 10 years after a farmer has opted out so that farmers do not have to fill out any forms or reapply. It will only apply when it is to the farmer's benefit and they are eligible for a tax offset. They will be alerted through their notice of assessment and can always make the choice to opt out again. If a farmer chooses to opt out again, they will be unable to access income averaging for another 10 years, which makes sense.

As I said earlier, the Agriculture Competitiveness White Paper produced many good policies and benefits for farmers across my electorate of O'Connor and, indeed, across the electorate of Grey and all around Australia. One of the key issues that are part of those improvements was the Farm Management Deposits scheme, where we doubled the limit per partner in a business from $400,000 to $800,000. That was a very important change because many farm businesses nowadays, where there might be only two partners, can turn over several million dollars a year, so the $800,000 limit allows a reasonable amount of money to be set aside. We also changed the rules around farm management deposits to allow offset accounts. If money is held in a farm management deposit, it could be offset against the loan account. I notice that in my area the commercial banks have started to roll out a product where, if you have money in farm management deposits, you can offset that. That is a commercial matter for the banks, as it should be, and it is great to see them starting to roll that product out. We also introduced the accelerated depreciation on new water infrastructure, fodder storage and fencing. That is very important for farmers when they do enjoy good seasons and when they do have some surplus cash they can reinvest in their business and build it up for the better times.

In my electorate, and I am sure in the electorate of Grey, we have just finished enjoying a pretty good season—16.6 million tonnes of grain delivered across Western Australia. Prices are not the best but that is a record harvest by about 800,000 tonnes. I think that is a great credit to the innovation of the farmers in my region and across Australia. They certainly are a very innovative group of people.

We are also experiencing record prices for red meat across the electorate and across Australia, and that is certainly putting a lot of confidence back into the livestock industry. I think the government can take a great deal of credit for that because of the support for live exports. We are seeing a lot of product going overseas through the live export trade, which is increasing demand here locally. I attended a cattle sale in Mount Barker just the other day, when 10-month-old baby beef were selling for between $1,200 and $1,400, which is a fantastic price and a great reward for those producers.

We are also seeing wool values pushing up to levels we have not seen since 1988. It is sad to say that it has taken 29 years for wool prices in my region to get back to over 1,000c greasy. So wool growers in my area are experiencing some good times.

We have also seen good demand for our grains through the new free trade agreements we have signed with China, Korea and Japan. These free trade agreements are already having a massive impact and are another initiative of this government that has really benefited agriculture. With the China free trade agreement, we have seen massive increases in the amount of wine exported to China, and that has been of great benefit to the wine industry across the Great Southern, Plantagenet and Porongurup regions in my electorate. We are also seeing seafood exported in record quantities. The Southern Forests food region, around Manjimup, which produces some of the world's best horticulture, is also seeing great benefits from those free trade agreements.

Some other important deals we have done include the Indonesia-Australia Comprehensive Economic Partnership Agreement and the Australia-Singapore Comprehensive Strategic Partnership, and there are many other emerging market opportunities.

While we are talking about tax here today, I want to touch on the enterprise tax plan. Many farm businesses turn over less than $10 million, so they are very much looking for that tax relief. I see the Assistant Treasurer here and nodding her head, and I urge her to push hard on that particular policy, because it will be a great benefit not only to the farmers across my electorate but to the small businesses that operate in my electorate—those people who supply the farmers. It is very important that we get those tax changes through the parliament, so that people can reinvest in their businesses and look to generate more profits, because they will keep more of that profit in their pocket. That will create more jobs and more opportunities across my electorate.

That is the summary of my thoughts on this particular piece of legislation. It is very important for farmers across my electorate and across Australia. I commend the bill to the House.