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Wednesday, 14 May 2014
Page: 3641

Mr PORTER (Pearce) (09:49): I rise to speak on the Tax Laws Amendment (2014 Measures No. 1) Bill 2014 and the member for Fraser has put an amendment to the motion before the House. The bill does two things: in schedule 1, there are three components that improve the operation of the Farm Management Deposits Scheme; and in schedule 2, there are provisions which will allow taxpayers to self-assess entitlements for refunds for overpaid GST either by virtue of mischaracterisation of the nature of the transaction or indeed a miscalculation of the transaction itself.

In this contribution, I want to focus on the first part of the bill before the House and those components that improve the Farm Management Deposits Scheme. We have had from the member for Fraser an attempt to draw into the debate on this bill a whole range of other budgetary matters; I might allow myself the indulgence of addressing some of those very briefly after I have made a comment about the Farm Management Deposits Scheme component of the present bill. Because the Farm Management Deposits Scheme is a very important scheme to my electorate of Pearce, and notwithstanding the member for Fraser's attempts to draw in other matters to this debate, the purpose of this bill warrants some time and some analysis and some statement about the importance of this bill because of the importance of the Farm Management Deposits Scheme.

I represent the electorate of Pearce, which is a 14,000 square kilometre electorate that has not only outer urban areas but also a very large part of Western Australia's Central Wheatbelt. It has a large farming community in broadacre agriculture as well as other agricultural pursuits, and the Farm Management Deposits Scheme has been a very, very important scheme for the people of my electorate. The improvements to that scheme that are contained within this bill are also going to be, likewise, very, very important to the people of my electorate. It has been said in some of the briefing papers that exist on this bill that the Farm Management Deposits Scheme is important because, and it is described in this way, 'an income from agricultural production is inherently subject to fluctuations due to variability of supply and demand', which is a fairly nice bureaucratic way of saying that farming is dependent on two things: firstly, the price of commodities, as is evidenced from month to month and day to day on the Chicago exchange, and, secondly, the weather. Farming depends on the weather, which in itself is quite undependable. An economist might describe the reason for the Farm Management Deposits Scheme as the fact that income from farming is lumpy. It surges and it hits troughs in various years depending on a range of things, but predominantly prices and weather as that affects your ability to actually produce the goods that you are selling at any given price.

There is probably no better illustration of those phenomena that create the lumpy cycle for income for farmers than exist in my electorate of Pearce. The WA Central Wheatbelt is a very significant part of agriculture in Western Australia, and indeed in Australia; it is some of the most productive arable land that exists in the country. In WA the grain industry is a major contributor to the agrifoods sector and to the entire Australian economy. The grains industry in WA is the largest agricultural sector in WA. Wheat is the dominant crop throughout the south-west. There are about 4,700 grain farms—primarily family owned and operated businesses—that produce on average 12 million tonnes of grain per year. Farm sizes range from 1,000 to 15,000 hectares. The value of WA grain exports in 2012-13 was over $3.1 billion with 70 per cent of that coming from wheat crops. So the value of grain exports from WA is $3.1 billion. It is a very, very large industry.

What is most intriguing about that industry is that, even in times where there have been droughts and adverse weather conditions, the ability of the industry to grow its productivity, even in short-term periods that have been inclusive of periods of drought and adverse weather events, has been very strong. Some of the data that suggests that is the case comes from the Australian Bureau of Statistics. Looking at Western Australia, and particularly the areas in my electorate of Pearce, from 2000-01 to 2004-05 there were two severe droughts in those five years. Notwithstanding that, the value of agricultural production in WA increased from $4,387 million to $5,149 million, which was a rise of 17.4 per cent and $762 million. There was considerable fluctuation in agricultural production from year to year over the period, but there was, as I noted, a 17.4 per cent overall increase. And that is in a five-year period where there were two droughts. What it does go to show is that even when there are very significant adverse weather events in a relatively short period of time, those weather events seem not to, in good arable land in Australia, affect the overall productivity of the industry. That is a phenomenon that is repeated throughout Australia and throughout Australian agriculture.

There is a very good Productivity Commission research paper called Trends in Australian agriculture. It notes that agriculture's share of the Australian economy has declined significantly from the turn of the century when it was around the 30 per cent mark. It is far lower than that now. But that is not a measure of the failure of the industry; it is a measure of its success. The dramatic increase in the productivity of the agricultural sector has facilitated the release of resources to other sectors of the economy. Like many modern economies, as the Australian economy has become more sophisticated over 100 years, the proportion of people engaged in agriculture has decreased but there has been a rapid increase in agricultural productivity. So, in that sense, the declining share of agriculture is a reflection of success rather than any systemic weakness. There has been a very strong inverse relationship between per capita income, GDP and employment share as accounted for by agriculture. That having been said, Australia's agricultural sector's share of output remains one of the highest in the OECD.

The decline in agricultural output is always a relative phenomenon. Real output in agriculture has increased around 2½ times over the four decades to 2003-04. Over the four decades to 2003, we have had a 2½-fold increase in agricultural production in Australia. That in itself is remarkable when you consider the very rapid decline in agriculture's share of the economy and the number of people engaged in agriculture. But what is absolutely remarkable about that 2½-fold increase in agricultural production is that it has occurred at a time when there have been dramatic shifts in the Australian climate for arable land, particularly in the south and the south-west.

Using the example again of my seat of Pearce, there has been a phenomenon in the central wheat belt which we dealt with at great length at the state government level where since the 1960s rainfall has decreased by 20 per cent. The south-west of Western Australia is prime arable land. This rainfall decrease since the 1960s is well documented. Yet, as some of these statistics have demonstrated, we have had radical increases in the productivity of that land while it has been subject to a 20 per cent decrease in rainfall. That has to do with many things—agricultural techniques, farming management, technology, hard infrastructure technology and technology applied to fertilisers, and the types of crops we are using.

Throughout this incredibly productive region of the central wheat belt, a region that has been productive since the earliest times of the colony, we have had very radical decreases in rainfall since the 1960s accompanied by radical increases in productivity. Inside that, there have been these short-term periods of five to seven years where there have been some very good years, some not so good years and sometimes some quite poor years. When that is smoothed out there has been quite significant growth in agriculture.

All that means that there is a particularly lumpy system of revenue for farmers. The Farm Management Deposits Scheme must be one of the better examples of successful policy—and it has bipartisan support in the House. To illustrate its success, you can look at the figures for the Farm Management Deposits Scheme's holdings at 30 June each year from 1999 to 2012. For my own state, in 1999 there were $32 million in such schemes and $463 million in 2012. For Australia, in 1999 there were $279 million in these interest-bearing accounts and $3,532 million in 2012.

The reason the schemes are so helpful for farmers is that the economic income derived from farming is of a lumpy nature. In addition, whilst the prices of commodities might change and weather variations will affect the nature of crop productivity year to year, the time that is available for a farmer to expend their labour on other income-gaining activities—non-farm income-gaining activities—remains relatively constant from year to year. If you are a farmer that has the ability to go out and derive an income of $80,000, $60,000 or $30,000 in any given year, the time that you have available to do that does not vary with commodity prices on the Chicago futures exchange or with whether or not it has been a good or bad year for agriculture. That is because often the same sort of effort is required in a drought for a minimal crop as is required in a very good year for a very good crop.

This piece of legislation, which had a large amount of bipartisan support—indeed its first drafting was under the previous government—is incredibly important for farmers. Being able to move money in and out of these accounts and being able to consolidate them without any taxation penalty is a massive benefit to farmers. Increasing the threshold from $65,000 to $100,000 is of incredible benefit to farmers. The take-up figures that I just cited from the National Rural Advisory Council report show that this scheme has become an integral part of the productivity of farming and making farming successful. The ability of farmers to go out and earn an income from other sources and effectively delay the tax payable on that income in bad years when they need to draw on that income means that we have been able to smooth out revenue sources for farmers in a very elegant, clever program that is now being substantially improved by virtue of these provisions—provisions which appear to have bipartisan support and which the farmers in my electorate will be very pleased about.

Matters which did not generate as much bipartisan support were mentioned by the member for Fraser. I just wanted to touch on three of those very briefly before closing out this contribution. Whenever it is the case that you have a budget, the first thing that most people do to try to suggest either the worthwhile nature of the provisions in your budget or their calamitous nature is to look at individual examples. The member for Fraser raised three or four at the beginning of his contribution and I wanted to just look very briefly at three of those—because if these are the best examples that you can provide to discredit a budget, they need some analysis.

The first was the notion of the assessment criteria changes that the government is proposing to the disability support pension. The member for Fraser mentioned a constituent who had a brain tumour and left us with the inference that that person is in jeopardy from the government's changes. That is patently ridiculous. The difficulty that we all understand with the DSP is this: at present, there are well in excess of 800,000 Australians on the disability support pension—that is, one in 15 Australians of relevant working age is on the DSP. The difficulty is not the people who have brain tumours and genuine difficulties. The difficulties are at the margins. Having some reasonable system of greater scrutiny and assessment for those margins is absolutely and fundamentally appropriate. In fact, I think it is beneath someone of the intellectual calibre of the member for Fraser to suggest that people with brain tumours are in jeopardy from this system.

The second example was a gentleman with crook knees who said that he would be lucky to manage to 60. What view did he take about Labor's change in the pension age to 67? He is still seven years short of that. What this goes to show is not that the problem cannot or should not be tackled—it must be—but that we have to change the attitude of employers to people in their 60s and leading up to 70. That is one of the reasons we have the $10,000 payment.

The third example—I believe her name was Sue—said that the co-payment might make her stop and think about her next visit to the doctor. Well, of course! When you have clear evidence that there is a level of overservicing, that is what you must do. The member for Fraser said that in his university years he agreed with a co-payment. There was another measure in this budget that he agreed with, but we will hear about that later. (Time expired)