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Wednesday, 12 September 1973
Page: 925

Mr WHAN (Eden) (Monaro) - Because of various rumours and various interpretations that have been placed on the effects of the Budget on primary producers, particularly in regard to taxation concessions, I have gone to the trouble to have many of the points clarified by the Minister for Primary Industry (Senator Wriedt) and I should like to place them on record tonight. Firstly, the Budget has provided new credit facilities for farmers, particularly to keep farms together on the death of the principal, and also to provide funds for debt reconstruction. This money is available through the Commonwealth Development Bank.

The Budget changed a number of taxation concessions, particularly the capital expenditure that applies to depreciable items. In the past these items were subject to immediate depreciation in the year the expenditure was incurred. They are now deductible at prescribed rates based on the estimated life of these investments. There are 2 types of depreciation system - the prime cost method and the diminishing value method. There is a choice of the 2 methods. The items themselves can be deducted only by primary producers. The privilege does not apply to any manufacturer or other business person. Another type of expenditure which is incurred by" farmers involves non-depreciable items such as clearing, drainage and soil conservation. These previously were fully deductible in the year they were incurred. They are now deductible over a period of 10 years at 10 per cent per annum.

Mr Street - Mr Speaker, I rise on a point of order. I seek your ruling. The honourable member for Eden-Monaro is referring to various matters regarding which I have placed a question on notice to the Treasurer. It is question No. 832. Is it in order for the honourable member to refer to these matters in this debate?

Mr SPEAKER -I do not think any point of order is involved. If the honourable member asked a question during question time concerning a matter on which a question was on notice he would be out of order. I do not think the honourable member is out of order in referring to these matters during this debate. I do not know whether the honourable mem ber for Eden-Monaro has perused the question on the notice paper and is using them for his benefit.

Mr WHAN - I have risen during this adjournment debate tonight because there is great confusion among the farmers in my electorate and I am sure among other farmers. This clarification is necessary. I have gone to the trouble of establishing the facts. Indeed, the mechanism I have used was available to anybody who cared to do likewise. I intend to continue my remarks in order to clarify the position. Expenditure on non-depreciable items which are involved in capital investment in clearing land, as I have mentioned, is deductible over a period of 10 years. Expenditure incurred in the maintenance of farm facilities is deducted in the year of the expenditure. Such expenditure might include the removal of suckers in a paddock. The acceleration depreciation, which involves expenditure on plant and structural improvements, was previously subjected to a depreciation rate of 20 per cent. This has now been brought into line with other business practice and such expenditure is depreciated at rates prescribed by the Commissioner of Taxation. For example, there is a 15 per cent depreciation rate for vehicles. The question of accelerated depreciation has now been brought into line with other business enterprises.

Double deductibility for properties has been removed. One of the fundamental objectives of the particular reforms carried out in the Budget is to make it difficult for people to speculate in the development, improvement and resale of farm land. Double deductibility previously allowed a purchaser of land to deduct in the year of expenditure the money spent on its development and then when the land was subsequently sold to deduct again the same amount of money. This second deduction has now been removed and the original investment is depreciated over time in accordance with normal business practice. The investment allowance of 20 per cent over and above the normal deduction rate has been withdrawn in the 1973 Budget. This allowance applied not only to primary producers but also to manufacturers. It has been withdrawn for all parties.

There has been also a very serious misrepresentation of the comments of the Treasurer (Mr Crean) in relation to deductibility of rates. Among farmers there is a widely held view that they are included in the limit of $300.

In his Budget Speech the Treasurer specifically mentioned that householders' private property would be subject to a limit of $300 for rates deductibility. Many farmers have questioned whether this limit applies to their farm operations, but this is not so. The limitation is only on private residential land and not on property from which income is derived. Special privileges have been extended to the farming community and the spirit of these privileges has been maintained in the $20m allocated to rural credit. This money will be available through the Commonwealth Development Bank. One privilege, which has long been enjoyed by the farming community, concerns income averaging over a 5-year period. This remains and is reinforced by the Government's intention to develop long term credit for the agricultural sector. Privileges previously established for estate duties and sales tax exemption on non-alcoholic beverages containing wholly Australian fruit or vegetable juice also remain unaltered.

It has been necessary to develop these particular points, most of which were clearly enunciated in the Treasurer's Budget Speech and which could have been deducted quite easily from that Speech, because they have been misinterpreted by members of the Opposition as they have gone about the countryside. There has been a clear and demonstrable attempt on the part of the Opposition to confuse rather than to clarify the position for the farming community. Members of the Opposition have chosen to capitalise on change, which involves considerably less in respect of a reduction in assistance than was true of the previous Budget. Honourable members opposite have chosen to capitalise on the confusion which they have created and aggravated. I feel that it is absolutely essential to clarify these changes in the approach to the rural sector in order to remove the confusion created by the Opposition.

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