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Farm Writers' Association Post-budget breakfast, Sydney, 10 May 2000: address [2000-01 budget]

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The Hon Warren Truss Federal Minister for Agriculture, Fisheries and Forestry

Address to the Farm Writers' Asssociation Post-Budget Breakfast


Wednesday 10 May 2000

Thank you, Noreen for your introduction.

And thank you for the opportunity to address your association today. The 2000-01 Budget is my first Budget as the Minister for Agriculture, Fisheries and Forestry.

It is an important Budget for many reasons. In the case of my portfolio, the Budget consolidates the policy achievements made by the Coalition since 1996 — initiatives which have become part of the landscape for the rural sector.

More broadly, the Budget is overwhelmingly a Budget for the people living in rural and regional Australia — a Budget that invests in the education, health and other services of regional Australia.

Last night’s Budget clearly demonstrates the Government’s commitment to rural and regional Australia, particularly our determination to secure a strong future for the farming sector. In my portfolio there is an investment of more than $350 million in new funding for farming and the other industries that are the lifeblood of our rural communities.

As well, the Government has made major investments in our social and economic infrastructure in the regions — more than $1.5 billion in fact:

$562 million for a regional health care package; ● $240 million through the stronger families and communities strategy; ● a new fuel grants scheme worth about $500 million; and ● $131 million in easing access to youth allowance. ●

It is important to put this investment in its context. These are not isolated initiatives — they form a coherent long-term policy to develop the skills and strengths of rural Australia. The Government knows that, with the right assistance, Australians living outside the capital cities can overcome the pressures many are now facing.

Economic framework

Sound economic management is essential for the future of the whole nation.

Australia’s economic fundamentals have been restored through responsible management, reversing the explosion in Government debt under the previous Government.

The Government has made key overdue reforms in areas such as the taxation system and the labour market, long needed to secure the country’s future.

Because of Australia’s fundamental economic strength, Australia was able to cope remarkably well with the Asian economic crisis. Economic growth in Australia in the current financial year is expected to be around 4 per cent — a strong performance compared to other developed economies.

Economic growth in 2000-01 is expected to remain strong at 3.75 per cent. Australia has grown by more than 4 per cent a year for three years.

Inflation has risen slightly recently because of one-off factors — such as petrol prices — which have boosted the 'headline' inflation rate. However inflation is still within the Reserve Bank’s inflation target of 2 to 3 per cent.

Tax reform will also have a one-off effect on inflation. However, this impact will not last and the inflation rate is expected to settle back into the Reserve Bank’s target range.

The Government’s fiscal strategy remains on track with the Budget in surplus again this year — for the fourth year in a row.

The Budget cash surplus for 2000-01 is expected to be $2.8 billion with further surpluses of $3.2 billion in 2001-02, $8.8 billion in 2002-03 and $14.4 billion in 2003-04. The Commonwealth should be debt free by 2003-04.

By June next year, we will have paid back $50 billion in Labor debt in just five years — in marked contrast to Labor which increased debt by $80 billion over their last five years.

Debt reduction frees up money to be spent on more worthwhile purposes. Since 1996, we have reduced annual interest payments by $3 billion.

The Government’s fiscal record is all the more remarkable considering that the rates of income tax, company tax, wholesale sales tax and petrol excise have not been increased.

Budget surpluses are not an end in themselves — they are important because they boost our national savings and ease pressures in the capital market. Farmers and other businesses benefit from this downward pressure on interest rates.

While international changes in interest rates puts pressure on our domestic rates, we continue

to enjoy very low rates - in some cases, the lowest rates for 30 years.

Even after last week’s quarter of a percent increase in interest rates, a broadacre farmer with average debt will be paying $204 less per month than when the Government was elected in March 1996.

We also expect strong jobs growth - 650,000 new jobs have been created over the past four years. By June next year, unemployment is forecast to be 6.25 per cent.

Tax reform delivers immediate and substantial benefits to Australian farmers. The removal of the wholesale sales tax — which is embedded in the prices of many inputs farmers use — will significantly reduce business costs. This, together with the GST-free treatment of exports, improves the competitiveness of Australia’s rural exports.

The cost of diesel fuel for regional road and rail freight will fall significantly through the diesel and alternative fuels grants scheme and input tax credits for GST on fuel.

Personal income taxes will be reduced substantially. Seventy per cent of primary producers now taxed at the marginal rate of 20 per cent will benefit from the increase in the tax-free threshold and a lower marginal tax rate of 17 per cent.

Pensions, allowances and benefits will increase in real terms and rural families will gain from the package’s family initiatives. Family assistance alone will increase to $2.4 billion a year.

The amount of extra money in farmers’ hands will vary, of course, depending on the individual circumstances of the farmer.

But a recent independent study found that net disposable income would be expected to increase by more than $5,500 a year for a medium grazing business and more than $18,000 a year for a cropping partnership after the introduction of the New Tax System.

AFFA Budget initiatives

I will now turn to specific measures introduced in the 2000-01 Budget, in my portfolio.

We will deliver a $353 million boost over the next four financial years to Australia’s farmers.

The most important measure is the extension of the Agriculture - Advancing Australia (AAA) package. When this package was introduced by the Government in 1997, it delivered unprecedented support to the sector, focusing on measures to boost competitiveness, sustainability and profitability.

Other Budget initiatives include:

Protecting animal and plant health; ● Strengthening Australia’s quarantine defences; ● Tightening quarantine border protection for East Timor operations and the Sydney 2000 Olympic Games; and ●

Developing systems to ensure accurate identification of the origin of agricultural and food products as part of the national biotechnology strategy. ●

Agriculture — Advancing Australia

The Agriculture - Advancing Australia package was introduced in 1997 to replace a loose set of ad hoc policies patched together by Labor.

The AAA package has helped farmers to improve their business and risk management skills and to become more self-reliant. At the same time, the package introduced an effective safety net for farmers in financial difficulties.

The benefits delivered by these programs have been significant:

More than 45,000 farmers have improved their skills and training through the Farmbis and Property Management Planning programs; ●

The old Income Equalisation Deposits and Farm Management Bonds have been replaced by Farm Management Deposits, offering commercial interest rates on entire deposits; and ●

More than 4,000 farmers in financial difficulty have been assisted through the Farm Family Restart Scheme. The previous scheme of conditional loans, with high assets, was scrapped when we came to office.


The Retirement Assistance for Farmers Scheme has assisted more than 1,400 retiring farmers to pass on their farms to a younger generation while remaining eligible for the age pension.

Through the combination of the current and extended AAA programs, the Government will sustain the high funding levels first introduced with the AAA package.

The enhanced AAA package includes funding of $309.4 million over the next four financial years for a range of initiatives:

Amalgamating and widening the Farmbis and Property Management Planning programs; ● A new, two-year pilot program to encourage innovation and diversification; ● Farm growth through export growth to boost market access initiatives; ● Enhancing the Farm Family Restart Scheme; and ●

Maintaining the Retirement Assistance for Farmers Scheme until June 2001. ● Program elements of the Agriculture - Advancing Australia package ●

The FarmBis and Property Management Planning (PMP) programs will be amalgamated and extended to continue the advances made in business and land management training. FarmBis and PMP have been very successful in encouraging farmers to update their business and natural resource management skills.

An additional $167.5 million will be provided over four years.

The national component of FarmBis will be expanded from 1 July 2000 with funding support of $10 million. It will address major national issues such as industry adjustment, creating national and international supply networks, product quality and safety. It will also encourage increased recognition and participation of women and young people in our rural industries.

The new program will commence on 1 July 2001, with commercial fishermen becoming eligible from that date for the first time.

Farm innovation

The Government will introduce, at a cost of $18.2 million, a new, two-year pilot program to promote on-farm innovation and industry diversification.

The program will support and encourage farmers and farmer groups to adopt innovative production techniques and to explore the potential for diversification into new farming activities.

Farm growth through export growth

$6.5 million in funding will be provided to boost our efforts at opening up lucrative regional markets through bilateral negotiations.

Progress to date has created significant opportunities for producers - for example, the $69 million live cattle trade to Indonesia - but there are still regulatory and other technical barriers.

With this funding, we will intensify efforts to widen access to key Asia-Pacific markets, such as China and Indonesia, with Thailand also a major priority.

Farm Help

The successful Farm Family Restart Scheme will be enhanced and extended to provide extra welfare support to farm families in financial difficulty. The new program — to be known as FarmHelp — will continue to deliver welfare support for farm families, with a number of possible improvements being considered.

$111.2 million will be provided to FarmHelp to extend it to 30 November 2003.

Retirement Assistance for Farmers

The Retirement Assistance for Farmers scheme will be continued until June 2001.

Farm Management Deposits

The successful Farm Management Deposit (FMD) Scheme, which was introduced in the current AAA package, was estimated to provide farmers with $60 million of benefits over the four years of the original AAA package. This scheme will continue.

Other agriculture measures

Other key aspects of this year’s Budget for the agricultural, fisheries and forestry sector include:

Building a national approach to animal and plant health

To maintain our enviable reputation as a supplier of high quality, clean and green agricultural produce, the Government will invest $22.3 million over the next four years to improve current animal and plant health infrastructure. These funds will be used to strengthen surveillance, disease prevention and awareness and improve Australia’s emergency response capacity.

New technologies

While new technologies, such as biotechnology, offer great promise to cut farm costs and

improve the natural environment, some consumers have concerns about the use of such technologies. The introduction of gene technology regulations and a public awareness campaign is a start. The Government will provide $30.5 million over four years to implement a national strategy for biotechnology. This will include funding of:

$3.65 million for the agriculture portfolio to identify the requirements and costs of systems to trace the origin of Australia’s major agriculture and food products.

An industry-based committee will be established to guide the implementation of the program and to disseminate the results and market information.


The Government has already committed $76 million over the period 1 July 1997 to 30 June 2001 to strengthen Australian quarantine. This Budget includes an additional $8.5 million for quarantine border and risk analysis work in 2001-02 to ensure that recent gains are consolidated and extended.

Extra staff, detector dog teams and x-ray units at Australia’s airports, international mail centres, wharves and container terminals are all paying dividends. In 1998-99, seizures of prohibited goods and materials at the border were running at an annual rate of about 227,000. In the nine months to March 2000 improved techniques had increased seizures to 442,000. Surveys show that public awareness of Australia’s quarantine laws is increasing.

Of the import risk assessments completed between 1993 and 2000, 73 per cent were to allow Australian industry to obtain overseas products or genetic material. In the majority of other cases, the imports did not compete directly with Australian production due to seasonal differences or other factors.

East Timor

$1.9 million a year has been allocated to maintain quarantine integrity in northern Australia under the vastly increased traffic to and from East Timor.

Olympic Games

An extra $1.55 million in 2000-01 has been allocated for the Sydney 2000 Games to help the Australian Quarantine and Inspection Service deal with extra international passengers and air and sea cargo.

New horticultural arrangements

The Australian Horticultural Corporation and the Horticultural Research and Development Corporation will be amalgamated into a new company, Horticulture Australia.

Other portfolio measures

Other features supported in the Budget include:

A continuation of the food and fibre chains program; ● Funds to restore ground water pressure in the Great Artesian Basin; ●

Continuation of support for the Government’s Supermarket to Asia strategy; ● Funding for the northern Australia quarantine strategy; ● Continuing commitment to monitoring and implementing regional forest agreements; ● Continuing the plantations 2020 vision program; ●

Protecting Australia’s important sub-antarctic fishery from illegal fishing; and ● The development of an action agenda for aquaculture; and ●

Funding for Natural Heritage Trust (NHT) programs to promote and encourage sustainable agriculture and natural resource management (in 2000-01 $185 million will be provided through AFFA for NHT programs).

Non-portfolio Budget measures

Let me now turn to other initiatives that will assist rural and regional Australia

Rather than spreading resources too thinly on a broad front, the Government is concentrating its efforts on revitalising services in particular, vital areas of community concern.

Health is one of the greatest concerns of people living in regional Australia. In response, the Government has announced a new regional health strategy worth $562 million that will provide more doctors and better health services for the country.

More than $100 million will be devoted to increasing the number of GPs in regional areas. Funding of almost $50 million will be used to boost the supply of allied health services. Another $48 million will be spent to make specialist services more available. Pharmacists will also receive additional support.

9 new clinical schools will be established in regional areas to encourage country students to follow medical careers and to draw medical students to the country. Every Australian medical faculty will have a school in rural areas.

The Government will also create 100 new university places for medical students who enter a bond to practice in rural areas for at least six years. The students will be paid a scholarship of $20,000 a year for the period of their undergraduate training.

At least another 85 new regional health services will be established, at a cost of $69 million.

This focus on health does not mean that other areas have been overlooked. Education is an abiding concern for all Australians but people in the regions can face particular hurdles. The Budget addresses these problems by increasing assistance for isolated children [$16 million] and the assets test for youth allowance will be relaxed further [$131 million]. A country areas program will be introduced, at the cost of $20 million a year, to improve the quality of education in the bush.

Contrary to some claims, the Government is spending large sums on regional infrastructure.

Federal spending on roads totals about $859 million and 90 per cent of this will be allocated to non-urban roads. Also more than $406 million will be provided to councils for spending on local roads and another $41 million will be allocated to elimination of black spots on our nation’s


The Government will also spend $40 million (over four years) on strengthening bridges (other than the national highway system).

People living in regional and remote areas will benefit from improved television and datacasting services, thanks to $260 million to assist regional commercial television introduce digital technology.

This Government believes in local solutions for local problems. More than $37 million will be allocated to foster and promote young leadership in regional communities.

Also, a further $15.8 million will assist volunteers to build their skills, helping them to further develop their assistance to regional communities.


The Government is determined to provide Australian farmers with a pro-growth business environment and the right mix of Government programs to ensure a prosperous and sustainable agriculture sector. With this support, and their skills and resources, Australian farmers can look forward to the future.

I am strongly committed to the future of rural Australia — it’s my home. I will do everything I can in my power as Minister to support the people and industries living in our rural and regional areas.

Thanks again for inviting me to this meeting of your Association.

Last updated 12 May 2000