In Canberra on Monday Shadow Treasurer, The Hon. Chris Bowen MP outlined the opposition’s plans for the budget. In his address there was neither a mention of the words farming nor agriculture...
Speaking to an audience at the National Press Club, the shadow treasurer Chris Bowen placed no focus on cutting Government spending, or even slowing spending as a means to budget repair.
There was, however plenty of mention of raising taxes through various means.
On both sides of politics the rhetoric around ‘savings measures’ has been twisted. Removing or reducing tax deductions are NOT savings measures. They are tax increases, plain and simple.
The focus on tax increases as the path to Budget salvation from both sides is concerning.
The main difference between the Government and the opposition’s approach is that Labour propose to make the income tax system more progressive by raising tax rates on higher earners more aggressively. But at what cost to our competitiveness?
The word ‘competitiveness’ did not feature once in Mr Bowen’s address nor in the opposition leader’s budget reply speech. Farmers’ ability to maintain and grow their productivity relies on their ability to compete in international markets and this is a definite blind spot on the opposition’s radar. For farmers, as NFF have said many times every cent counts!
Mr Bowen was asked whether he would retain the recently legislated tax cuts, including company tax cuts for small business and the tax discount for unincorporated businesses. He gave no commitment to do so - he showed no concern for the small business relying on tax cuts, including the 150,000 businesses in the agriculture sector, 96 per cent of whom have a turnover of less than $2 million.
In his address Mr Bowen made it clear that the ALP would introduce an emissions intensity scheme for the electricity generation sector. The Government has ruled that out but has also not allocated any additional funding for the Emission Reduction Fund.
However the opposition remains committed to an unrealistic target share of 50 per cent renewables by 2030. This ‘picking winners’ mentality in relation to renewable generation technologies almost completely destroys the benefits of a ‘technology neutral’, market-based approach to meeting climate change targets.
Regional infrastructure, commitment to the instant asset write-off for small business, the Regional Investment Corporation…these were all things the NFF applauded in the Budget. We’re none the wiser as to where the ALP will land on these issues. NFF will be watching closely and advocating loud and hard on these issues.
The opposition leader, the Hon. Bill Shorten MP said he wouldn’t support $162 million in spending to renegotiate the Trans Pacific Partnership – NFF remain committed to seeing the TPP come into force as we believe there are still significant benefits for Australian agriculture and the issue is a potent symbol of our national commitment to free trade in an increasingly protectionist world. We’d be concerned if the ALP turned their back on their proud record on trade liberalisation over successive decades.
On Monday, former Treasury Secretary Ken Henry gave a stirring interview to the Australian Financial Review and belled the cat on both sides of politics and their commitment to ‘budget surpluses over the economic cycle’.
Dr Henry said we would be lucky to achieve even one budget surplus in this current economic cycle, let alone a string of surpluses to offset the string of large deficits that are driving up our government debt and pushing our interest payments on those government borrowings to more than $20 billion in 2020-21 – the year when that elusive surplus is projected to materialise.
Between now and then, that’s nearly $73 billion in interest payments that the Commonwealth Government can’t use to address our infrastructure woes or devote to improving the lives of ordinary Australians, including farmers.
The shadow treasurer nailed one of the problems – the use of overly optimistic economic forecasts that are controlled by the government of the day.
He committed to removing the macroeconomic and fiscal forecasts from treasury and giving the independent Parliamentary Budget Office that responsibility. The NFF will be watching for follow through on this commitment whenever the ALP returns to office and we urge the Coalition Government to do the same.
Scott Kompo-Harms is the General Manager of Trade and Economics at the National Farmers' Federation.