Farmonline Blog

AGRICULTURE sector leaders breathed a sigh of relief on Tuesday night when their worst nightmare – the abolition of the diesel fuel rebate – did not appear in the Budget.

I didn't believe it ever would. The policy principles which underpin the rebate are too sound. But even more importantly, it would have been political suicide.

No, the rumour about the rebate was a teaser, something to give agriculture something to be happy about on Budget night.

You can hear the conversation; “fuel tax up, health costs up, education costs for the kids up, family benefits cut, Landcare cut, but don’t worry, we still have the diesel fuel rebate!”

Yes, farmers are people too. And they live in rural communities which face everyday challenges not imagined by their city cousins. When fuel taxes rise it hits these already challenged communities harder because transport costs dictate that these tax increases become embedded in everything they buy, including their food.

In the cities where GPs are plentiful and competition strong, bulk-billing services are easy to find. But in the bush the story is quite different. In rural and regional communities, GPs are too often in short supply and GPs are far more selective about who they offer bulk-billing services to. Measures taken in the Budget will make that situation worse.

And watch for the impact on rural Australia of the Abbott Government’s decision to reduce its share of hospital and education funding. Amongst other things, state governments will look to smaller rural communities first when forced to rationalise their services.

But it gets worse.

The withdrawal of Commonwealth funding is a cleverly designed plan to starve state governments of money and in turn, push them to the desperate option of requesting an increase in the GST.  Yes, the GST, that tax which hits rural and regional Australia harder because it’s applied to goods which have a higher pre-GST cost because of the impact of transport costs.

Ten per cent of $20 is more than 10pc of $18 and while 20 cents doesn’t sound like much, each additional cost of each transaction adds up.

It’s popular in some quarters to push people off the dole but watch for the pain in rural Australia where jobs are harder to find. “Ah,” you say, “the government will make them travel to where the work is”.

Let me tell you about a phenomenon known as “dynamic decline”. A rural community loses an industry, let’s say the local abattoir. Or maybe drought or other adverse conditions have forced lay-offs across a number of farms with knock-on affects for local farm supplies businesses.  Those fit, capable, and willing to work leave the town leaving behind the elderly and least employable. The vibrancy and economic health of the town declines and the process repeats itself until the only people left are those who can’t work.

Is this Tony Abbott’s vision for rural Australia?

“Come on”, I hear you say, “surely the conservative government did something for agriculture in the Budget?”  Yes: an additional $100 million was allocated to research and development. But it will be spent over four years and will be offset by cuts in other research areas including the Rural Industries Research and Development Corporation and our Co-operative Research Centres and the CSIRO.

Like the pension and family support cuts, these funding reductions are designed to address the so-called “Budget emergency”. The problem is, there isn’t one.

The Australian economy is the envy of the world; low debt, relatively strong growth and a AAA credit rating.

That was just a ruse to justify broken promises. The consequences will be acute, but nowhere more than in rural and regional Australia.

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