Federal Budget & South Australian Dairy Farmers
27 October 2022
Federal Budget & South Australian Dairy Farmers
The Federal Treasurer, Jim Chalmers, brought down the Labor Government’s first full budget for the year 2022 -2023 this week. For a comprehensive breakdown of the budget from a national rural perspective, please note the analysis provided by Craig Hough from ADF attached.
The Murray Darling Basin Plan
The most contentious matter from a SADA perspective are the announcements regarding the Murray Darling Basin Plan. There is concern amongst up-river jurisdictions about a ‘not for publication’ figure against a Murray Darling Basin Plan announcement. The reason given is that this spending is ‘not for publication’ is to avoid distortion of ‘the market’.
The concern is that this will be the next tranche of water buy-backs. SADA’s water policy, recently endorsed and supports the Basin Plan’s implementation and specifically the outcomes that it is to deliver. Some farmers have expressed concern that this is the Government positioning itself to buy back water entitlements as indicated by both SA and National Labor prior to this year’s elections and the commitment to rolling out the 450 GL.
This does not appear to be the case. There are two issues to remember, firstly, the arrangements relating to the 605 GL which are Supply Projects which upstream states such as NSW are handsomely failing to achieve but where South Australia is relatively well positioned, and secondly the 450 GL which relates to Efficiency Projects.
Key points
The Commonwealth could immediately use buybacks to recover the unresolved 340GL of the 605GL Sustainable Diversion Limit Adjustment Mechanism (SDLAM) projects. Buybacks for this water are already allowed for in the Water Act. SA has been largely compliant with its obligations relating to the 605 GL and its commitment to the 605 GL are substantially being complied with, with only one project considered to be at significant risk (June 2022)[1]. By comparison NSW has multiple projects that are at high or extreme risk of non-compliance.
So far, the Commonwealth has indicated that that buybacks could be avoided if alternate projects can be found for a package that will go to Ministerial Council in February 2023. The law currently requires that the 450 GL projects are subject to a social and economic test that requires either neutral or positive social and economic outcomes for a project to proceed.
Key issues
Dairy Farmers in other states, as well as primary producers more generally, will focus on maintaining the social and economic criteria for the 450 GL recovery and it is expected that farmer organisations will also push for alternatives to the 605 GL for the package for the Ministerial Council.
Other matters from an SA perspective in the Budget
From a South Australian perspective, the Federal budget offers:
- $460 million for the South Australian component of the Freight Highway Upgrade Program, including the Dukes, Stuart and Augusta highways.
- Additional funding for biosecurity preparedness and response.
- Regional connectivity has received a welcome boost, with the Government providing $757.7 million over 5 years from 2022–23 to improve mobile and broadband connectivity and resilience in rural and regional Australia. SADA working with PPSA will continue to strive to have as much of that income spent in SA as possible.
- The Federal Government is eager to invest in Carbon Farming and Carbon Capture technologies, with the goal of achieving “net zero and negative emissions”, allocating over $160 million to these areas. SADA is currently working on a project that will support carbon and methane technology. Additional to specific carbon and emissions programs a program and incentive to support uptake of low emissions technology has been announced.
Finally, the budget also expects that there will be a peak in Australia’s inflation rate of 7.75 percent in December 2022. This will have a noticeable impact on farm costs. Part of the rise in costs will be a substantial impact on energy costs arising from the war in Europe and the impact of Quantitative Tightening (after several years of Quantitative Easing) and Interest Rate manipulation by Central Banks, including the Reserve Bank of Australia.
ENDS
[1] Notably SA’s target for its contribution to the MDBP to recover 131.8 GL. By June 2022 SA had recovered 141 GL (surface water).