Farmers assess tax repeal

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Jenne BrammerThe West Australian
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Farmers are assessing the impact of the tax repeal on their bottom line.
Camera IconFarmers are assessing the impact of the tax repeal on their bottom line. Credit: The West Australian

The State's farm lobby groups remain divided about the payoff for agriculture after the repeal of the carbon tax.

WAFarmers strongly opposed the carbon tax since it was proposed by the previous Government due to the negative impact on farmers' bottom lines.

However, WAFarmers president Dale Park said although the removal would lower the input costs for agricultural production, the impact may not be as significant as anticipated.

"With WA dominated by broadacre faming, which had relatively low direct electricity requirements, the impact of the tax abolishment would not have a huge impact overall," he said.

"The benefits would be felt more within the dairy industry."

According to a statement released by the Australian Dairy Industry Council in June, the tax was adding an average of $1365 to the electricity cost of running the average Australian dairy farm, with some larger farms incurring up to an additional $6980 in costs.

Mr Park said if the Government was to be believed, the removal of the tax would result in big price reductions.

"However bear in mind input prices didn't rise as far as initially predicted, so there's less far for them to drop," he said.

Pastoralists and Graziers Association climate change spokesman Leon Bradley said the impact of the tax abolishment on farmers is more significant.

"The carbon tax had a huge knock-on effect, introducing unnecessary and crippling costs which affected the bottom lines of all types of farmers," he said.

"The tax was designed to be ratcheted up in future years so the impact would have continued to increasingly hurt primary producers.

"Currently we estimate that about 50 per cent of broadacre operations are non-profitable. I believe if the tax remained, then we could expect about 75 per cent of farms to be non-profitable in the future.

"Therefore the removal of this tax is a significant win for primary producers in WA. The repealing is positive for primary producers' balance sheets and will boost our international competitiveness."

PGA president Tony Seabrook agreed the move would remove unnecessary and crippling imposts on primary producers.

"The PGA was the first, and for many years the only farming organisation to openly oppose the introduction of an emissions trading scheme as it was not in the best interests of farmers and their industry, and we applaud the coalition on fulfilling their promise to remove this deceptive tax," he said.

"We remain however, somewhat dismayed that once again the Australian Senate is being held hostage by a cabal of independent Senators who are only interested in promoting their own political agenda, rather than listening to the concerns of their electorate."

Mr Park said while the removal of the tax was good news, he was concerned Australia now had no clear policy on climate change.

"The worry is that people will look at us as a wealthy country and wonder why we are not doing anything to address the issue," he said.

However, Mr Bradley was not concerned.

"No amount of government regulation, taxes or energy restrictions will change the temperature or weather in Australia or anywhere else on the globe," he said.

"There has been no statistically significant global warming for 18 years contrary to all the predictions made by the global warming activists."

State Treasurer Mike Nahan said the repeal, to be backdated to July 1, will cause electricity bills to fall by about 8 per cent, or $126 a year, for an average WA living within the South West Interconnected System.

The price of electricity for residential households in regional WA outside the SWIS is expected to fall by about 8 per cent or $267.34.

Dr Nahan said the tax was a burden on WA families.

"I am delighted that the Federal Government has succeeded in scrapping this ineffective tax," he said.

"Directly, the carbon tax was estimated to cost WA Government agencies around $60 million in 2014-15 due to higher prices for goods and services.

"WA businesses will also benefit from the abolition of the tax, including those in the mining and oil and gas industries that have driven much of the recent growth in the State's employment and household incomes."

Dr Nahan said he would immediately begin the process of making adjustments to tariffs through the law and gazettal process to reflect the repeal of the tax.

Treasury will continue to work with Synergy, the Water Corporation and the Public Transport Authority and other Government policy agencies to identify the impact of the carbon price repeal.

CARBON COSTS

The Federal Treasury has estimated the carbon tax would have cost an average household around $550 in 2014-15.

The Federal Treasury has estimated the removal of the carbon tax will reduce the national headline CPI by 0.75 of a percentage point.

Modelling by Federal Treasury demonstrated the tax increased prices across almost all areas of household expenditure, including electricity, gas, food, pharmaceuticals, clothing, housing, motoring, travel, health and education.

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