Pressure escalates over dairy crisis response and backpacker tax delay

Shadow Agriculture Minister Joel Fitzgibbon accused his opposite number of being too slow to respond to the unfolding dairy crisis of recent weeks, following a visit to Victorian dairy country for stakeholder talks last week.

The Nationals leader has provided initial assistance including removing barriers on access to Farm Household Allowance, on May 5, for effected producers that he detailed in a letter to United Dairy Farmers Victoria President, Adam Jenkins.

But with the federal election campaign entering week two, the growing dairy crisis, coupled with deepening cynicism of the government’s inability to announce its plan to defer the tax on working holiday makers - that’s set to hit a flat 32.5 per cent rate on July 1 - is forcing rural MPs to lose patience and squeeze harder on cabinet ministers.

According to sources, a band of anxious government MPs, with electorates suffering the sharpest impacts of the snap milk price-cuts, have lobbied Mr Joyce to pull together an urgent assistance program but are not seeking direct financial subsidies.

It’s understood Victorian rural Liberal MPs Dan Tehan and Sarah Henderson, senior Nationals MP Darren Chester, SA Liberal Tony Pasin and Tasmanian Liberal MP Eric Hutcheson have accentuated their push for a relief package over recent days.

The Agriculture and Water Resources Minister is believed to be preparing to make an announcement later this week on a support program comprising dairy-specific Rural Financial Counsellors and concessional loans program.

Mr Joyce will visit various regions of Victoria in coming days to hold talks with local dairy farmers and industry representatives impacted by the crisis, where an assistance package is likely to be fine-tuned then revealed soon after.

It’s also set to include measures to strengthen the provision of information and services to help farmers make tough commercial decisions, in response to the financial uncertainty caused by Murray Goulburn’s abrupt decision to claw-back farm-gate milk prices following a sudden profit downgrade that other processors followed, like Fonterra.

The severity of the situation has been compounded by ongoing dry seasonal conditions for many producers facing reduced livestock feed supplies and huge cost increases for irrigation water.

Mr Tehan declined to comment on specific details of any federal assistance measures for the dairy industry that may be unveiled in any package this week.

But he said all Coalition MPs had been working “around the clock” to ensure federal and State governments “play their part” in assisting dairy farmers “at this extremely difficult time”.

The Australian Securities Investments Commission has also moved to investigate Murray Goulburn’s recent activities and market disclosure statements while the Australian Competition and Consumer Commission has also launched an inquiry.

Mr Tehan has also pointed to a task force that has been set up to look at additional measures to support farmers that’s due to report in two weeks.

He said the lobbying MPs were also worried about escalating pressures associated with the pending backpacker tax increase that’s amplifying the dairy sector’s woes and has broader impacts on the farm sector’s viability.

Other government members from agricultural producing regions have expressed concerns the government has not yet announced its formal position and clarified whether the tax increase will be deferred six months while a review is held.

One senior government member said Treasurer Scott Morrison already had a ready-made solution – which cabinet rejected ahead of the federal budget – that could appease industry concerns about delaying any real solution via another review.

That proposal, developed with input from the farm and tourism sectors, suggested the tax increase should be softened to 19pc and superannuation arrangements changed, to provide a $540 million cost-neutral budget outcome.

It’s understood some Coalition members remain hopeful that proposal is still a live option.

But Mr Joyce indicated another review was a more likely outcome, saying a delay was needed to ultimately provide legislation and a “fairer fit” on the visa arrangements.

He said he, the Prime Minister and Treasurer had been in close negotiations and would “come to a resolution”.

The Nationals leader also questioned Labor’s position on the tax increase which they supported after first being announced in last year’s budget, to create $540m to help fund policy initiatives in the Agriculture and Northern Development White Papers.

In response, Opposition deputy-leader Tanya Plibersek said that Mr Fitzgibbon had stated ‘we will deal with this in government’.

“Joel Fitzgibbon, our shadow minister has said that he'll work with the affected communities to make sure that they have the labour they need,” she said.

On the dairy crisis, Mr Joyce said he would start talking to milk processors and retailers about the price difference between a bottle of water and a bottle of milk that he believed was an “anathema”.

“I think it's incredibly wrong that water basically in a bottle is priced more than milk and I think we have to have a strong yarn to the retailers about this and basically ask them that if that they want to fix it, that would be great,” he said.

“If they don't then they ask the government to fix it which they always complain about - but that's an option that we can always keep up our sleeve.”

Mr Joyce said he’d already ensured regulations were changed so farm household allowance would give farmers in need up to $1000 a fortnight just “to keep groceries on the table”.

“We have concessional loans available and made sure that rural financial counsellors are also there,” he said.

“I will on Tuesday get down there and sit down with these people and have a yarn to them.

“I can completely understand the grief that they're going through and I want to make sure that we do whatever's in my power.”

Ms Plibersek said thousands of farmers needed government support including mental health services but it was “extraordinary” that Mr Joyce took credit when beef prices went up but was “missing in action” when milk prices dropped.

In response, Mr Joyce said, “I haven't quite heard what the Labor Party policy is on anything to do with agriculture, it's just like it's invisible to you, agriculture doesn’t exist”.

Industry groups led by the National Farmers Federation have vowed to campaign hard against the backpacker tax increase leading into the July 2 poll, warning it’s already impacting seasonal planting decisions as nervous producers fret on workforce numbers.

Asked about the backpacker tax issue on Saturday, Prime Minister Malcolm Turnbull said, “We’ve been listening very carefully to the concerns raised in regional communities about that change which of course comes in to effect on July 1”.

“We’ll have more to say about that in the future,” he said reflecting similar comments from Mr Joyce who said “watch this space” when touring Queensland last week.

Australian Greens agriculture spokesperson Senator Rachel Siewert announced her party was opposed to the backpacker tax due to unfair impacts on growers.

Senator Siewert said the government's backpacker tax was “a grab for revenue” that ignored impacts on farmers who rely on working holiday makers for key seasonal work but they will now look elsewhere, instead of Australia.

She said the government's proposed delay was “a cynical election move to delay the operation of the tax until after the election” and they should abandon the increase immediately.

“No one wins with the backpacker tax, farmers and growers need to attract workers and it serves as a disincentive to backpackers to work in the agricultural sector,” she said.

“Peak farming organisations reject this tax, as do the Greens.”

Independent Victorian Senator John Madigan said there were 143,918 working holiday makers between the ages of 18 and 30 in Australia on June 30 last year and most worked on farms, picking fruit and vegetables.

He said backpackers tended to take on jobs few Australians wanted like fruit-picking and their labour was essential to the national agricultural industry and their spending critical to the tourism industry.

“Unfortunately the forecast $540 million in extra revenue the tax will raise is based on a false economy,” he said.

“It assumes backpackers will keep coming in similar numbers even as we slug them with tax rates well in excess of what they pay in competing destinations.

“Quite clearly many of them will simply go elsewhere.

“The government’s proposal will kill the goose that laid the golden egg.

“It’s bad policy, plain and simple and will hit hardest our farmers who are already doing it tough.”

WAFarmers CEO Stephen Brown said there was no time for uncertainty as backpackers had already started making decisions.

“One week the State and federal governments are telling everybody that agriculture is the next big industry in Australia, the next they are stifling the ability for this to occur with this proposed tax,” he said.

“Clearly there is no time for uncertainty - now is the time to act, otherwise the future of the agricultural and tourism industries and the livelihoods of regional and rural communities will be very bleak indeed.”