Progress towards reducing burdensome taxation on agricultural businesses continued recently with the Victorian Government planning to cut state stamp duty on agricultural insurance. This concise and considered move by the Victorian Government addressed one of the key deterrents to greater take-up of agricultural insurance, affordability.
By removing stamp duty on insurance against damage to crops, livestock and equipment, Victoria will be able to unlock the benefits that come with the sensible risk transfer from government to the commercial market.
The Victorian Famers’ Federation (VFF), National Farmers’ Federation (NFF) and the Insurance Council of Australia (ICA) all welcomed the announcement and hailed it as a pragmatic and common sense reform.
The Queensland Farmers’ Federation (QFF) is calling on the Queensland Government to deliver the same reform in this year’s Budget to make agricultural insurance products more affordable for farmers. Currently in Queensland, duty is charged on the premium (the total amount paid to the insurance company for the insurance) and GST, which is considered part of the premium.
QFF continues to highlight that modern agricultural businesses operate across state borders, so where practical it makes perfect sense to harmonise state regulations and taxes. Many insurance providers are global companies, so consistency across jurisdictions would also remove red tape compliance for them, which should result in more efficient and effective product development.
Recent disasters such as Tropical Cyclone Debbie and the associated Queensland floods serve as a poignant reminder of the current gaps in the agricultural insurance market and how adequate product offerings could help mitigate the financial impact of such events on farm businesses. The status quo once again exposed the government to the reality of another financially taxing disaster recovery obligation.
Working constructively with AgForce and our industry members CANEGROWERS, Cotton Australia and Growcom, QFF is progressing the development of suitable insurance products for a wider range of crops to provide additional risk management options for farm businesses. Providing farmers with increased access to affordable, tailored insurance products will help free up capital/finance. This will enable farmers to invest in climate adaptation and mitigation measures, rather than using limited financial resources to rebuild and recover from recurring damaging weather events.
QFF is working with global risk experts and reinsurer Willis Towers Watson, the University of Southern Queensland and the Department of Agriculture and Fisheries to explore and develop a realistic product that could satisfy all parties, especially farmers. Funded by the Queensland Government, the results of this collaboration are promising and will be presented at a Rural Press Club event later in the year.
The Queensland Government has already demonstrated that it is possible to get positive and important reforms with modest levels of investment when applied in the right areas when it removed stamp duty on the transfer of land for all types of succession as part of the 2016-17 Budget. Removing the inefficient stamp duty tax on agricultural insurance in the 2017-18 Budget would send a clear signal of intent and goodwill to the agricultural and insurance sectors. A continued collaborative effort will be required to realise a viable agricultural insurance industry – something that has the potential to benefit both farmers and the government and improve the financial stability of rural and regional Queensland. – Stuart Armitage, QFF President
