The Federal Budget handed down on 25 October 2022 is primarily about implementing the Albanese Government’s pre-election commitments, with the Government’s Plan for a Better Future policy document featuring significantly in the Budget Papers.
We also saw a fair amount of ‘new management’ changes, including re-branded programs and new programs funded by terminating or diverting pre-existing announcements.
Water projects
Funding has been cut from the Hells Gates Dam project, announced with much fanfare in the Coalition’s 2022-23 Federal Budget, released in the lead-up to the 2022 election.
Strangely, for such a significant infrastructure project, Federal funding was “committed” for Hells Gates Dam before the business case was completed. For its part, the Australian Labor Party, in the lead up to the election, committed to reviewing this project, and unsurprisingly the October 2022 Budget indicates that the Commonwealth Government wants this project to stay on the drawing board for some time yet.
Now, $32 million is allocated to ‘progress consultation and strategic planning with the Queensland Government for water infrastructure options in central Queensland and the Burdekin region’
Although $5.4 billion was given, and is now taken away, the fact that the actual expenditure was scheduled to arise in over a decade’s time means that, at least in dollar terms, this cut is academic.
Elsewhere on the National Water Grid, there is a deferral of funding for the Dungowan Dam and Pipeline, Emu Swamp Dam and Pipeline, Hughenden Irrigation Scheme and Wyangala Dam Wall Raising projects until these projects are further developed. Pleasingly, funding committed to the construction of the Paradise Dam in Queensland has been retained.
Water Markets
In a year of widespread flooding in Australia, attention is focused on the Murray-Darling Basin due to the sheer volume of water flowing through and beyond it. However, we must not forget that in more average years, water allocations from this basin are some of the most contested in Australia and have been a political football for some time.
This Budget funds water market reforms set out in the Water Market Reform Roadmap. Somewhat more controversially, the Budget also allocates funding toward meeting environmental water targets under the Murray-Darling Basin Plan – this means buying back significant volumes.
Unsurprising, given the likely eye-watering cost of buying back hundreds of gigalitres of water in the Murray-Darling Basin, the funding commitment has been deemed commercially sensitive and not published for either of these announcements.
Biosecurity
With Foot and Mouth Disease (FMD) and Lumpy Skin Disease (LSD) already present in Australia’s neighbours, it is not surprising that more than $134 million has been allocated over the next four years to reinforce Australia’s biosecurity capability.
In the short term, $14 million is allocated in this financial year to help Indonesia, Papua New Guinea, and Timor-Leste with their responses to FMD and LSD. This support continues with an additional $61.6 million earmarked to roll out over the following two years, which will also bolster detection and response capabilities in Northern Australia.
Funding is also allocated to on-farm biosecurity and the transition to a national livestock traceability system ($46.7 million over three years), and to funding more detector dogs at Australia’s entry ports ($11.7 million over four years, and $3.3 million per year thereafter).
Regional communities
The Growing Regions Program and regional Precincts and Partnerships Program receive $1 billion over three years from 2023. Under these programs, regional councils, and non-profits apply via an annual competitive grant process. If this seems familiar, that is because it is – the programs take the place of the Building Better Regions Fund and Community Development Grants program, in a clear sign of the Albanese Government putting its stamp on regional funding. Unfortunately, applications under Round 6 of the Building Better Regions Fund will likely need to be resubmitted.
In a similar vein, the Modern Manufacturing Strategy, under which several regional food processing businesses have already been funded, will be discontinued. A National Reconstruction Fund takes its place. Agriculture, forestry, and fisheries continue to be a sector focus for the National Reconstruction Fund, as it was for the Modern Manufacturing Strategy, but just $500 million is allocated to this sector from 2022 – 2027. Unlike grants under the Modern Manufacturing Strategy, the National Reconstruction Fund will provide money in the form of loans, guarantees and equity.
Round 2 of the Agricultural Shows Development Grant will not proceed (freeing up $14 million for FY23 and FY24), and uncommitted funding from round 2 of the Agriculture Shows and Field Days program ($2.8 million for FY23) has been ‘redirected’. Some of these dollars will surely be going toward the $12.3 million allocated over the next three years to regional trade events.
The Australian Agriculture Visa program has been absorbed into the Pacific Australia Labour Mobility (PALM) scheme. In this Budget, $67.5 million is committed over four years to expand the PALM scheme, including supporting employers’ investment in upfront costs. Primary visa holders on long-term placements will be allowed to bring partners and children to Australia, and those family members will be eligible for social support, including family assistance payments.
Connectivity
Pleasingly there is continued investment in improving mobile and broadband connectivity in regional and rural Australia. The measures funded in this Budget are those committed to before the election, and include:
- $20 million over five years for (another) audit of mobile coverage to ‘better identify black spots and guide investment priorities’
- $400 million to upgrade coverage black spots (presumably not those currently known, but those identified and approved by the audit)
- $30 million to fund the On-farm Connectivity Program to support farmers in improving connectivity across their operations
- $600 million to upgrade NBN connections to Fibre to the Premises
- $450 million to the NBN to upgrade and extend fixed wireless connectivity (although this appears to be the same funding announced in the March budget).
Ecosystem services
The next phase of Natural Heritage Trust funding has been announced in this Budget, constituting $1.1 billion to be provided over six years. The Natural Heritage Trust delivers funding to the National Landcare Program and was most recently funded by $1.1 billion over seven years in then Treasurer Scott Morrison’s 2017-18 Budget.
Notably, $302 million is earmarked to support the transition of the agriculture toward sustainable farming and land management practices, to build Australia’s climate and disaster resilience, and contribute to emissions reductions and improved environmental outcomes. It is expected that these outcomes will be delivered via programs administered by Landcare Australia.
Funding will be allocated over 5 years to employ and upskill up to 1,000 “Landcare Rangers”. Announced by the ALP pre-election, Landcare Rangers bear more than a passing resemblance to Joe Hockey’s ill-fated Green Army, albeit the Albanese Government will no doubt point to proper pay and conditions being a key differentiating factor. Landcare Rangers, it is expected, will be trained environmental specialists who can work with Landcare on land conservation and restoration projects. It is worth noting that when announced pre-election, the program was estimated to cost $75 million over the forward estimates; wage growth appears to have already been impacted, with $90 million now allocated.
The October budget did not announce major changes to Australia’s carbon markets. The Government is no doubt waiting to receive and consider the Chubb Review’s findings from its inquiry into these markets, which is currently in progress and expected to run through until 31 December 2022. $20 million is allocated to establish an outreach program to empower participation in carbon markets and to integrate low emission technologies and practices. Notably, more than $400 million has been stripped from carbon capture and storage projects
Natural Disasters
The Government will provide an additional $51.5 million in the current financial year to support communities impacted by natural disasters, including support for communities in Queensland and businesses in New South Wales affected by flooding in early 2022, and continuing support for Victorian communities affected by the 2019-20 Black Summer bushfires.
The Budget also includes a provision of $3 billion over the forward estimates to account for potential future costs of natural disasters.
BDO Comment
Overall, the October Federal Budget provides positive news for Australian food and agribusiness producers in the short to medium term. The Budget clearly states, ‘under new management’, and although there is rebalancing of expenditures, resulting in some programs being abandoned and others reshaped or rebranded, there does not appear to have been substantial economy-wider expenditure cuts that are likely to significantly impact the sector.
If you have any questions about what the Federal Budget means for you or your organisation, please contact a BDO adviser.