25 May 2012

Budget pleases Fed Farmers, but not HortNZ

1:27 pm on 25 May 2012

Federated Farmers is supporting the general thrust of the Government's economic measures as set out in the Budget on Thursday but the horticulture industry feels let down by the lack of funding to bolster biosecurity.

Federated Farmers president Bruce Wills says he's pleased with the Government's focus on cutting spending.

"One of the key things we have called for particularly, for many years, is for Government spending to be capped over time at 30% or under of GDP, so we have seen that request being pursued, and we particularly support the Government's intention to have a surplus Budget by 2014/2015."

But Mr Wills says farmers and their accountants will need to take note of measures in the Budget to close a livestock tax loophole.

The new rules, signalled earlier this year, mean farmers can no longer elect to switch from one livestock valuation scheme to the other, which had allowed for market valuations to go untaxed.

The Government estimates the change will save about $184 million in potential revenue losses, over the next four years.

Previously farmers could choose to value livestock under the herd valuation scheme or the national standard cost scheme, and change schemes at will.

Mr Wills says the change has been driven by misuse of the scheme by some farmers, who would switch from one scheme to another to avoid paying tax.

He says, however, that Federated Farmers does want sharemilkers to be allowed to switch cost schemes as they downsize their herds to move into farm ownership.

The Budget action is retrospective, so all livestock valuation switches since August 2011 are void.

Biosecurity concern

Horticulture New Zealand says it's disappointed the Budget made no mention of biosecurity.

President Andrew Fenton says the discovery of a pest fruit fly earlier this month should have meant more funding for border controls, but the Government has missed its opportunity.

"Growers will be angry about this. We've made it very clear to the Government; they've had an excellent opportunity to address the issues of biosecurity after the fight we've all had over the past 10 days in Auckland with the fruit fly find."

He says all growers were looking for was "south of $5 million" for biosecurity, to make 100% X-ray mandatory at all points of entry, and increase the funding for detector dogs at points of entry.

Mr Fenton says he will be meeting Minister for Primary Industries David Carter, to continue that campaign.