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Budget must not fuel Australian dollar, say farmers

9 May 2011

Budget must not fuel Australian dollar, say farmers

The National Farmers’ Federation (NFF) will closely scrutinise tomorrow’s Federal Budget to ensure that it does not inject further upward pressure on the Australian dollar, in doing so eroding farm incomes and removing opportunities for rural and regional Australia.

“It is becoming clear that there will be a significant deficit in this budget. It is therefore essential that the Government avoids measures that fuel consumer spending and lift discretionary demand, taking the Australian dollar beyond the ‘death zone’ for our exporters. What is required are measures that build economic capacity,” said NFF President, Jock Laurie.

“The Australian public needs little reminding of the extent of Australian farmers’ exposure to international markets and therefore the pressures of the dollar on agricultural commodity prices.

“Every one percent increase in the value of the dollar is estimated to shave off $210 million dollars from Australian farm incomes. With the Australian dollar appreciating by a staggering 55% in the last two years, this factor has clearly been the single greatest enemy of the agricultural sector, removing somewhere in the order of $11.5 billion in net farm incomes.

“No sector of the economy feels the brunt of a strong dollar more than agriculture.

“The warning signs about the strength of the dollar have been around for some time and we hope that the Government will take heed of these in the Budget.

“It has also been patently clear that with inflation, interest rates and the dollar all showing worrying signs for Australia’s trade dependent economy, any Federal Government spending needs to be focussed on building capacity within our economy and easing the inflationary pressure.

“This includes areas such as infrastructure works and research and development that bolster productivity growth without an inflationary effect on the economy. Tomorrow’s announcement also needs to include investment in urgent, non-inflationary measures such as securing Australia’s pest and disease free status and measures to ease the pressures on natural resources, particularly water.

“The farming community shares the concerns of other trade-exposed industries about implementing a carbon tax in an environment where the high Australian dollar is already well and truly biting. The NFF will strongly oppose any mechanism that adds further, unnecessary pressure to farmers’ ability to compete on domestic and international markets. In particular, the treatment of transport fuel and primary food processing are major concerns and their inclusion in any scheme would fall into the category of being a regressive tax on agriculture and regional communities,” Mr Laurie said.

[ENDS]

Media Contact: Matt Linnegar on (02) 6273 3855 or 0408 448 250

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