Growers in Victoria and New South Wales have welcomed the move by their state governments in removing some of the crop and livestock insurance duties once imposed on the sector. Many growers in these states will now be able to purchase specialised crop insurance solutions they previously couldn’t afford due to onerous taxes.
However Queensland, Western Australia, South Australia, Tasmania and Northern Territory agribusiness haven’t been as lucky, with growers calling for the removal of similar duties.
Adequate insurance allows growers to continue doing what they love: feeding the world.
Our national extent of insurance duties
The New South Wales Government announced that it would remove stamp duty on crop and livestock insurance effected or renewed on or after 1 January 2018.
This measure was one of many changes the state government has made to make things easier for professionals looking to manage unique risks with private insurance. Small businesses with an annual turnover of $2 million or less were also given exemptions for various insurance products including commercial vehicle insurance and product liability insurance.
From 1 July 2017, Victoria established duty exemptions from insurance for: Livestock, Agriculture machinery and Crops that are grown, harvested or stored
Specifically, they’ll be lifting the duty on multi-peril insurance solutions.
Throughout Australia, insurance duties vary greatly by state:
- New South Wales: 2.5 per cent (0 per cent from 1 January 2018)
- Victoria: 10 per cent (0 per cent)
- Western Australia: 10 per cent
- Queensland: 9 per cent
- South Australia: 11.5 per cent
- Tasmania: 10 per cent
- Northern Territory: 10 per cent
Although many of these states grant exemptions for other insurance purchases including insurance on vessels used for commercial purposes, merchandise purchased from overseas, health and life cover, agriculture is left behind.
How insurance duties hurt Australian growers
Drought, fire, floods, hail and many other natural threats can completely wipe out a growers crop, leaving them with nothing to sustain themselves.
The only way for growers to manage risk is to purchase sufficient multi peril and specialised crop insurance solutions.
The risks are unavoidable, and the only way for growers to manage them is to purchase sufficient multi peril and specialised crop insurance solutions. Unfortunately, this is out of reach for many growers due to excessive duties.
Examine a crop insurance policy that costs $50,000 annually. In those states with 10 per cent insurance duties, this would be a $5,000 expenditure. In South Australia, growers would be forced to pay $5,750 and in Queensland $4,500.
Rather than front the cost, many growers take the risk and either purchase insufficient insurance or go without coverage at all. This is particularly true for family growers who have much leaner budgets than larger operations.
Inhibiting growers from purchasing private insurance cover seems ludicrous, particularly because when disaster strikes the uninsured, it’s taxpayers who end up funding expensive government bailouts to get agriculture back on its feet.
According to South Australian opposition agriculture spokesman David Ridgway, “Growers take the burden off taxpayers in a drought [with multi peril policies]. It seems a bit of a no-brainer to exempt stamp duty.”