NSW Farmers is calling for the New South Wales Government to champion the development of a risk management insurance market in Australia by implementing the recommendations of the 2017 Independent Pricing and Regulatory Tribunal (IPART) investigation into multi-peril crop insurance, including $40 million for rebated premiums, and to work with the Commonwealth and other jurisdictions to implement a national tax incentive scheme for farm income protection insurance products.
To encourage the development of a risk management insurance market in Australia, NSW Farmers calls for:
- reconsideration of the findings of the IPART and implementation of the recommended temporary rebate to encourage the development of a commercial farm income insurance market in New South Wales;
- better education of farmers, rural businesses, lenders, insurers and others about the potential benefits of farm income protection insurance to farm business’ operations; and
- engagement by the New South Wales Government with the Commonwealth Government and other jurisdictions to investigate the development of a national farm income protection insurance market, particularly through tax incentives.
The risks associated with farming continue to increase; the recent drought has highlighted the climate risks associated with agriculture and challenged even the most prepared farm business. Building greater resilience in the farming sector is essential to managing future droughts – risk mitigation products are available but they are expensive because the market remains underdeveloped in Australia.
NSW Farmers has long-championed a role for government to partner with the agriculture sector to develop a viable risk management framework for agriculture. Through farm income protection insurance products, for example, farmers can insure their future income based on long-term production, reducing reliance on government assistance in times of need and building their own business resilience. IPART’s report acknowledged the infancy of the domestic farm income insurance market and endorsed government assistance to more fully develop a functional insurance marketplace.
NSW Farmers believes that more can and should be done to explain the potential of farm income protection insurance to primary producers. IPART considered that the present high-entry price may reflect farmer uncertainty about the potential benefits of the products available, reducing the number of policy holders and leading to a higher premium.
A state-based rebate will encourage producers in New South Wales to consider farm income insurance products. However, we acknowledge that a longer-term solution rests in the development of a comprehensive, national approach to market development. We therefore call upon the New South Wales Government to champion the delivery of a national tax incentive scheme, of between 150 and 175 per cent, for farm income protection insurance products, and lead its development through the processes of the Council of Australian Governments.