Certainty needed for water and tax
Jeremy Griffith, APAL General Manager, shared this update in the Winter 2026 edition of AFG.
The horticulture sector is facing growing uncertainty due to proposed tax changes and reduced access to water.
Water access needs to be prioritised for orchards: a review of the Murray–Darling Basin Plan
Australia produces the vast majority of its fresh fruit and vegetable supply domestically, with much of this production reliant on irrigation. The Murray–Darling Basin, as Australia’s largest source of irrigation water, is critical to national food security, affordability and the viability of many regional communities.
Reduced availability and greater reliance on temporary water markets are placing upward pressure on prices. Significant spikes in water prices will ultimately flow through to consumers, or be required to be absorbed by growers.
This is why calls to continue to ‘buy back’ water need to be considered carefully. The amounts that have been targeted are not trivial. To put it in perspective, the widely promoted target of 450 gigalitres represents enough water to irrigate all of Australia’s apples, pears, stone fruit, mandarins, table grapes and berries.
The answer is not to choose between environmental outcomes and food production. A balanced Basin Plan can deliver both, but it must better recognise horticulture as a strategic national asset.
That means prioritising infrastructure and efficiency measures before further reliance on water buybacks (which is also an extraordinarily expensive process that the taxpayer is funding). This means supporting investment in technologies such as drip irrigation, netting and soil moisture monitoring, while establishing clear drought planning arrangements that protect permanent plantings during critical periods.
Proposed tax changes
While water policy and tax policy are different issues, both have a direct bearing on long-term investment decisions. Growers make decisions over decades and require policy settings that are predictable and support future investment.
The federal government’s recent proposed changes have created considerable uncertainty, with many seeking professional advice to understand what the reforms may mean.
Farm businesses are not uniform. No two orchards are the same. They differ by ownership structure, debt levels, succession plans etc. As a result, changes to capital gains tax (CGT) arrangements and related business structures can have very different consequences.
The potential for unintended consequences is significant.
Pleasingly, and following strong advocacy from the agricultural sector, the government has announced proposed amendments to address some of these concerns.
In particular, the government has proposed increasing the turnover threshold for the small business 50 per cent active asset CGT concession from $2 million to $10 million. This is a welcome and practical step that is expected to extend eligibility to the vast majority of farm businesses.
However, this should not be taken to mean the broader reforms are fully understood or without risk. Industry’s primary concern remains ensuring that any final reforms do not discourage investment, complicate succession planning or create unintended consequences.
APAL will continue to work closely with the broader agriculture sector and government until all amendments are finalised.
This article was first published in the Winter 2026 edition of AFG.
