Tax, fee fears dry up interest

ABOUT 200 Riverland grape growers have expressed interest in taking the Federal Government's $57 million small block irrigators exit grant to sell their water rights and rip out vineyards.

But Wine Grape Growers Australia executive director Mark McKenzie said exit fees and tax implications were preventing growers from seriously considering the deal.

Mr McKenzie said initial inquiries to Centrelink and the Riverland Response Centre in Berri showed about 200 applicants for the exit grant and a further 120 expressions of interest in the Murray Valley.

The Government's offer to irrigators on 15ha farms or less is up to $170,000 in taxable compensation, training and plant removal grants to exit irrigated farming but to continue living on their property.

But growers are worried that capital gains tax for rights held for less than five years could bite into earnings.

Mr McKenzie said if the Government shared the cost of exit fees that growers would have to pay for giving up their water rights, more would consider the deal.

Riverland Wine Grape Grower Association executive director Chris Byrne said the arbitrary 15ha cut-off "discriminated against many vulnerable growers".

Mr Byrne also said market water prices did not reflect the Government's permanent removal of irrigation water from the system, adding the price was a fire sale deal offered by a distressed seller.

Federal Agriculture Minister Tony Burke is due to meet Riverland producers and industry representatives on January 5 to discuss the exit scheme and other water-related issues.