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CONTENTS
Farm Household Support Amendment (Restart and
Exceptional Circumstances) Bill 1997
Date Introduced: 2 October 1997
House: House of Representatives
Portfolio: Primary Industries and Energy
Commencement: Royal Assent
To establish the Farm Family Restart Scheme and the Exceptional
Circumstances Relief Payment for farm families.
The Farm Family Restart Scheme (FFRS) was announced on 14
September 1997 as part of the Government's integrated rural policy
package entitled Agriculture - Advancing
Australia.It is described there as 'the Government's key
program for delivering improved welfare support to the farm sector,
as well as providing adjustment assistance to farmers who wish to
leave the land'.(1)
It is intended that the FFRS will begin operating on 1 December
1997, providing a welfare safety net for low income farmers
experiencing financial hardship who cannot borrow further against
their assets and/or who are not ready to make a decision to place
their farm on the market and access welfare support under the
Social Security hardship provisions.
It is further intended that the FFRS will operate as a 'decision
support system' for farmers considering leaving the industry by
giving them access to professional advice on the future viability
of their business and on employment opportunities if they choose to
leave the farm.
The key features of the scheme will be:
- income support paid at the Newstart Allowance rate (with a
partner component where applicable).(Currently for a single person
with no children, the maximum payment per fortnight is $321.50.For
a couple with children, the maximum fortnightly payment to each
partner is $290.10).(2) This payment will be available for a
maximum period of twelve months;
- recipients will not have to satisfy an activity test and will
not have to put the farm on the market to obtain assistance;
- recipients will have a binding obligation to obtain
professional advice on the future viability of the business, and
career counselling where appropriate.Financial support will be
provided to help recipients meet this obligation;
- access to a re-establishment grant of up to $45,000 on the sale
of the farm.This will only be available to farmers who enter the
scheme during its first two years of its operation; and
- the value of any income support used by the recipient will be
deducted from the re-establishment grant.This is intended to
provide an incentive to farmers to leave sooner rather than later
in order to retain a larger grant;
- the re-establishment grant will be subject to an assets
test.Farmers may have up to $90,000 in assets to qualify for the
maximum grant.The re-establishment grant will phase down by $2 for
every $3 in assets above the threshold;
- farmers who have been on the scheme for less than six months
and withdraw will be eligible to apply to rejoin the scheme, to
complete their twelve months.Farmers who withdraw from the scheme
after six months will not be able to rejoin.
Comparison with the Farm Household Support Scheme (FHS)
The Farm Household Support Scheme came into operation in March
1993.It was intended to support those farm families who were unable
to access commercial finance by providing income support for
day-to-day living expenses.Since October 1993 demand for Farm
Household Support (FHS) fell so that, by the end of 1995-96, the
number of families being supported was less than fifty.In 1995-96 a
total of $959,000 was spent on FHS.(3) The FHS was terminated in
May 1997.(4)
The Farm Family Restart Scheme differs from the previous FHS is
a number of ways, including:
- farmers do not have to sell their farm in order to gain
assistance;
- they have an obligation to obtain financial advice, and career
counselling where appropriate;
- the FFRS payments are paid as a grant, not as a loan; but
- any amounts paid will be deducted from the re-establishment
grant, should the farmer decide to leave the farm.(Under the FHS,
farmers who sold their property within two years had the first nine
months of the FHS payments converted to a grant.Farmers who sold
their farms outside the two year period, or farmers who did not
sell their farms, had to repay the whole amount of FHS); and
- the value of assets which the farmer may have and still qualify
for the maximum re-establishment grant has been increased from
$45,000 to $90,000.
This Bill also introduces the Exceptional Circumstances Relief
Payment (ECRP).It is similar to the current Drought Relief Payment
(DRP) and will be available to eligible farmers in declared
Exceptional Circumstances. The Bill does not define 'exceptional
circumstances'.However, in his second reading speech the Minister
for Primary Industries and Energy, Hon John Anderson MP, said
that:
(t)he exceptional circumstances relief payment gives recognition
to the fact that there are exceptional circumstances which are
beyond the scope of normal farm risk management strategies.It will
be available to farmers suffering financial hardship as a result of
rare and severe events including, but not restricted to, extreme
drought.(5)
This will be similar to the Exceptional Circumstances (EC)
provisions of the current Rural Adjustment Scheme under which the
payment of interest rate subsidies is possible, in exceptional
circumstances, for other than severe drought.For example, in 1993
payments were made to farmers in southern Australia whose crops
were affected by heavy rain at harvest time while in 1994 EC
payments were made as a consequence of the decline in wool
prices.(6)
Requests for drought exceptional circumstances assistance are
currently assessed using a nationally agreed framework based on six
core criteria consisting of the threshold meteorological criterion,
agronomic and stock conditions, farm income levels, water supplies,
environmental impacts and scale of event.Under the threshold
meteorological criterion, it must be established that the event for
which assistance is sought is of such severity that it only occurs
once in every twenty to twenty five years, and last longer than
twelve months.(7)
DRP will continue as a transitional arrangement.The ECRP will
replace the DRP when this Bill receives Royal Assent.
The DRP is (and ECRP will be) an income support payment
equivalent to the Newstart Allowance (including partner allowance
where applicable).It is subject to an income test and an off-farm
assets test.Eligibility for DRP also qualifies farm families for
special access to a Health Care Card and Family Payments, and the
exemption of farm assets from the Austudy assets test.The length of
time that a farmer can receive this payment will be determined on a
case-by-case basis, according to the nature of the declared
exceptional circumstance.A twelve month recovery period will
continue to apply for exceptional drought.
The effect of Item 17 is to limit claims for
restart income support to four years from the scheme's commencement
date, and to limit applications for re-establishment grants to two
years from the scheme's commencement date.
Item 24 sets out the eligibility criteria for
restart income support.
Who qualifies for restart income support?To
qualify for restart income support a person must be:
- a farmer
- at least 18 years of age
- an Australian resident
- in Australia
- a farmer for a continuous period of two years immediately
before they apply; and
- have a certificate of inability to obtain finance.
- Circumstances in which a person will not qualify for
restart income support include:
- if the Secretary determines that they are not effectively in
control of the farm (for example, when a mortgagee has taken
control, or when a person is a bankrupt, or when an eviction notice
has been served on a person in respect of a farm);
- if a person, or their partner has already received restart
income support for a total of more than six months; or
- if a person has already been paid restart income support on two
earlier occasions.
Item 29 sets out additional circumstances under which restart
income support will not be paid for a period, even though the
person may be qualified to receive it.These circumstances
include:
- if a person is receiving farm household support or exceptional
circumstances relief payment;
- if there is no determination by the Secretary that the value of
the person's assets does not exceed their asset value limit;
- if the person is a full-time student;
- is receiving another support payment, or
- is receiving income from funds provided under a Commonwealth
funded employment program.
It will be possible for a person receiving restart income
support to transfer to exceptional circumstances relief payment,
with their restart income support suspended for the period that
they receive the other payment (Item
31).Item 94 explains how this will be
done.
Restart income support and exceptional circumstances relief
payment is not payable to a person for the period that the person's
partner is receiving either farm household support, exceptional
circumstances relief payment or restart income support
(Item 37).
Obligation to obtain advice.All people
receiving restart income support have an obligation to obtain
advice on the long term prospects for their farm business and their
future options if they decide to leave the industry.Item
42 enables the Secretary to direct the recipient to obtain
certain advice, and to assist the person in paying for the
advice.The item also sets the consequences for the recipient of not
complying with the Secretary's direction.
Rate of restart income support.Item
54 inserts a new Division 3 under which the rate of
restart income support is determined.
- It is to be the sum of any Newstart allowance and partner
allowance that a person would receive if they were entitled to
receive those payments;
- Exempt assets (farm assets, and life insurance and
superannuation) and proceeds from a forced disposal of livestock
are to be disregarded for the purposes of calculating the rate at
which restart income support is payable.
Restart income support is paid as a grant not a
loan.Item 60 specifies that restart
income support is paid as a grant of financial assistance.
Digest comment: The Farm Household Support was paid as
a loan to the person.In his second reading speech on this Bill, the
Minister for Primary Industries and Energy, Hon John Anderson,
said:
Support paid under this scheme will be provided as a grant - not
as a loan scheme, which was proven ineffective under the former
government's farm household support scheme.It resulted in low
income farmers incurring debts to the government which they simply
did not have the capacity to repay.This government has, in fact,
decided to wipe the slate clean in regard to the household support
scheme in days gone by and write off those debts.Those who have
repaid - there are only a few of them - will receive a
reimbursement.(8)
An amount of $5.1 million has been estimated to write-off the
debts of the Farm Household Support Scheme.(9) The write-off of
these debts is not included in the current Bill.
Restart re-establishment grant scheme and restart advice
scheme.Item 95 inserts new sections in
the Farms Household Support Act 1992 for the purpose of
allowing eligible applicants to be provided with a re-establishment
grant.The Minister is provided with power to make an instrument
which will be the basis for the operation of the scheme, covering
such matters as criteria for eligibility, administrative
procedures, and the amount and method of payment of the grant.
The item also sets out the framework that will enable eligible
applicants and their families to be provided with professional
advice on their long term prospects, including the administrative
arrangements for applying for assistance, the types of advice and
the people who may provide it.
Repeal of sunset clause. The Farm Household
Support Act 1992 was to cease to have effect on 31 December
2000.The effect of Item 108 is to extend the
Principal Act indefinitely.
Transitional arrangements for the assessment of
claims and payment of drought relief payments are set out in
Schedule 3.The effect of Items 2 and 3 of
Schedule 3 is to continue the current Drought Relief
Payment until the Exceptional Circumstances Relief Payment is
available (i.e. when this Bill receives Royal Assent).Item
2 specifies that a drought exceptional circumstances
certificate continues valid for the period specified on that
certificate.Item 3 specifies that any claims made
for drought relief payment, but not yet assessed, will be treated
as a claim for exceptional circumstances relief payment.
This Bill introduces a number of elements of the Agriculture
- Advancing Australia package announced by the Government on
14 September 1997.These are:
- setting up the Farm Family Restart Scheme; and
- conversion of Drought Relief Payments to Exceptional
Circumstances Relief Payments.
Items of the AAA Package not included in the current Bill
include:
- Farm Business Improvement Program (FarmBIS);
- Farm Management Deposits Scheme;
- encouragement for older farmers to pass the family farm on to a
younger generation, retire and have immediate access to the Age
Pension;
- funding for rural communities to help them cope with change;
and
- the phasing down of interest rate subsidies under the Rural
Adjustment Scheme.
- Agriculture - Advancing Australia: an integrated
rural policy initiative of the Federal Government for farmers and
rural communities, 14 September 1997.
- Centrelink Commonwealth Government Payment Rates 20
September - 31 December 1997.
- Dept. of Primary Industries and Energy, Rural Adjustment
Scheme Annual report 1995 96, AGPS, Canberra, 1996: 31.
- Farm Household Support Amendment Act 1997.
- Second reading speech, House of Representatives,
Debates, 2 October 1997: 8703.
- Rural Adjustment Scheme Advisory Council, Annual report
1993 94, AGPS, Canberra, 1994: 22 & 49. Also, ibid,
Annual report 1994 95: 22.
- ibid, Annual report 1995 96, AGPS, Canberra, 1996:
6.
- Second reading speech, op.cit..
- Agriculture - Advancing Australia, op. cit.
Rosemary Bell
21 October 1997
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ISSN 1328-8091
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