Bills Digest No. 91  1999-2000 Farm Household Support Amendment Bill 1999


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer and Copyright Details

Passage History

Farm Household Support Amendment Bill 1999

Date Introduced: 24 November 1999

House: House of Representatives

Portfolio: Agriculture, Fisheries and Forestry

Commencement: In effect, on 1 December 1999.

Purpose

Extend the life of the Restart Re-establishment Grant Scheme.

Background

Farm Family Restart Scheme

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 (AAA). It was 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)

The FFRS is administered by Centerlink and commenced in December 1997 replacing the re-establishment grants previously available under the Rural Adjustment Scheme. FFRS provides 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.

The FFRS also operates 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 FFRS include:

  • income support paid at the Newstart Allowance rate (this payment is available for a maximum period of twelve months)
  • recipients do not have to satisfy an activity test and do not have to put the farm on the market to obtain assistance
  • recipients have a binding obligation to obtain professional advice on the future viability of the business, and career counselling where appropriate (Financial support is provided to help recipients meet this obligation), and
  • access to a re-establishment grant of up to $45,000 on the sale of the farm.

FFRS Re-establishment Grants

Farmers who decide to leave farming may be eligible for a Restart Re-establishment Grant (RRG) of up to $45,000.

Farmers and their partners may have up to $90,000 in net assets and still qualify for the maximum grant of $45,000. The net asset threshold excludes household and personal effects up to a value of $10,000. The RRG is reduced by $2 for every $3 in assets above this threshold and is not payable if all assets after the sale exceed $157,500.

Where a farm has not been sold within three months of applying for the grant, the farmer must seek professional advice.

To qualify for a RRG, farmers must not have received, or have an active claim for, a re-establishment grant under the Rural Adjustment Scheme or the Rural Partnership Program.

The RRG is a time limited Scheme and is available for eligible farmers who apply for FFRS from 1 December 1997 until 30 November 1999.

To be eligible for the RRG, a farmer must finalise the sale of the farm within 12 months of applying for the grant, or if he or she received Restart Income Support, within 12 months of ceasing income support. At 30 June 1999, 1208 farm families were in receipt of income support under the FFRS. In addition, during 1998, 172 farmers leaving agriculture received RRGs.(2)

Rationale for amendments

Neither the Second Reading Speech or the Explanatory Memorandum provide economic rationale for the extending the deadline for RRG applications. Two rationale are given by the Government for the extension, namely:

The extension to the FFRS re-establishment grants will facilitate the exit from farming of those farmers in severe financial difficulties and without prospects of a financially sound future in agriculture.(3)

Extending the FFRS re-establishment grants will assist farmers in severe financial difficulties to assess their future in agriculture and, if necessary, leave the industry with dignity.(4)

Financial Impact

The estimated cost of extending the deadline for RRG applications by seven months given by the Government in its Explanatory Memorandum to be $5.1 million.

Main Provisions

The effect of the repeal of section 6C of the Farm Household Support Act 1992 proposed by item 2 of Schedule 1 of the Bill is to remove the deadline for RRG applications (currently 30 November 1999). The Government states in the Explanatory Memorandum that it intends to extend, by legislative instrument, the current deadline by 7 months to 30 June 2000.

Concluding Comments

Arrangements implemented by the Commonwealth to assist adjustment in agriculture are not paralleled in any other industry sector although that is not to say that adjustment assistance has not been provided to other industries. Prior to the introduction of the AAA package, adjustment assistance was provided to farmers by way of the long established Rural Adjustment Scheme (RAS) which had interest rate subsidies as a longstanding feature.

However, the mid-term review of RAS which reported in May 1997 found that RAS assistance was small relative to other forms of assistance to agriculture but also concluded that RAS:

  1. had not had a significant positive impact on the adjustment process

  2. had not met the goal of fostering the development of a profitable and competitive farm sector, and

  3. was not appropriate to the adjustment needs of Australian agriculture.

The review recommended that government programs clearly distinguish between the farm business and the welfare needs of farm families and that farm re-establishment be one of the new program structures. The rationale for a farm re-establishment scheme was to encourage farmers who wish to leave farming to do so as early as possible so that they can maximise their assets on departure.(5)

Endnotes

  1. Agriculture - Advancing Australia: an integrated rural policy initiative of the Federal Government for farmers and rural communities, 14 September 1997.

  2. Department of Agriculture, Fisheries and Forestry, Annual Report 1998-99, p. 24.

  3. Farm Household Support Amendment Bill 1999, Explanatory Memorandum, p. 2.

  4. Farm Household Support Amendment Bill 1999, Second Reading Speech.

  5. Department of Primary Industries and Energy, Rural Adjustment - Managing Change, May 1997.

Contact Officer and Copyright Details

Ian Ireland
3 December 1999
Bills Digest Service
Information and Research Services

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document.

IRS staff are available to discuss the paper's contents with Senators and Members
and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1999.

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