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CONTENTS
Passage History
Purpose
Background
Main Provisions
Concluding Comments
Endnotes
Contact Officer and Copyright Details
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.
Extend the life
of the Restart Re-establishment Grant Scheme.
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.
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.
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:
-
- had not had a significant positive impact on the adjustment
process
- had not met the goal of fostering the development of a
profitable and competitive farm sector, and
- 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)
-
- Agriculture - Advancing Australia: an integrated rural policy
initiative of the Federal Government for farmers and rural
communities, 14 September 1997.
- Department of Agriculture, Fisheries and Forestry, Annual
Report 1998-99, p. 24.
- Farm Household Support Amendment Bill 1999, Explanatory
Memorandum, p. 2.
- Farm Household Support Amendment Bill 1999, Second Reading
Speech.
- Department of Primary Industries and Energy, Rural Adjustment -
Managing Change, May 1997.
Ian Ireland
3 December 1999
Bills Digest Service
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ISSN 1328-8091
© Commonwealth of Australia 1999
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