Bills Digest No. 50 2001-02
Social Security and Veterans' Affairs Entitlements Legislation
Amendment (Retirement Assistance for Farmers) Bill 2001
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
Contact Officer & Copyright Details
Social Security and Veterans' Affairs
Entitlements Legislation Amendment (Retirement Assistance for
Farmers) Bill 2001
Date Introduced: 29 August 2001
Portfolio: Family and Community Services and Veterans'
Commencement: Royal Assent
provisions in the Social Security Act 1991 (SSA) and the
Veterans Entitlements Act 1986 (VEA), applying to the
Retirement Assistance for Farmers Scheme (RAFS). The amendments
will enable qualifying farmers, who were unable to finalise the
transfer of their farm by 30 June 2001, to transfer their farm
after that date and continue to qualify for the RAFS.
The RAFS was introduced as a part of the
Agriculture - Advancing Australia package, announced by
the Prime Minister the Hon. John Howard and the Minister for
Primary Industries and Energy the Hon. John Anderson on 14
September 1997. When announced, the RAFS was only intended to run
for a fixed period from 14 September 1997 to 14 September 2000 and
estimated to cost $77.6m.(1)
The legislation that provided for the RAFS was
the Social Security and Veterans' Affairs Legislation Amendment
(Retirement Assistance for Farmers) Act 1998. The Bills Digest
No. 161 of 1997-98 refers.(2)
What is the RAFS, who can get it
and what does it provide?
The RAFS provides assistance for older,
low-income farmers who wish to give away the farm to the younger
generation without having their pension entitlement affected by the
age pension asset and gifting provisions.
Whilst the RAFS commenced from 15 September
1997, it was also open to farmers who had gifted their farms to a
near relative in the five years before this date.
The RAFS is available to:
- a farmer who has owned their farm for at least 15 years, or who
has been involved in farming for 20 years
- is an Australian resident and living in Australia
- is of age pension age, or has a partner who is of age pension
age, on or before 30 June 2001
- is legally transferring their farm to a person of the younger
generation, who has been actively involved in the farm enterprise
for the three years preceding transfer, and
- was on an average total income for the three financial years
before farm transfer, or for the three financial years before 30
June 2001 (whichever is the earlier), equal to or less than the age
Other key RAFS qualification requirements
- the net value of the total farming enterprise being given away
must be less than $500 000, and
- the farmer must dispose of all farming interests.
Extension of the RAFS past
The RAFS was originally to cease on 14 September
2000, but was extended until 30 June 2001 with this extension being
announced on 23 November 1999.(3) The extension was
included in the 2000-2001 Budget. The estimated additional costs
for the RAFS extension in the Family and Community Affairs
Portfolio were $1.499m in 2000-01, $1.927m in 2001-02, $1.942m in
2002-03 and $2.016m in 2003-04.(4) The estimated
additional costs for the RAFS extension in the Veterans' Affairs
Portfolio were $0.357m in 2000-01, $0.328m in 2001-02, $0.340m in
2002-03 and $0.352m in 2003-04.(5)
Whilst access to the RAFS ceases largely in
2001, the forward estimates contain expenditure to 2003-2004 as it
encompasses payment of age pension to farmers, who would not have
otherwise qualified under the assets test/deprivation rules, but
for the concessional arrangements contained with the RAFS.
How many farmers have used the
When the RAFS was announced as a part of the
Agriculture - Advancing Australia (AAA) package, there
were no estimates provided in the AAA package as to the number of
farmers projected to be assisted.(6)
There were some projected targets for the RAFS
provided at Senate Budget Estimates, with it being estimated that
some 1,800 Family and Community Services (F&CS) customers
through Centrelink and some 300 Veterans' Affairs customers would
take up this initiative.(7)
In the first year of the RAFS, 716 farmers
(including spouses) accessed the RAFS through either Centrelink or
Veterans' Affairs. A further 212 farmers have been assessed as
eligible, once they transferred their farm.(8) In the
second year of the RAFS to 30 June 2000, some 846 farmers
(including spouses) accessed the RAFS through either Centrelink or
Veterans' Affairs. A further 165 farmers had been assessed as
eligible, once they transferred their farm.(9)
RAFS claims had a high rejection
Close to half (43 per cent) of claims for RAFS
were rejected. Some of the reasons for this high rejection rate
were provided by the F&CS at Senate Budget Estimates in May
- complexity of the RAFS qualification criteria
- valuations had to be provided for the farm, with some 14 per
cent of claims rejected as the farm was valued over
- some 9 per cent of claims were rejected as the person the farm
was being passed to did not meet the criteria, ie. not a close
- some didn't have anyone to gift the farm to
- some 43 per cent of rejections had income that was too high for
the age pension, and
- some 34 per cent of rejections wanted to keep some of the farm
assets, eg. the prize bull.
The Government reported in a reply to a Question
on Notice that a review of the RAFS had been conducted and its
findings were considered in the planning for the 2000-2001
Budget.(11) The reply to the Question on Notice No.
1 296 did claim the original estimated number of farmers
assisted by the RAFS was 2 100 and this had largely been met
with some 1 550 assisted as of 28 March 2000.(12)
The RAFS review report has not been made public.
Number of farmers aged over
In the 1996 Census, some 198 989 persons
recorded their occupation in primary production (ie. mixed crop and
livestock farmer, livestock farmer, crop farmer, aquaculture farmer
and farmer & farm managers). Of this group, some 42 684
(21 per cent) were aged 60 or more.
RAFS - special welfare
assistance rules for farmers
The components of the RAFS, in which the asset
value of a farm up to the value of $500 000 can be disregarded
for the age pension asset test, is an example of some of the
special means testing rules that apply under the SSA for farmers.
There are not really any other special means testing rules that
apply for other groups in the labour market or the community, in
terms of income support means testing.
Another example of special welfare rules for
farmers is the family assets test that applies to dependent
claimants for youth allowance (YA). Normally, for YA the family
asset test limit is $438 250, but a 75 per cent discount for
farm/business assets applies to the family assets test. There is no
other like asset discount arrangement for family assets held in
other business arrangements for YA.
Another welfare assistance program that applies exclusively for
farmers is the Farm Help program. Farm Help has its origins in the
Family Farm Re-Start Scheme that was announced in the AAA package
of September 1997 and has four key components:
- income support payable for a maximum of 12 months at the
newstart allowance rate with a partner component;
- a re-establishment grant of up to $45 000, which is
payable when an eligible farmer leaves the farming industry;
- an obligation to obtain professional advice on the future
viability of the business, and career counselling is required where
appropriate. Farm families will receive up to $3000 (excluding GST)
to obtain advice, and to help with any costs associated will
obtaining advice such as travel or child-care; and
- a retraining grant of $3500 available to farmers and/or their
partner who receive a re-establishment grant under the Farm Help
There is no like scheme applying for families in
other business arrangements.
Criticisms of the
The National Farmers Federation (NFF) had some
criticisms of the RAFS, claiming the assets limit of $500 000
should be raised to $800 000, to ensure people with viable
farms were able to access the RAFS.(13)
The NFF have also been critical of the closure of the RAFS,
urging its extension.(14)
Schedule 1 - Item 1 amends the Social
Security Act 1991 to introduce the notion of a specified
timeframe within which qualifying farmers and their partners must
complete the transfer of their farm. Providing that a qualifying
farmer lodged a request for a pre-assessment of their eligibility
under the RAFS on or before 31 July 2001, the farmer will than have
three months after the date of the Centrelink approval to finalise
the transfer of the farm.
For all other applications, the deadline for
transfers remains at 1 July 2001.
Item 1 also sets out the
requirements an application must to meet to gain the benefits of
the extension. Proposed section 1185AB defines the form in which
the pre-assessment request may be made and the nature and date of
the affirmation response from Centrelink.
Item 13 refers to ex-gratia
payments and prevents dual benefit from any extension under this
Bill and any ex-gratia payment for the same assistance. Ex-gratia
payments can be made to provide like or same assistance in
circumstances where legislation is intended or imminent, is
beneficial legislation but has not yet been made into law by being
passed by the Parliament.
Schedule 2 provides the mirror amendments
contained in Schedule 1 but to the Veterans' Entitlements Act
The impact of this Bill is beneficial.
The RAFS has helped a small number of older age
low-income farmers transfer the ownership of their farm to a close
relative and gain access to the age pension, when in normal
circumstances the asset test limits and/or deprivation of assets
provisions would have applied to preclude age pension.
Notwithstanding this Bill proposes to provide a limited extension
of time for some farmers to complete farm transfers already under
process, the RAFS has always had a closure date. This indicates the
Government has not intended to maintain the RAFS as a permanent or
long-term concessional welfare access arrangement for farmers.
Perhaps the RAFS review (report not made public)
indicated that to provide greater access to the RAFS, and thereby
increase the numbers of farmers assisted, would require a
significant liberalisation of the qualification requirements. For
example, do as the NFF suggested and lift the farm asset limit up
from $500 000 to $800 000.
This may have been at too much cost and/or pose
too much of a threat or difference for asset test treatment for one
section of the community.
The RAFS is another example of special welfare
access rules that apply for farmers but do not apply to any other
sector of the community.
- The Hon. Mr John Anderson, MP, Minister for Primary Industries
and Energy, Media Release - Federal Government Gives Farm
Sector "AAA" Rating, 14 September 1997.
- Social Security and Veterans' Affairs Legislation Amendment
(Retirement Assistance for Farmers) Bill 1998. Bills Digest No. 161 1997-98.
- The Minister for Agriculture, Fisheries and Forestry the Hon.
Mr Warren Truss, MP, 23 November 1999, House of Representatives,
Debates, Answer to Question without Notice, page 9227.
- Department of Family and Community Services Portfolio Budget
Statement - 2000-01 Budget Paper No 1.8, page173.
- Department of Veterans' Affairs Portfolio Budget Statement -
2000-01 Budget Paper No 1.4B, page32.
- The Hon. Mr John Anderson, MP, Minister for Primary Industries
and Energy, Media Release - Federal Government Gives
Farm Sector "AAA" Rating. op.cit.
- Senate Community affairs Legislation Committee, 2000-2001
Budget Estimates, 24 May 2000, page 391.
- Department of Family and Community Services 1998-1999
Annual Report, page 179.
- Department of Family and Community Services 1999-2000
Annual Report, page 184.
- Senate Community affairs Legislation Committee, 1999-2000
Budget Estimates, 4 May 1999, page 415.
- The Hon. Mr Larry Anthony, MP Minister for Community Services,
Answer to a Question on Notice No. 1296, 10 May 2000, House of
Representatives Hansard, pages 15424-15425.
- National Farmers Federation Media Release, NFF Cautiously
Welcomes Retirement Assistance Bill, 25 June 1988, NR 69/98.
- National Farmers Federation Media Release, Boost for
Rural Education and Health, 22 May 2001, NR 63/2001.
11 September 2001
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