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Thursday, 30 October 2003
Page: 17279

Senator CHERRY (12:53 PM) —The Democrats likewise will be supporting the Farm Household Support Amendment Bill 2003. Indeed, we have supported the Farm Help program, which was established through the Farm Household Support Act, because of the necessary assistance it provides to many Australian farmers. In the past we have expressed some concerns about the way the program was targeted and its resulting outcomes. It is encouraging to note that the bill picks up a number of the recommendations from the two previous reviews of the Farm Help program, which identified several problems with the uptake of the assistance. The ANAO's report shows that in 2001-02 the number of customers on income support was overestimated by 30 per cent, on professional advice by 21 per cent and on re-establishment grants by 11 per cent. One of the key aspects of this bill that we note and which we support is the extension of the period for making applications for Farm Help income support to June 2004.

The problems with Farm Help which have been identified by the ANAO have also been evidenced in the $120 million Sugar Industry Reform Assistance package, which has been based on the Farm Help program but targeted much more at the economically stressed sugar industry. This package was established to deliver assistance to cane growers in order to overcome current difficulties and achieve a profitable future for the industry. The scheme has been massively undersubscribed, with only one of its objectives being partially met.

In Senate estimates questions in May it was found that there had been close to 2,600 successful applicants for income assistance, of which 395 had been unsuccessful, and at that time eight applications were pending. This number was significantly lower than the 4,200 who received support in 2000-01 and it accounted for only $9.3 million of the estimated $30 million allocated for income support measures. It is worth noting that the income assistance under the sugar package finished on 30 September and from that time people were required to apply for assistance under Farm Help, and I understand that quite a number of people have done so. The Democrats expressed frustration at that time that the government did not see fit to extend the income support aspects of the Sugar Industry Reform Assistance package, notwithstanding the fact that there had been no progress on reform in the industry, no progress on reaching agreement with the Queensland government and no progress at an international level in terms of relieving the income pressures on sugar farmers, particularly in my home state of Queensland.

At the estimates hearing in May it was also disclosed that there had been only seven applications for the one-off industry exit grant of $45,000 and all of those were still pending at that time. Even if they were all granted that would only be $315,000 of the estimated $30 million allocated for exit grants under the sugar package. Although applications for the industry exit grant remain open until 30 March 2005, there would need to be 666 payments to use the $30 million allocated. Under the current criteria it is highly unlikely that these moneys will be used, because of the difficulties associated with qualifying for it. To qualify for the grant, a farmer must be entitled to income support and present a business plan under this program.

While this bill amends the Farm Help program, it is not clear if the amendments will flow to the Sugar Industry Reform Assistance program. There is a great need in Queensland for the continuing assistance and the sugar industry remains in very urgent need of reform. We urge the government to work much more constructively with the Queensland government to ensure that these reforms are undertaken in a manner that is appropriate for cane farmers in Queensland. It is worth noting that in the past year the world price of sugar has dropped 16 per cent and the Australian dollar has risen 25 per cent. The current Queensland Department of Primary Industries forecast for the industry shows that the gross value will drop by 15 per cent, its lowest level for more than a decade.

To avoid the Sugar Industry Reform Assistance program failing to meet its target of delivering reform in the industry, we need to look at the industry's exit grant program again. We need to ensure that it is better targeted at the needs of cane growers and also ensure that income support continues to be available whilst stress remains on that industry. If the government is serious about reforming the sugar industry then it must continue what it has started and ensure that its reform objectives are met.

I also want to touch very briefly on another key element of the government's assistance to farmers in stressed circumstances—that is, the Farm Management Deposit Scheme. Whilst it is not touched upon by this bill, it is a key part of the measures in the government's package. It is worth noting that figures released on 23 October showed that farm management deposits had risen to a record level of $2.48 billion, up $407 million on June the previous year. The minister set great store by the fact that there had been a total of $597 million in withdrawals from the scheme over the course of the last financial year—more than three times the amount of withdrawals in the previous year. But there was also an increase in deposits of $1 billion in the same year. The Democrats do find it somewhat difficult to reconcile in our own minds why there should be a net increase in farm management deposits in a year in which a large percentage of the Australian farming community faced one of the worst droughts in Australian history. You would think that in such a year the Farm Management Deposit Scheme's total deposits would have fallen rather than risen by $400 million. We would urge the government to look at that matter. We would hate to think that the Farm Management Deposit Scheme, despite its very good and commendable objectives of evening out income between good and bad years, was simply turning into little more than a tax minimisation plan for high-income farmers. We would urge the government to look to the future when considering that matter.

As I said, the Democrats will be supporting this scheme. We urge the government to continue to ensure that its income support measures are appropriate to the needs of Australian farmers and that, in industries that are under extreme stress, such as the sugar industry, assistance is provided in a form that is appropriate, that meets needs and that is targeted to achieving appropriate outcomes. But we also urge the government to ensure that, in its other reform measures such as the Farm Management Deposit Scheme, again the assistance is targeted, the incentives are targeted and the rebates are targeted so that help goes to those people who genuinely need it and can genuinely use it, rather than simply providing a tax break which is not necessarily called on in years of drought.