Mr RUDDOCK (Immigration and Multicultural Affairs) (1:53 PM) —I move:

That the bill be now read a second time.

This bill gives effect to a measure announced by the Prime Minister on 14 September 1997 to be known as the `Retirement Assistance for Farmers Scheme'. The scheme is part of the government's `Agriculture—Advancing Australia' package. The measure was developed from a recommendation from the special rural task force, which was established by this government to examine the impact of the social security assets test on rural customers. A number of other task force recommendations were also addressed in the `Agriculture—Advancing Australia' package.

The purpose of the scheme is to meet welfare and adjustment objectives of farmers by providing a three-year `window of opportunity' for low income, pension age farmers and their partners to gift their farm to the younger generation without affecting their access to the age pension, and to retire from farming with dignity. Eligible farmers will be able to gift their farm enterprise, valued up to $500,000, to family members of a younger generation who have been actively involved in the farm. This will allow eligible farmers to retire and have immediate access to the age pension. The family farm will no longer be required to support two or more generations.

The bill provides for the scheme's commencement from 15 September 1997, although people who transferred their farms in the preceding five years might also be able to benefit from the scheme.It is intended that the scheme will operate for three years only, that is, until 14 September 2000.

This measure is targeted at those families who are in hardship because their businesses are capable of supporting only one family but are being required to provide a living for two or more families. It will remove a significant impediment to the intergenerational transfer of the family farm. It represents a significant concession for farmers. There are several elements that need to be met in order for a retiring farmer to qualify for the age pension under the scheme. I will outline some of them.

The net value of the farm that can be gifted is up to $500,000, not including farm debts. However, where a farmer wishing to retire currently runs a farm in partnership with an eligible descendant and wishes to transfer his or her share of the farm to that person only the retiring farmer's share of the equity in the farm will be included when valuing the farm. If a farmer decides to retain a life interest in their home on the farm or excise their home from the remainder of the farm, the value of the home and of any surrounding land of up to two hectares that is used for domestic purposes will also be deducted from the value of the farm being gifted.

The scheme will be open to any farmer of age pension age who, as at 14 September 1997, has owned the property for at least 15 years or has been actively involved in farming in Australia for 20 years, subject to limitations on property value and income.

A farmer's total income over the three financial years prior to transfer, including farm income, can be up to the applicable age pension rate, depending on marital status. However, any losses from the farm can be used to offset other income including non-farm income. A further concession is that any social security income support payments will not be included when determining income. Any payments under the Austudy scheme or payments under the Veterans' Entitlements Act 1986 and the Farm Household Support Act 1992 will also not be included as income.

Only one member of a couple will need to be of age pension age or reach age pension age by 14 September 2000 in order for the couple to access the scheme, regardless of which partner has legal ownership of the land. A non-age pension age spouse may qualify for another social security payment such as partner allowance or carer payment.

Subject to meeting the other requirements of the scheme, farmers who have gifted their farms to their children in the five years to September 1997 and are currently precluded from receiving age pension for five years or are receiving a reduced rate of age pension because of that gift will be able to have their payments adjusted back to 15 September 1997.

I commend the bill to the House, noting that it is the first time in more than 13 years that any government has seen fit to act in this area. I am surprised that members who tried to interject during the second reading speech were prepared to offer comments about the adequacy of this when they failed so dismally to act in relation to these matters themselves when they were in office. I present the explanatory memorandum.

Debate (on motion by Ms Macklin) adjourned.