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Thursday, 27 May 2004
Page: 29312


Mr TRUSS (Minister for Agriculture, Fisheries and Forestry) (9:21 AM) —I move:

That this bill be now read a second time.

The purpose of the Farm Household Support Amendment Bill 2004 is to extend the government's Farm Help Supporting Families Through Change program and renew its focus to support decision making by low-income farmers `who can no longer borrow against their assets' to make changes to their situation. The bill extends the program to 30 June 2008.

Passage of the bill will also give effect to a number of amendments that aim to improve the effectiveness and administration of the Farm Help program and ensure that it reaches low-income farmers most in need. There will be an increased emphasis on using strategic information, analysis and professional advice to support decision-making. The extension of the Farm Help program and its associated changes will not affect the ongoing exceptional circumstances relief program.

Farm Help has been operating since December 1997 to facilitate adjustment by providing a welfare safety net to people on farms in severe financial difficulty. It was a core component of the Australian government's flagship agricultural policy, the Agriculture Advancing Australia package announced in 1997.

The Farm Household Support Amendment Bill 2004 will give effect to the government's 2004 budget commitment to extend the Farm Help program until 30 June 2008 as a key component of the ongoing Agriculture Advancing Australia package. In the 2004-05 federal budget the Triple-A package received a $238 million injection, of which $134.9 million over four years is allocated to the Farm Help program. The funding brings the total provision for the Agriculture Advancing Australia package since 1997 to over $1 billion.

Continued support for the Farm Help program demonstrates that the government is delivering on its commitment to people managing farms in rural and regional Australia and helping them build their capacity to manage risk, adopt new practices and improve strategic planning and decision making.

The direct target group of the Farm Help program to date has been low-income farm families in severe financial difficulty. These people are eligible if they meet means testing requirements, satisfy the eligibility requirements and can no longer borrow against their assets.

The assistance provided through Farm Help is flexible and can be tailored to meet the needs of each farm family. The program provides up to 12 months income support at the Newstart Allowance rate; a grant for professional advice and training such as financial, legal and business planning, to assist recipients to make decisions about their future in farming; and a re-establishment grant, currently up to $45,000, for people who decide to leave farming and sell the farm. Farm Help is due to conclude on 30 June 2004.

Farm Help has a long record of achievement. Since the program commenced on 1 December 1997 to 30 April 2004 over 8,600 farmers have received Farm Help income support and over 1,000 farmers have received re-establishment assistance.

A major aim of the Farm Help program is to support low-income farmers in their decision making to make changes to their situation. The Farm Household Support Amendment Bill 2004 introduces a number of procedural and administrative changes to the Farm Help program and its associated instruments and will enable the program to operate more effectively and to better reach its target recipients. These changes will be reflected in the Farm Household Support Act 1992, in the act's disallowable instruments, the Farm Help Re-establishment Grant Scheme and the Farm Help Advice and Training Scheme and in regulations prescribed by the act.

The changes have emanated from the ongoing monitoring of the program's performance, a mid-term evaluation of Farm Help and the performance audit of key Agriculture Advancing Australia programs undertaken by the Australian National Audit Office in 2003.

New requirements for income support and re-establishment grants mean that a person will have to undertake financial advice and develop their activity plan prior to receiving income support—except in cases of hardship—and prior to receiving a re-establishment grant. Farmers will be encouraged to approach the program as an opportunity to gain information and skills that will support a better outcome for them and their families in the long term.

The object of the act has been amended to refer separately to the objectives of the exceptional circumstances relief payment and Farm Help income support. This is to ensure that there is no interpretation by the courts that the two schemes are intended to be the same. The exceptional circumstances relief payment focuses on welfare for farmers in declared exceptional circumstances situations. The Farm Help program no longer focuses on welfare, but on adjustment. It will, however, continue to provide short-term financial assistance to farmers who are experiencing difficulty in meeting living expenses and are unlikely to obtain a loan from a financial institution, while they take action to improve their long-term financial situation either on or off the farm.

The Farm Household Support Amendment Bill 2004 proposes a program extension to 30 June 2008, with applications for income support and the re-establishment grant closing on 30 June 2007. Income support payments will conclude on 30 June 2008, professional advice and training grant expenditure must be finalised by 30 June 2008 and the sale of farm enterprises must be completed by 30 June 2008. Provision has been made in the 2004-05 budget for residual expenditure of $2 million in 2008-09 to finalise re-establishment grants, advice and training grants and Centrelink delivery costs.

Provision will be made for any further extensions of the Farm Help program beyond June 2009 to be made by regulation.

The re-establishment grant will be increased to $50,000—up from the current $45,000. This change will be made in the Farm Help Re-establishment Grant Scheme 1997.

Clarifying the process for a person applying for Farm Help income support

Under the revised program, a person will apply for the advice and training grant, rather than income support, to enable them to obtain advice about their inability to obtain finance and develop an activity plan. These requirements will need to be undertaken prior to any claim for income support or a re-establishment grant.

Undertaking financial assessments

Currently farmers who join the program are required to arrange a financial assessment of their farm business within three months. Under the enhanced program, farmers will be required to undertake the financial assessment of their farm business and develop an activity plan before their income support can commence. An adviser, prescribed by a regulation enabled by the act, will make an assessment of the farmer's likelihood of accessing further finance, removing the requirement for bank certification.

This amended process is intended to maximise recipients' opportunities to make decisions about their future and to implement change, while they receive income support under the program for up to 12 months.

The removal of the requirement for a certificate of inability to obtain finance addresses concerns by banks and their clients that obtaining the certificate might jeopardise a person's future borrowing arrangements.

Hardship provision

A provision has been included to vary the process for people in severe financial hardship for Farm Help. To qualify for this provision, a person will be an eligible farmer for the purposes of the program. The liquid assets of a person and their partner at the time of application will be not greater than the total amount of Newstart allowance that would have been payable in the immediately preceding six weeks if the person were entitled to Newstart allowance and had no other income.

Hardship provision recipients will be provided with income support for a period of up to three months while they undertake their financial assessment and develop their activity plan. Income support will cease if they have not done this within the three-month period. This provision will not require people to sell farm assets. The recipient will then be assessed in order to qualify for the remainder of their income support. Income support which is paid under the hardship provision will not be an additional period to the twelve months available for income support.

Mutual obligation under the Farm Help program will be strengthened. It is intended that activity plans will be reviewed quarterly by Centrelink and recipients to ensure that program recipients are making effective use of program elements to support informed decision making and/or improvements in their farm business. In particular, Farm Help recipients will be encouraged to maximise their use of the opportunity to access the professional advice and training grant.

Amendments to the Farm Household Support Act will enable reviews to be conducted of re-establishment grant recipients to determine whether they are complying with their undertaking not to re-enter farming within five years of receiving the re-establishment grant. A proviso has been included which enables the Australian government to recover grants where a person has re-entered farming within five years of receiving the grant. This provision is being transferred from the re-establishment grant instrument.

Participants are no longer able to suspend their Farm Help income support to access the exceptional circumstances relief payment and then return to Farm Help income support. This is to encourage farmers to approach the program as an opportunity to gain information and skills that will support a better outcome for them and their families in the long term. This amended process is intended to maximise recipients' opportunities to make decisions about their future and then implement change while they receive income support under the program for up to 12 months.

A farmer is able to apply for the exceptional circumstances relief payment after their completion of the Farm Help program. There is provision to terminate Farm Help income support if a person or their partner is in receipt of an exceptional circumstances relief payment. This removes the possibility of a person or a couple receiving Farm Help income support and the exceptional circumstances relief payment at the same time.

The government remains committed to the development of self-reliant, competitive and sustainable rural industries. It also recognises that there are significant pressures on farmers to remain on the land and that some farmers, often for reasons beyond their control, are unable to keep up with the pace of change.

Passage of this bill will enable eligible low-income farmers coping with change in the farming industry to have the opportunity to make informed decisions about their future in farming while giving them financial security and access to advice to make their decision.

It also has a significant emphasis on mutual obligation for people receiving assistance—in terms of making progress to implement decisions in relation to improving their farm business, seeking alternative sources of income, or leaving the industry. The extension of the Farm Help program and its associated changes will not affect the ongoing exceptional circumstances program. The amendments to create a more effective Farm Help program are designed to promote earlier decision making by recipients and emphasise a mutual obligation, with the objective of encouraging adjustment. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Swan) adjourned.