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Farm Household Support Amendment Bill 2004

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2002-2003-2004

 

 

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

FARM HOUSEHOLD SUPPORT AMENDMENT BILL 2004

 

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by the authority of the Minister for Agriculture, Fisheries and Forestry,

the Hon Warren Truss MP)

 



 

FARM HOUSEHOLD SUPPORT AMENDMENT BILL 2004

 

 

GENERAL OUTLINE 

 

1.         The purpose of the Farm Household Support Amendment Bill 2004 is to extend the Government’s Farm Help - Supporting Families Through Change programme 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.

 

2.         The Bill extends the programme to 30 June 2008 as a key component of the ongoing Agriculture - Advancing Australia package.

 

3.         The Bill includes a number of amendments that aim to improve the effectiveness and administration of the Farm Help programme 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. These changes have emanated from the on-going monitoring of the programme’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. The extension of the Farm Help programme and its associated changes will not affect the ongoing Exceptional Circumstances Relief Payment programme.

 

4.    The Farm Household Support Amendment Bill proposes extending the programme to 30 June 2008 for a four-year fully operational programme with applications for income support closing on 30 June 2007. Income support payments will conclude on 30 June 2008. There will be residual expenditure after 30 June 2008 of approximately $2 million.  Provision will be made for any simple extensions of the Farm Help program (beyond June 2009) to be made by Regulation. This will enable the matter to be dealt with expeditiously by the Parliament.

 

5.    The Farm Household Support Amendment Bill 2004 will also give effect to a number of proposed enhancements to the Farm Help programme, including:

 

a)       Requiring that financial assessments are undertaken after the initial stage of application and the Activity Plan developed before income support can commence.

b)       Ensuring financial assessments are undertaken by prescribed advisors.

c)       Requiring the assessment of a farmer’s ability to access further finance to be included in the financial assessment.

d)      Providing immediate access to income support after initial application if applicants meet the Farm Help hardship provisions.

e)       Enabling reviews to be conducted of re-establishment grant recipients and their partners to determine whether they have re-entered farming within 5 years of receiving the grant.

f)        Removing the provision allowing farmers to suspend their Farm Help income support to access the Exceptional Circumstances Relief Payment and then return to Farm Help income support.

g)       Ensuring recipients are making effective use of the programme through obtaining advice and implementing their activity plans.

h)       Amending the objects of the Farm Household Support Act 1992 to reflect the changed focus of the programme from welfare to adjustment.

 

6.    The Instruments established under the Farm Household Support Act 1992 will also be amended to implement the programme extension and its enhancements. Specifically, these will focus on:

a)         Increasing the maximum re-establishment grant to $50,000.

b)        Determining a farmer’s ability to access further finance in the financial assessment.

c)         Undertaking financial assessments after the initial stage of application and developing the Activity Plan before income support can commence.

d)        Financial assessments being undertaken by prescribed advisors. In most cases this would be a suitably qualified financial person, although it is possible that provision will be made to allow others to undertake the financial assessment in remote areas, in rare instances.

e)         Ensuring that Counsellors, funded by the Australian Government, cannot draw funding from more than one Australian Government programme for the same purposes (in response to an ANAO recommendation).

f)         Undertaking quarterly reviews of recipients’ circumstances and progress against their activity plans, undertaken to ensure recipients are making effective use of programme elements in terms of decision-making and business improvements.

7.    A regulation under the Farm Household Support Act 1992 will be issued which details who can provide financial assistance to programme recipients.

 

FINANCIAL IMPACT STATEMENT



8.    The Farm Help programme was allocated $134.9 million over four years in the 2004-05 Federal Budget. Changes to the programme proposed in the Farm Household Support Amendment Bill 2004 have been included in this figure. There will be residual expenditure after 30 June 2008 of approximately $2 million. 

 







 

 

NOTES OF CLAUSES



Clause 1 - Short Title



This Bill is to amend the Farm Household Support Act 1992 .



Clause 2 - Commencement



7.         Clause 2 specifies the commencement date for the provisions in the Act. Most provisions will come into effect on the date the Farm Household Support Amendment Act 2004 is proclaimed. Schedule 1 is retrospective to 1 July 2004, to ensure that struggling farmers will not be disadvantaged by delays in the scheme’s operation.



Clause 3 - Schedule(s)



8.         Clause 3 provides that the amendments specified in a Schedule to the Act, and any other items in a Schedule, are amended or repealed according to the terms of the Schedule.  Any item in a schedule has effect according to its terms.

 

SCHEDULE 1 - EXTENDING THE FARM HELP INCOME SUPPORT SCHEME.

 

Item 1 - Paragraph 6B (a)



9.         This item extends the closing date for applications for Farm Help income support to 30 June 2007 or such later date as is prescribed.

 

Item 2 - Paragraph 6B (b)

 

10.     This item extends the closing date for payment of Farm Help income support to

       30 June 2008 or such later date as is prescribed.

 

SCHEDULE 2 - CHANGES TO FARM HELP INCOME SUPPORT AND RE-ESTABLISHMENT GRANT SCHEME

 

Part 1 - Main amendments

 

Item 1 - Subsection 3(2)

 

11.     This item references the meaning for an activity plan to subsection 8B(3).

 

Item 2 - Subsection 3(2)

 

12.     This item references the meaning for advice on financial outlook to subsection 8B(2).





 

Item 3 - Subsection 3(2)

 

13.     Item 1 inserts the definition of liquid assets from the Social Security Act 1991 . Inclusion of this definition means that the assets of a person and their partner, if any, (excluding farm assets) will be assessed to verify whether they qualify for the hardship provision developed for Farm Help.

 

Item 4 - Subsection 3(2) (definition of sale of a farm)

 

14.     This definition has been repealed.

 

Item 5 - Subsection 3(2)

 

15.     The definition of sale of a farm enterprise has been inserted to replace the definition of sale of a farm. This change has been made to ensure that sale of a farm refers to a transaction which results in the rights or interests of a person in the enterprise and the land used for the purposes of the farm enterprise being transferred to another person. This clause is not intended to allow for the transfer of a person’s right or interest to their partner.

 

Item 6 - Subsection 3(2)

 

16.     This item references the meaning for severe financial hardship to section 5.

 

Item 7 - After Section 4



17.     This clause allows farmers who are in severe financial hardship when they make a claim for Farm Help income support, to access Farm Help income support without having obtained advice on their financial outlook or developing an activity plan. If a farmer who qualifies for Section 8B (1) (a) to (c) of Farm Help income support requests hardship assistance under the Farm Help programme, they will have to prove that they meet the criteria for hardship. Severe financial hardship is defined as where the liquid assets (as defined in section 198N of the Social Security Act 1991 ) of a person and their partner at the time of application are 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.

 

18.     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.

 

19.     The intention of this clause is to allow for a minority of applicants to the scheme, who need immediate income support, to undertake the initial requirements of the programme. The majority of applicants will be required to develop their activity plan and undertake a financial assessment prior to receiving income support. This is to ensure that programme participants benefit from the maximum time, while on income support, to implement their activity plan and emphasises the adjustment focus of the programme.

 

Item 8 - Section 6



20.     The previous objects of the Act have been repealed and replaced with separate objects for the Exceptional Circumstances Relief Payment and Farm Help income support. There are no objects for the Farm Household Support programme as this programme has ceased. The amendment and clarification of the objects has been developed to assist decision-makers, tribunals and the courts, in making clear the distinction between Farm Help and the Exceptional Circumstances Relief Payment.  Previous rulings by the Courts have considered that the objectives of the two programmes are the same and that Farm Help had a welfare orientation. This is not the case. The object of Farm Help has been refined to promote adjustment by farmers - to ensure that they take action to improve their long term financial situation by either improving the financial performance of their farm enterprise, finding alternative sources of income or re-establishing outside farming.



Item 9 - Section 8B



21.     This section repeals the previous section and substitutes an amended qualification for Farm Help income support. These changes are to ensure that programme requirements to obtain a financial assessment and develop an activity plan prior to income support (except in cases of hardship) are met. This will assist decision making by low income farmers ‘who can no longer borrow against their assets’ to make changes to their situation. The differences in qualification provisions for Farm Help and the Exceptional Circumstances Relief Payment demonstrate that Farm Help has an adjustment focus, whereas Exceptional Circumstances Relief Payment is primarily a welfare programme.

 

22.     Section 8B(1)(d)(i) removes the requirement for a bank certificate of inability to obtain finance, in response to concerns raised by farmers and the banks, particularly the perceived impact this requirement might have on a farmer’s future borrowing capability. It replaces the certificate with the requirement for a person to obtain advice from a prescribed adviser. This prescription will be made by regulation. Advisers will give their opinion on whether a farmer is likely to obtain further finance and on the prospects of the farm enterprise. There is still provision in the Act in 8B(1)(d)(ii) for a person to obtain advice about their inability to obtain finance from their primary lender, as an optional alternative.

 

23.     Section 8 (e) inserts the requirement that a person obtains advice from a prescribed adviser on whether there is a reasonable likelihood of improving the financial performance of the farm enterprise.

 

24.     Section 8B(1)(f) makes mandatory the requirement that a person develops an activity plan prior to receiving income support or a re-establishment grant, enabling in Sections 51 and 51B termination of assistance under the programme if a person fails to develop and implement an activity plan. The rationale for this clause to encourage farmers to approach the programme 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 to then implement change, while they receive income support under the programme for up to twelve months.

 

25.     Requirements in 8B(1)(d), (e) and (f) can be deferred in the instance of severe financial hardship, as discussed previously.

 

Item 10 - At the end of Division 1B of Part 2

 

26.     This provision ends the opportunity for a person or their partner to suspend their Farm Help income support to access Exceptional Circumstances Relief Payments and then return to Farm Help income support. This provision has been developed to ensure that a person uses their time on Farm Help to implement their activity plan and achieve some form of adjustment in the farm business. A continuous period of consideration of options and decision making will give farm families the best opportunity to fulfill their own stated goals and achieve improved financial security. A person or their partner is able to apply for Exceptional Circumstances Relief Payment after their completion of the Farm Help programme. This provision will not be retrospective beyond the commencement of Schedule 2.

 

Item 11 - Section 13B



27.     Subsection 13B has been repealed as it is no longer relevant to programme revisions. It was included when an activity plan was not a mandatory requirement.

 

Item 12 - Subsection 19(3)



28.     This amendment inserts new reference to Section 19 subsection 4.

 

Item 13 - at the end of section 19



29.     This amendment allows discretion for the Secretary to waive the requirement for a person to obtain advice on financial outlook or to develop an activity plan prior to being granted income support where they have been determined to be in severe financial hardship. It also allows for access to the Farm Help advice and training scheme if income support is granted for this three-month period through the hardship provision. It allows the Secretary to use the information a person provides for the Farm Help advice and training grant for the purposes of determining whether they are able to qualify or be payable for Farm Help income support, if they apply for Farm Help income support within a period of three months of being eligible for the advice and training grant. It refers in the Note to cessation of payability of income support if advice is not obtained and the activity plan is not developed within three months of the claim being granted. This responsibility can be delegated by the Secretary to Centrelink.



Item 14 - At the end of Part 8



30.     Section 50 provides the ability 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 Exceptional Circumstances Relief Payment at the same time.

 

31.     Section 51 provides for automatic termination if a person fails to obtain advice on financial outlook or develop an activity plan within three months if they are in receipt of income support because they have been granted access under severe financial hardship provisions (subsection 19(4)).

 

32.      Section 51B provides for termination of Farm Help income support if a person fails to comply with an activity plan that they have developed. This ceases to be payable on the day that the determination is made.

 

Item 15 - Part 8A



33.     Part 8A has been repealed, to remove the provision to suspend Farm Help income support or Farm Household Support to access Exceptional Circumstances Relief Payment.

 

Item 16 - Paragraph 52A (1)(a)

 

34.     This provides objects for the Farm Help re-establishment grant scheme which relate to the amended object for Farm Help income support.

 

Item 17 - After section 52A

 

35.     52AA gives the Commonwealth the authorisation to recover the amount of a re-establishment grant if a re-establishment grant recipient or their partner returns to farming within five years after receiving the grant. This provision has been transferred from the Re-establishment grant instrument.

 

Item 18 - Paragraph 52B(1)(a)

 

36.     This repeals the paragraph and substitutes a new guideline for the advice and training grant scheme in the Farm Help Advice and Training Scheme 1997 instrument. These guidelines particularly enable the development of an activity plan by recipients of the advice and training grant.

 

Item 19 - Paragraph 52B(3)(b) and (c)

 

37.     This repeals the paragraphs and substitutes provisions (b), (c), (d) and (e) as further guidelines for the advice and training grant scheme in the Farm Help Advice and Training Scheme 1997 instrument. These amended provisions outline what the Instrument is required to cover: assistance to comply with directions to develop an activity plan; implement an activity plan; obtain advice on their financial outlook and the consequences for a person of not complying with directions.

 



Part 2 - Consequential amendments

 

Farm Household Support Act 1992

 

Item 20 - Subsection 8E(5)

 

38.     This subsection has been repealed, as Section 49D (ability to suspend Farm Help if Exceptional Circumstances Relief Payment is payable) to which it refers has been repealed.

 

Item 21 - Section 9A (note)

 

39.     The note has been repealed as part 8A (Qualification for Exceptional Circumstances Relief Payment) to which it refers has been repealed.

 

Item 22 - Section 9B (note)

 

40.     The note has been repealed as part 8A (Qualification for Exceptional Circumstances Relief Payment) to which it refers has been repealed. This now refers to section 50 for termination of Farm Help income support where Exceptional Circumstances Relief Payment is payable.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Part 3 - Application and saving provisions

 

Item 23 - Definition

 

41.     This refers to the principal act mentioned in Schedule 3 as the Farm Household Support Act 1992.

 

Item 24 - Farm Help income support

 

42.     This item notes that amendments in (1) made by items 1, 2, 3, 6, 7, 8, 9, 11, 12, 13, 20, 21 and 22 will be applicable to a person who makes a claim for Farm Help income support on or after the commencement of this item.

 

43.     This item notes that amendments in (2) which relate to the insertion of sections 51 and 52 into the Farm Household Support Act 1992 will be applicable to a person who makes a claim for Farm Help income support on or after the commencement of item 14.

 

Item 25 - Exceptional circumstances relief payment

 

44.     This item notes that amendments made by item 8 will be applicable to a person who makes a claim for Exceptional Circumstances Relief Payment on or after the commencement of this item.

 

Item 26 - Interaction between exceptional circumstances relief payment and farm help income support

 

45.     This item notes that amendments in (1) made by items 10 and 15, where a person who makes a claim for Exceptional Circumstances Relief Payment, that results in Farm Help income support not being payable to a person, will commence for a claim made on or after the commencement of this item.

 

46.     The amendments made by item 14 in relation to the insertion of section 50 into Farm Household Support Act 1992 will apply on or after the commencement of this item. This item refers to a situation where a person receives an Exceptional Circumstances Relief Payment, that results in Farm Help income support not being payable to a person.

 

Item 27 - Activity plan directions under section 13B

 

47.     Paragraph (1) clarifies that despite the repeal of section 13B of the Farm Household Support Act 1992 made by item 11 , the section will continue in force where a claim for farm help income support was made prior to commencement of the repeal of this item.

 

48.     Paragraph (2) clarifies that despite the repeal of section 13B of the Farm Household Support Act 1992 made by item 11, the section will continue in force where a direction under section 13B to undertake an activity plan was given and in force prior to commencement of the repeal of this item.

 

49.     Paragraph (3) clarifies that despite the repeal of section 13B of the Farm Household Support Act 1992 made by item 11, the section will continue in force where a direction under section 13B to comply with an activity plan was given and in force prior to commencement of the repeal of this item.

 

Item 28 - Farm Help re-establishment scheme

 

50.     Paragraph (1) refers to amendments made by items 4, 5, 8, 16 and 17 of Schedule 2, which will apply to a claim for a re-establishment grant on or after commencement of this item.

 

51.     Paragraph (2) refers to amendments made by items 4 and 5 of Schedule 2 to subsection 3 (2) , , to the amendment made by item s 16 of Schedule 2 to section 52A   and the insertion by item 17 of section s 52AA to 52AC 52AA in Schedule 2 . . Despite these, section 52A of the Farm Household Support Act 1992 and the instruments made under that section will continue to be in force on and after the commencement of those items where a claim for a re-establishment grant was made prior to the commencement of those items.

 

Item 29 - Farm help advice and training scheme

 

52.     Paragraph (1) refers to amendments to section 52B of the Farm Household Support Act 1992 made by items 18 and 19 of Schedule 2 which will apply to a claim for a grant of the advice and training scheme on or after the commencement of this item.

 

53.     Paragraph (2) refers to amendments to section 52B of the Farm Household Support Act 1992 made by items 18 and 19 of Schedule 2. Despite these, section 52B of the Farm Household Support Act 1992 and the instruments made under that section will continue to be in force on and after the commencement of those items where a claim for the advice and training grant was made prior to the commencement of those items.