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2013-2014

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

FARM HOUSEHOLD SUPPORT BILL 2014    

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Agriculture,

the Hon. Barnaby Joyce MP)

 



 



 

TABLE OF CONTENTS

Glossary                                                                                                          1

General Outline                                                                                               3

Financial Impact Statement                                                                            6

Statement of Compatibility with Human Rights                                            7

Notes on clauses                                                                                             19

            Part 1—Preliminary                                                                            19

            Part 2—Farm household allowance                                                    22

            Part 3—Activity supplement                                                              53

            Part 4—Farm financial assessments                                                    55

            Part 5—Application and modification of the social security law       57

            Part 6—Miscellaneous                                                                        64





 



GLOSSARY

The following abbreviations and acronyms are used throughout this explanatory memorandum.

Abbreviation

Definition

AAT

Administrative Appeals Tribunal

ABSTUDY

An income support payment for Aboriginal and

Torres Strait Islander Australians who are studying or undertaking an Australian Apprenticeship

ATO

Australian Taxation Office

AWOTE

Average Weekly Ordinary Time Earnings

Case manager

An officer of the Department of Human Services whose role is to assist applicants and recipients of FHA to consider the financial advice provided to them in their farm financial assessment and use it to develop and implement an individualised action plan designed to improve their capacity for self-reliance

CSIRO

Commonwealth Scientific and Industrial Research Organisation

DHS

Department of Human Services

EC

Exceptional Circumstances

ECRP

Exceptional Circumstances Relief Payment

FHA

Farm Household Allowance

the Bill

Farm Household Support Bill 2014

FHSA 1992

Farm Household Support Act 1992 (Cth)

FHSCT Bill

Farm Household Support (Consequential and Transitional Provisions) Bill 2014

IGA

Intergovernmental Agreement on National Drought Program Reform agreed on 3 May 2013 by national, state and Northern Territory primary industries ministers

LAWP

Liquid assets waiting period

NARWP

Newly arrived resident’s waiting period

Reciprocal obligations

A framework under which applicants and recipients of the Farm Household Allowance must agree to, and undertake, actions designed to improve their capacity for self-reliance in return for payment. Once granted payment, the recipient must comply with the terms negotiated in their Financial Improvement Agreement

Social Security Act

Social Security Act 1991 (Cth)

Social Security Administration Act

Social Security (Administration) Act 1999 (Cth)

Social security law

Together, the Social Security Act, the Social Security Administration Act and Australia’s 29 International Social Security Agreements

(The agreements help people who migrate between agreement countries get social security benefits listed in the agreement)

SSAT

Social Security Appeals Tribunal

SWPP

Seasonal work preclusion period

TFFP

Transitional Farm Family Payment

 



 

FARM HOUSEHOLD SUPPORT BILL 2014

GENERAL OUTLINE

The Farm Household Support Bill 2014 (the Bill) provides the mechanism to implement the Farm Household Allowance (FHA), an income support payment for farmers and their partners who are in financial hardship.

The Bill delivers the Australian Government’s commitment under the Intergovernmental Agreement on National Drought Program Reform (IGA) to provide a time-limited income support payment for farmers and their partners based on individual need. The IGA represents a new nationally-agreed approach to drought programs that will support farm families in hardship and help farmers prepare for and manage business risks, including drought. FHA is to commence on a date set by Proclamation and replaces the existing Exceptional Circumstances Relief Payment (ECRP), which was only available to farmers in regions experiencing exceptional circumstances, such as drought. FHA will be available without a drought or Exceptional Circumstances declaration.

The Bill provides for:

•           up to three cumulative years of income support for farmers and their partners in hardship without the need for a climatic trigger

•           a requirement for a person to meet a means test, composed of an asset and income test, to qualify for payment. The means test restricts payment to those individuals who lack sufficient means to support themselves and ensures FHA is paid at a rate that provides equitable treatment of people in like circumstances

•           an assets test that is higher than mainstream asset limits in recognition that farm assets are relatively illiquid compared with other types of business assets and therefore cannot readily be drawn on for self-support

•           a requirement for a person to enter into, and comply with, a financial improvement agreement to qualify for payment. The agreement requires the person to undertake approved activities such as education, training or off-farm employment, designed to improve their capacity for self-reliance and takes into account the special circumstances of farmers and their partners

•           a requirement for a person to have a farm financial assessment conducted. The purpose of the farm financial assessment is to evaluate options to improve the person’s financial situation and inform the development of the financial improvement agreement

•           a farm financial assessment supplement and an activity supplement for the purpose of partially or wholly funding the farm financial assessment and compulsory activities, respectively

•           ancillary benefits such as a health care card, telephone allowance, remote area allowance, clean energy supplement, pharmaceutical allowance and rent assistance, subject to a recipient meeting certain requirements

•           an income support payment for farmers and their partners that aligns with social security law where possible. This approach ensures recipients are treated equitably and have access to the same benefits and services as mainstream income support recipients.

The Department of Agriculture consulted industry stakeholders and

Australian Government agencies in developing the policy supporting FHA. Relevant agencies and stakeholders accept the need for reform of government drought support arrangements. In 2008-09 a national review of drought policy was undertaken. It included an economic assessment by the Productivity Commission; a climatic assessment by the Bureau of Meteorology and CSIRO; and a social assessment by an expert social panel.

Following the national review of drought policy, in 2010 the Australian Government, in partnership with the Western Australian government, conducted a two year pilot of drought reform measures in regions of Western Australia. The pilot tested a range of programs to inform the design of a new national approach to drought support. The pilot was reviewed in 2011 by an independent panel, which reported strong support for an income support payment for farm families in hardship that is based on demonstrated individual need rather than a climatic trigger. Furthermore, the panel emphasised the requirement for reciprocal obligations to help farm families realistically assess their financial position and take steps to become more self-reliant.

FHA was developed in response to the national review of drought policy and WA drought pilot review. It is represented as an output in the IGA: “a farm household support payment”. FHA will be delivered by the Department of Human Services (DHS). DHS case managers will assist people to apply for payment, take action to improve their situation and contact other government and non-government services for further assistance.

The main provisions of the Bill that provide for FHA and necessary amendments to other Acts will commence on a day fixed by Proclamation. 

The Bill is accompanied by the Farm Household Support (Consequential and Transitional Provisions) Bill 2014 (the FHSCT Bill).

The FHSCT Bill repeals the Farm Household Support Act 1992 (FHSA 1992), which contains provisions relating to the exceptional circumstances arrangements, the related payment of ECRP, as well as other payments and schemes that have ceased. The FHSCT Bill makes consequential amendments to other Acts that refer to the FHSA 1992, provisions of the FHSA 1992 or payments made under the FHSA 1992. The FHSCT Bill also makes consequential amendments of a minor nature to other Acts to support the full and effective implementation of FHA; and includes contingent amendments and general transitional provisions.



 

FINANCIAL IMPACT STATEMENT

It is estimated that FHA will cost the Australian Government $99.4 million in the first three years of the program. This includes $62.1 million in administered costs (for payments to recipients) which will be paid through the Consolidated Revenue Fund. This estimate is based on expected demand for the program in its first three years of operation. However, FHA is uncapped and demand-driven, which means funding will increase in times of higher demand. Modelling by the Australian Bureau of Agricultural Resource Economics and Sciences shows that drought is likely to be the primary driver of increased demand.

The estimated cost of FHA includes program administration, case management and ongoing IT maintenance. It also includes a significant once-off investment to develop and monitor a fit-for-purpose IT system in 2013-14 to deliver FHA.

Estimated financial impact:

2013/14

2014/15

2015/16

2016/17

$14.3m

$17.1m

$26.8m

$41.2m

 



 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the

Human Rights (Parliamentary Scrutiny) Act 2011

 

Farm Household Support Bill 2014

 

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

Overview of the Bill

1.         The purpose of the Farm Household Support Bill 2014 (the Bill), together with the Farm Household Support (Consequential and Transitional Provisions) Bill 2014, is to provide for the Farm Household Allowance (FHA). This allowance makes available financial assistance to farmers and their partners who are in financial hardship, in the form of time-limited income support and funding to obtain relevant advice and training, so they undertake actions to improve their situation.

2.         FHA is aligned where possible with social security payments under social security law (i.e. the Social Security Act 1991 and the Social Security (Administration) Act 1999 ); and particularly with newstart allowance and youth allowance.

3.         The Bill, together with the Farm Household Support (Consequential and Transitional Provisions) Bill 2014, is part of a broader national drought program reform agenda that replaces the Exceptional Circumstances (EC) arrangements and is designed to encourage farmers to plan for the future and better manage risks, including the risks associated with drought.

4.         FHA replaces the existing Exceptional Circumstances Relief Payment. Unlike current drought policy, which is based on a climatic trigger, FHA is available regardless of the cause of financial hardship and assists recipients to develop strategies for self-reliance.

5.         The Bill is designed to shift the focus of assistance for farmers from a crisis response to preparedness and risk management. It includes measures that can be tailored to accommodate an individual’s circumstances in developing strategies to improve their long-term financial situation.

 

Human rights implications

6.         In achieving the purpose of providing for FHA, the Bill promotes a number of rights provided under the International Covenant on Economic, Social and Cultural Rights (ICESCR). These rights include the right to social security, the right to health, the right to respect for the family and also the right to an adequate standard of living, including food, water and housing.

7.         The following rights are engaged by the Bill:

•           Article 9 of the ICESCR - right to social security

•           Article 11(1) of the ICESCR - right to an adequate standard of living, including food, water and housing

•           Article 12(1) of the ICESCR - right to health

•           Article 10(1) of the ICESCR - right to respect for the family

•           Article 6(1) of the ICESCR - right to work and rights in work

•           Article 17 of the International Covenant on Civil and Political Rights (ICCPR) - right to protection from arbitrary interferences with privacy

•           Article 2(2) of the ICESCR and article 26 of the ICCPR - rights of equality and non-discrimination.

8.         The payment of FHA, the rate of which is provided for in Part 2, Division 8 of the Bill, is intended to help meet basic household needs; and therefore to advance immediately the first five rights mentioned above.

9.         The activity test requirements underpinning FHA in Part 2, Division 8, Subdivisions A and B of the Bill involve the negotiation between a farmer, their partner and a case manager of reciprocal obligations to ensure that undertaking the financial improvement agreement will improve the recipient’s capacity for self-reliance. Part 2, Division 3 of the Bill provides that, to qualify for payment as a farmer or a partner of a farmer, an individual must, among other things, be willing to enter into a financial improvement agreement and complete the activities negotiated in that agreement within a specified time period. These requirements are designed to achieve progressively the full realisation of the abovementioned rights by farmers over time. [1]

Right to social security

10.       Article 9 of the ICESCR recognises the right to social security. The United Nations Committee on Economic, Social and Cultural Rights (CESCR) has stated that the term ‘social security’ in article 9 encompasses the right to access and maintain benefits, whether in cash or in kind to secure protection from (a) lack of work-related income; (b) unaffordable healthcare; or (c) insufficient family support. [2]

11.       The CESCR has also stated that all persons should be covered by the social security system without discrimination; [3] in particular, “State parties should also remove de facto discrimination on prohibited grounds, where individuals are unable to access adequate social security”. [4]  

12.       The prohibited grounds of discrimination are outlined in ICESCR Article 2(2), which imposes a duty on governments to guarantee the exercise of the rights recognised in that treaty “without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status”.

13.       The value of farm assets often precludes farmers from being eligible for mainstream social security payments. This is despite the sometimes limited capacity of farmers to generate income from farm assets. The illiquidity of farm assets makes it difficult for farmers to sell these assets in the short-term to provide for their self support.

14.       While FHA provided for in the Bill is not a social security payment under the social security law, for the purpose of the Bill FHA is treated as if it were a social security payment (see section 95 of the Bill). At any rate, that FHA aligns where possible with mainstream social security to ensure that farmers are treated equitably and have access to the same benefits and services as other income support recipients means that it can be considered in the same way as social security for farmers and their partners.

15.       The Bill therefore promotes the right to social security. To address the risks involved in farmers losing their means of subsistence for reasons beyond their control, the Bill advances the protection of farmers’ lack of work-related income by providing income support to farmers in the form of FHA when their capacity for self-support is equivalent to other members of the community who would be entitled to social security. It does so particularly by giving farm assets concessional treatment under section 34 when a claim for FHA is assessed.

Highest attainable standard of health

16.       Article 12(1) of the ICESCR recognises the right of all individuals to enjoy the highest attainable standard of physical and mental health.

17.       The CESCR has stated that this right is not confined to the right to health care. [5] The CESCR considers that article 12 more broadly acknowledges that the right to health embraces a wide range of socio-economic factors that promote conditions in which people can lead a healthy life, and extends to the underlying determinants of health, such as food and nutrition, housing, access to safe and potable water and adequate sanitation, safe and healthy working conditions, and a healthy environment.

18.       The ancillary benefits payable under FHA promote this right. Under Part 2, Division 8, Subdivisions A and B of the Bill, FHA recipients are entitled to a range of allowances, bonuses, supplements and payments (‘ancillary benefits’ collectively). This reflects that under mainstream social security law various ancillary benefits are available to social security recipients who meet specific criteria.

19.       In particular, FHA recipients are granted automatic access to a Health Care Card (under Part 5 of the Bill that applies the social security law to FHA); and, subject to eligibility criteria, rent assistance and Pharmaceutical Allowance under Part 2 , Division 8, Subdivisions A and B of the Bill.

20.       The Health Care Card assists FHA recipients with certain health costs by allowing access to specific services at a concessional rate. Rent assistance is a supplementary payment added to FHA of recipients in commercial rental accommodation, in recognition of the housing costs faced by FHA recipients. Pharmaceutical Allowance is also payable in some circumstances, aligned generally with mainstream social security rules. This allowance helps with the cost of pharmaceutical prescriptions under the Pharmaceutical Benefits Scheme.

21.       To a lesser extent, the agreed activities under the activity test requirements mentioned above in paragraph 9 engage indirectly with this right. These activities, such as training courses, assist farmers who are receiving income support to improve their farm’s viability or their prospects of gaining work outside the farm; and, consequently, to promote the conditions mentioned by the CESCR in which people can lead a healthy life.

22.       The agreed activities can also help farmers and/or their partners overcome barriers such as mental illness that may prevent them from fully engaging in activities to improve their situation and may include counselling, crisis support and referral to other services and support.

Right to an adequate standard of living, including food, water and housing

23.       Article 11(1) of the ICESCR protects the right to an adequate standard of living, including food, water and housing. States have an obligation to ensure the availability and accessibility of the resources necessary for the progressive realisation of this right. The CESCR has stated that the core content of the right to adequate food implies both the availability and (economic and physical) accessibility of food. [6]

24.       Given that the livelihood of farmers is subject to seasonal and climatic variability, the Bill protects this right by providing financial support to farmers and their partners at times of hardship and where they demonstrate limited capacity to support themselves.

25.       The right to an adequate standard of housing is protected to a lesser extent under the Bill given that the value of the family home is excluded from the assets test for the FHA under section 33 .

Right to respect for the family

26.       Article 10(1) of the ICESCR obliges States to provide the widest possible protection and assistance to the family, particularly for its establishment and while it is responsible for the care and education of dependent children.

27.       The Bill engages with this right indirectly both through the terms of a farmer’s (and their partner’s) activity agreement that takes into account responsibilities relating to family and the exemptions from the FHA activity test.

28.       Section 16 of the Bill provides that personal factors affecting the recipient’s ability to take steps to improve their situation must be taken into account when deciding whether a particular activity is reasonable. These personal factors include any carer responsibilities of a farmer and their partner for dependent children. 

29.       Similar to mainstream social security law, Part 2, Division 5 of the Bill provides for a range of circumstances where relief or exemption may be given from the FHA activity test. These provisions recognise circumstances impacting on the individual and their family and include: pregnancy; domestic violence; and responsibilities of parents and foster carers for the care and education of disabled children.

Right to work and rights in work

30.       Article 6 of the ICESCR protects the right to work, including the right of everyone to the opportunity to gain a living by work which they freely choose or accept, and obliges governments to take appropriate steps to safeguard this right.

31.       Article 7 of the ICESCR further provides that to achieve the full realisation of this right, the steps to be taken by a State include “technical and vocational guidance and training programmes, policies and techniques to achieve steady economic, social and cultural development and full and productive employment under conditions safeguarding fundamental political and economic freedoms to the individual”.

32.       The CESCR has stated that States’ principal obligation to ensure the progressive realisation of the exercise of the right to work means that they must adopt measures aimed at achieving full employment. [7]

33.       The Bill engages this right as part of the activity test requirements in Part 2, Division 4 of the Bill, which are similar to mainstream social security law. Where the activity agreement focuses on skills development and training to improve the farmer’s and/or partner’s job prospects outside the farm, existing employment service providers will offer tailored services and programs to help recipients in their transition to employment.

34.       In particular, section 19 of the Bill provides that a person satisfies the FHA activity test by undertaking activities that include seeking and undertaking suitable paid work. This provision promotes the right to work, particularly given that the reciprocal obligations include activities that are mandatory.

35.       Various matters must be taken into account by the Secretary under section 19 of the Bill in determining whether work agreed in an activity agreement is ‘unsuitable’; and this clause therefore protects the right to work. Particular paid work may be considered unsuitable if, for example, it is considered that:

•           the work’s conditions would constitute a risk to health or safety and would contravene a relevant occupational health and safety law

•           commuting would be unreasonably difficult

•           moving homes would be required.

Rights of equality and non-discrimination

36.       Article 2(2) of the ICESCR requires States to ensure that the rights recognised in that Covenant are exercised “without discrimination of any kind as to race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status”.

37.       The CESCR has clarified that discrimination constitutes “any distinction, exclusion, restriction or preference or other differential treatment that is directly or indirectly based on the prohibited grounds of discrimination and which has the intention or effect of nullifying or impairing the recognition, enjoyment or exercise, on an equal footing, of Covenant rights”. [8]

38.       Article 26 of the ICCPR is a stand-alone right and also prohibits discrimination in law or in fact in any field regulated and protected by public authorities. Its effect is to provide that all persons are equal before the law and are entitled to equal protection of the law without discrimination. [9]

39.       Upon first reading the Bill, two aspects of FHA engage with the right of non-discrimination: the qualification criterion of being a ‘farmer’ or a ‘partner of a farmer’; and the different treatment, including rate of payment, of FHA based on age.

Qualification criterion - requirement to be a ‘farmer’

40.       The qualification criterion requiring a FHA applicant to be a ‘farmer’ or a ‘partner of a farmer’ may in the first instance appear directly discriminatory based on the prohibited ground of ‘other status’ (i.e. occupation).

41.       The CESCR has stated that “not every differentiation of treatment will constitute discrimination, if the criteria for such differentiation are reasonable and objective and if the aim is to achieve a purpose which is legitimate under the Covenant”. [10] The reasons for the differentiation in the Bill, particularly the differing financial situations and circumstances of farmers, are reasonable and objective. In addition, the FHA seeks to achieve the legitimate purpose of providing financial assistance to farmers who are in financial difficulty if they undertake actions to improve their situation.

42.       Furthermore, the effect of this differentiation is not to impair the enjoyment (on an equal footing) by those not receiving FHA of their right to social security enshrined in article 9 of the ICESCR. While FHA aims to align where possible with mainstream social security payments (and ensure that recipients of FHA are on an equal footing with mainstream social security recipients), some departure exists. For example, the reciprocal obligations underpinning FHA are objectively more flexible than the activity test for newstart allowance and recognise that farmers are not unemployed at the time they are seeking support.

Differentiation on the basis of age

43.       The other aspect of the Bill that may in the first instance appear to operate to limit the right of non-discrimination is the different treatment of FHA based on the age of an applicant/recipient:

•          A person is paid the youth allowance rate if they are below 22 years old, rather than the newstart allowance rate ( section 60 )

•          If a person is below 16 years they are not entitled to receive FHA ( section 8 )

•          FHA continues to be made available once a person has reached age pension age (65 years for men; tapered for women) ( Part 2, Division 8, Subdivisions A and B ).

44.       The rate of FHA is equivalent to the rate of payment an individual would receive if they were receiving newstart allowance. If an individual is of youth allowance age (22 or younger) they receive the youth allowance (independent, not accommodated) rate of payment as though they are independent and not accommodated.

45.       In relation to the ‘minimum age’ qualification criterion for FHA, it is unlikely that a person under 16 would be able to satisfy the first two qualification criteria in section 8 of the Bill. These criteria require an applicant to be a ‘farmer’ or a ‘partner of a farmer’, as well as to contribute a significant part of their labour and capital to a farm enterprise. Furthermore, the minimum age of 16 is consistent with the minimum age for a person applying for youth allowance (non-independent and looking for full-time work or undertaking approved activities).

46.       That FHA continues to be made available once a person has reached age pension age. This differs from social security law, where eligibility for newstart allowance, for example, ceases once an individual reaches age pension age. This recognises that many farmers continue to work well past what would be considered retirement age in other professions and that a similar age restriction would significantly limit the effectiveness of FHA.

47.       A person of age pension age who receives FHA may also be paid a lower rate than the age pension and would be required to undertake reciprocal obligations that a person receiving the pension would not be required to undertake. By making FHA available to persons of age pension age, the Bill may in the first instance appear to differentiate indirectly on the basis of age. This may be seen as having the effect of impairing the exercise, on an equal footing, by persons receiving FHA on the right to social security enshrined in article 9 of the ICESCR.

48.       However, for the reasons outlined above in paragraph 45, this differentiation is reasonable and objective and supports the legitimate purpose of the Bill. Furthermore, the Bill does not differentiate between FHA recipients and regard has been paid to the rights and interests of those affected by

section 8, section 60 and Part 2, Division 8, Subdivisions A and B . For example, the same circumstances that prevent farmers from accessing social security allowances (i.e. high asset levels) may preclude qualification for the age pension. In addition, section 8 of the Bill provide that eligibility for FHA will be conditional on farmers, at the time of application, being willing to enter into a financial improvement agreement. This would exclude from eligibility any individual who is so aged or frail that they would not, or could not, undertake reciprocal obligations.

Privacy

49.       Article 17 of the ICCPR prohibits arbitrary or unlawful interference with an individual’s privacy, family, home or correspondence. This right may be subject to permissible limitations where those limitations are provided by law and are non-arbitrary. In order for an interference with the right to privacy to not be arbitrary, it must seek to achieve a legitimate objective and be reasonable, necessary and proportionate to this purpose.

50.       The Bill applies the administrative arrangements of social security law found in the Social Security (Administration) Act 1999 (the Social Security Administration Act) and, where necessary, modifies the operation of those provisions for the purpose of FHA. In particular, Part 5, Division 3 of the Bill applies the following provisions in the Social Security Administration Act, which engage with the right to privacy:

•          information-gathering (Part 5, Division 1)

•          the requirement to provide information etc. (Part 3, Division 6)

•          confidentiality (Part 5, Division 3).

51.       The Social Security Administration Act provisions applied by the Bill relating to information-gathering and providing information contain a number of powers that relate to information-gathering for purposes including:

•          determining an individual’s initial entitlement to gain access to FHA

•          coercive information-gathering powers for monitoring legislative compliance

•          investigations where there has been or could be a breach of the law.

52.       Part 5, Division 3 of the Bill applies the confidentiality provisions in Part 5, Division 3 of the Social Security Administration Act. These confidentiality provisions prohibit any person from misusing information about a person that is or was held in government records for social security purposes. Specifically, the Social Security Administration Act allows:

•          a person to obtain, record, disclose or use ‘protected information’ (section 202)

•          the Secretary to obtain and disclose information, including ‘protected information’ (sections 204A-204B, 208-208A). [11]

53.       By requiring people to provide information and potentially allowing personal information to be disclosed in some circumstances, the Bill in the first instance limits the right to privacy. However, the provisions in the Bill requiring people to provide information are lawful and non-arbitrary. Furthermore, the Bill does not allow disclosure of personal information beyond what is authorised by law.

54.       Part 5, Division 3 of the Bill also applies provisions in the Social Security Administration Act regarding the collection and use of information and the disclosure of personal information that are necessary to administer FHA. These clauses are reasonable and proportionate in the context of social security law, which also contain the following safeguards:

•          The purposes for which a person can obtain, record, disclose or use ‘protected information’ and the Secretary can obtain and disclose information are limited

•          These clauses are subject to the provisions of the Privacy Act 1988 [12]

•          These clauses do not affect the operation of the Freedom of Information Act 1982

•          The Minister may make guidelines for the exercise of the Secretary’s disclosure powers (refer Social Security Administration Act section 209).



 

Conclusion

55.       The Bill is compatible with the human rights outlined above. In some instances it promotes human rights and to the extent that it may limit these rights, these limitations are reasonable, necessary and proportionate to achieve legitimate aims.

Minister for Agriculture, the Hon. Barnaby Joyce MP



 

NOTES ON CLAUSES

Part 1—Preliminary

Section 1: Short title

This section provides for the Bill to be called the Farm Household Support Act 2014 .

Section 2: Commencement

This section provides that sections 1 and 2, and Parts 5 and 6 of the Bill commence upon Royal Assent.

The commencement of Parts 5 and 6 upon Royal Assent allows DHS to receive and process claims prior to payment of the Farm Household Allowance (FHA) being made. This provision aims to minimise the time between the granting of claims and payment of FHA, particularly for those people who are in receipt of relevant terminating income support payments.

The remainder of the Bill (sections 3 to 89) which contain the substantive provisions for FHA commences upon a day set by Proclamation.

Section 3: Object of this Act

This section sets out the Bill’s object of improving the financial situation of farmers and their partners who need financial assistance through the provision of:

•           FHA for up to three years

•           funding to engage in certain activities

•           funding to obtain a farm financial assessment.

Certain activities include receiving relevant training, advice and other activities designed to improve a person’s capacity for self-reliance.

Section 4: Simplified outline of this Act

This section summarises the substantive provisions of the Bill, which are to provide financial assistance to farmers and their partners who contribute significant labour and capital to a farm enterprise which has a significant commercial purpose and character. The qualification criteria are explained more fully under section 8.

This Bill provides for three types of payments:

•           FHA for up to three years

•          funding (called the activity supplement) for undertaking activities such as receiving training or advice, or undertaking study

•          funding (called farm financial assessment supplement) to pay for an assessment of the financial position of a person and a relevant farm enterprise.

The inclusion of FHA as a social security payment means that the rules for making a claim, administering payments and reviewing decisions relating to payments under this Bill are in the Social Security Act and the Social Security Administration Act.

Readers should note that the simplified outline is not intended to be a comprehensive outline of all provisions in the Bill. It is intended that readers should rely on the substantive provisions to fully understand the intent and effect of the Bill.

Section 5: Definitions

This section defines most of the terms used in the Bill. Some of the definitions are signpost definitions that refer to the section of the Bill where the term is substantively defined. It should be noted that expressions used in the Social Security Act, have the same meaning in this Bill, except where they are in conflict.

Definitions of particular note are:

Farm enterprise

A farm enterprise is an enterprise carried on within any of the agricultural, horticultural, pastoral, apicultural or aquacultural industries.

Farmer

A farmer is someone who has a right or interest in land used wholly or mainly for the purposes of a farm enterprise. Right or interest encompasses any legal or equitable estate in land, or restriction on the use of land, or any other right, charge, power or privilege over or in connection with the land.

Farm financial assessment

The farm financial assessment is an assessment of the financial position of a farm enterprise and the individual for whom the assessment is conducted. The purpose of the assessment is to develop and evaluate options to improve the financial position of the individual through an analysis of their resources, liabilities, barriers and goals.

Section 6: Meaning of cumulative period of farm household support and 3 years or less

It is intended that a person who qualifies for FHA, subject to their ongoing eligibility, can receive FHA for up to three years, or 1095 days. There is no limitation on the timeframe over which an individual can be paid and the period(s) of support do not need to be consecutive.

A person’s cumulative period of FHA is the total number of days for which FHA is payable to a person. This includes non-consecutive days and days when the person qualifies as either a farmer or a partner of a farmer.

Under social security law, the first day of payment, referred to as the start day, is the first day for which the payment is payable to a person, and hence the day from which the person is paid. Normally, this is the day that a person makes a claim for payment or contacts DHS about the payment if they subsequently make a claim within 14 days (or 13 weeks if there is a continuous medical condition). However, there are limited circumstances in which a person's start day may be earlier than the day they claim FHA, such as following the birth of a child or where a person has become incapacitated as the result of a medical condition.



 

Part 2—Farm household allowance

Division 1—Simplified outline of this Part

Section 7: Simplified outline of this Part

This section summaries the substantial provisions of Part 2, which include criteria a person must meet to qualify for FHA as a farmer or the partner of a farmer. To qualify for FHA as a farmer, a person must contribute significant labour and capital to a farm enterprise that has a significant commercial purpose or character. The domestic partner of such a person may also qualify for FHA even if they do not contribute significant labour and capital to the enterprise. Another requirement is that the person is willing to enter into and comply with a financial improvement agreement (FIA). This agreement outlines the activities a person must do to meet the activity test (which is a test that a person usually must satisfy to receive payment). In some situations, a person may be exempt from the activity test and continue to meet the qualification criteria, including if the person is temporarily incapacitated.

A person who qualifies for payment must meet additional requirements to receive payment, such as owning assets valued below a certain limit.

A person’s rate of FHA depends on their age, with people under 22 receiving a rate equivalent to youth allowance, while everyone above this age receive a rate equivalent to newstart allowance.

To receive FHA, a person must meet certain obligations, referred to in this explanatory memorandum as reciprocal obligations. These obligations include compulsory activities that are tailored to the individual and designed to improve their capacity for self-reliance.

Administration processes, such as rules about how to make a claim for FHA, are found in the Social Security Act and the Social Security Administration Act. Part 5 of this Bill modifies these other Acts to facilitate the administration of FHA in line with mainstream social security payments.  

Division 2—Basic qualification of farmers and their partners for farm household allowance

Division 2 sets out the qualification requirements for FHA. The qualification criteria allow qualifying farmers and their partners, who are suffering financial hardship, to have time-limited access to government support. Financial hardship is determined through asset and income testing.

Consistent with other social security payments, FHA tests the eligibility of farmers and their partners separately. Accordingly, there are separate qualification criteria for farmers and partners of farmers.

Section 8: Qualification of farmers for farm household allowance

This section describes the eight criteria a person must meet to qualify for FHA as a farmer:

(a) the person is a farmer

The requirement in paragraph 8(a) is targeted to people who are engaged in a farming enterprise. The definition of farmer in section 5 is intentionally broad to capture individuals who have a right or interest in the land used for the purpose of the farm enterprise but do not necessarily have total financial or legal control of the farm enterprise, such as a sharefarmer (a person who has entered into an agreement to contribute resources to a farm enterprise in return for a share of profits).

Hunters, wild-catch fishers and foresters are not captured under the definition of farmer . In contrast, farmers who undertake activities that promote permanent, bio-diverse carbon plantings and revegetation on their farm (for example, carbon farming initiatives) as part of their farm enterprise operations are considered to meet the definition of a farmer under FHA.

(b) the person contributes a significant part of his or her labour and capital to a farm enterprise

Paragraph 8(b) requires an individual to contribute significant labour and capital to a farm enterprise to qualify for FHA. This requirement ensures that FHA is only available to individuals whose principal occupation is farming.

The significant labour test excludes those individuals who meet the definition of farmer but whose principle occupation is not farming. Labour includes both physical and intellectual exertion that is invested in the farm enterprise. A farmer whose major contribution of labour to the farm enterprise involves undertaking farm management activities (such as business planning, risk assessment and management or administration) may satisfy the labour test. The labour test excludes absent farmers, such as a farmer who is in a nursing home or a silent investor in a farm enterprise.

A farmer satisfies the labour test if they are exempt from the activity test due to temporary incapacity.

The purpose of the capital test is to exclude those individuals who meet the definition of farmer but who are better defined as an employee as they do not have a significant financial investment in the business. Such people are better positioned to claim social security payments targeted at non-farmers as their assets are unlikely to preclude them from other payments.

The term significant as it relates to the labour and capital test is intentionally broad and should be interpreted as a relative measure of a person’s capacity to contribute labour and capital.

Example of a farmer who does not meet the labour test

A person has a one third share of a vineyard and only contributes labour to the vineyard for a few days each year. The individual is paid a wage for their labour like other vineyard employees. Compared to their principal occupation as a mechanic, this individual does not contribute a significant part of his labour to the farm enterprise, so would not be eligible for FHA.

Example of a farmer who does not meet the capital test

A person is given a small share in their family’s farm enterprise. The individual works full-time on the farm and receives approximately $25,000 per year from the farm profits for their labour. While they have a right or interest in the farm enterprise and contribute significant labour, this person does not qualify for FHA as they do not contribute significant capital to the farm enterprise.

(c) the farm enterprise has a significant commercial purpose or character

Paragraph 8(c) requires a farmer to be engaged in a farm enterprise that has a significant commercial purpose or character to qualify for FHA. This requirement prevents ‘hobby farmers’ from qualifying for payment. A hobby farmer is a person with a right or interest in a small farm that is maintained without expectation of it being their primary source of income. The intention of FHA is to support farmers and their partners who do not have an alternative source of income upon which to draw for self-support. It is not intended to support people who choose to engage in activities that are not aimed at generating adequate income.

The Secretary’s Rules specify the criteria used to determine whether a farm enterprise has a commercial purpose or character.

(d) the land that is used for the purposes of the farm enterprise is in Australia

Paragraph 8(d) requires that land used for the purpose of the farm enterprise be located in Australia. This prevents individuals solely involved in overseas farms from qualifying for payment of FHA. Without this limitation an individual could qualify for FHA even if their farm enterprise was located in another country if the labour activities that they contribute to the farm enterprise were deemed significant, such as farm manager activities (i.e. bookkeeping, planning, oversight etc.).

(e) the person has turned 16

Paragraph 8(e) requires a person to have turned 16 to qualify for FHA. While it is unlikely that a person under 16 would be able to meet the definition of farmer or the labour and capital test, the minimum age of 16 is consistent with the minimum age for a person applying for youth allowance (looking for full-time work or undertaking approved activities).

(f) the person is an Australian resident, and is in Australia

Paragraph 8(f) requires a farmer to be an Australian resident and be in Australia to qualify for FHA, consistent with social security law. The qualification requirement for a person to be in Australia is subject to FHA’s overseas portability provisions which allow a person to continue receiving FHA while overseas for a limited time under specific circumstances.

(g) either:

(i)        the person has indicated, in writing, that the person is willing to enter into, and comply with, a financial improvement agreement; or

(ii)       a financial improvement agreement is in force in relation to the person

Paragraph 8(g) requires that a person must indicate, in writing, their willingness to enter into and comply with a FIA to qualify for payment of FHA. Alternatively, a person may satisfy this requirement if they have already entered into a current FIA. The agreement details the activities a recipient is required to undertake while on payment which promote active decision-making and self-reliance. These activities, such as training courses, aim to help farmers who are receiving FHA to improve their income either from on-farm activities or improve their prospects of gaining work outside the farm.

If more than one family member from the same farm enterprise claims FHA, the activities in their individual financial improvement agreements may be linked to prevent anomalous outcomes.

(h) the person’s cumulative period of farm household allowance is 3 years or less

Paragraph 8(h) limits payment to individuals who have received three years or less of FHA. This restriction creates a time-limited payment that encourages recipients to take action to improve their circumstances and avoids entrenching dependence on income support payments.

Section 9: Qualification of farmers’ partners for farm household allowance

This section provides that FHA tests separately the eligibility of farmers and their partners to ensure that both members of the couple are actively engaged in activities specified in the FIA. Accordingly, this section provides separate qualification criteria for partners of farmers. The qualification criteria for a partner of a farmer differ from those for the farmer in that the qualification criteria for a partner do not require the associated farmer to be paid FHA or be an Australian resident in Australia.

It would be administratively unfair to deny payment of FHA to a partner because the farmer is not being paid FHA. The associated farmer may not qualify for FHA for a number of reasons, including that they have used their three years of support; they may be overseas and not meet the portability test; or they may be unwilling to undertake reciprocal obligations. Equally, it would be administratively unfair to deny a benefit to an Australian resident who would otherwise qualify for the payment but for the residency status of their partner. Testing the eligibility of members of a couple separately is consistent with all other social security payments.

This section outlines ten criteria that a person must meet to qualify for FHA as a partner of a farmer. A person who satisfies the partner qualification criteria may be disqualified from FHA if the associated farmer is not in effective control of the farm enterprise, such as if the mortgagee has taken possession of the farm, the farmer is bankrupt or has received an eviction notice.

To qualify for FHA for a period as a partner of a farmer, a person must meet the following criteria throughout that period:

(a) the person is not qualified for farm household allowance under section 8

Paragraph 9(a) requires that a person not qualify for FHA as a farmer before they can qualify as a partner. This restriction ensures that FHA is paid to individuals under the most suitable qualification criteria. 

(b) the person is a member of a couple

Paragraph 9(b) requires a person to be a member of a couple to qualify for FHA. This restricts payment of FHA to individuals who are in a genuine domestic relationship. To be considered a partner of a farmer, a person must:

•          live with a farmer on a permanent or indefinite basis as their partner

•          be either legally married or in a registered or de facto relationship with a farmer.

Both members of the couple must also be over the age of consent (applicable to the relevant state or territory). The definition of a farmer’s partner is consistent with the definition of a member of a couple in social security law.

(c) the person’s partner is a farmer

Paragraph 9(c) restricts payment to individuals who are partners of a farmer (see partner qualification requirement (b) and definition of a farmer in section 5). This requirement is subject to the grace period for farmers’ partners, which allows an individual to continue receiving FHA for up to 14 weeks after they cease to be in a relationship with a farmer.

(d) the farmer contributes a significant part of his or her labour and capital to a farm enterprise

Paragraph 9(d) requires the associated farmer to meet the labour and capital tests. This targets payment of FHA to individuals whose partners are actively involved in farming; rather than retired farmers or farm investors, for example. This requirement is subject to the grace period for a partner of a farmer, which allows an individual to continue receiving FHA for up to 14 weeks after the person’s partner (the farmer) is imprisoned or psychiatrically confined and therefore cannot contribute significant labour or capital to the farm enterprise.

(e) the farm enterprise has a significant commercial purpose or character

Paragraph 9(e) requires an individual to be the partner of a farmer who is involved in a farm enterprise that has a significant commercial purpose or character to qualify for payment. This requirement excludes individuals whose partners are hobby farmers.

(f) the land that is used for the purposes of the farm enterprise is in Australia

Paragraph 9(f) restricts payment to individuals who are partnered to a farmer who is involved in a farm enterprise that is located in Australia. 

(g) the farmer resides in Australia

Paragraph 9(g) restricts payment to individuals whose partner is a farmer who resides in Australia. Without this requirement, the associated farmer could reside overseas which would limit the partner’s ability to take action to improve their own capacity for self-reliance (consequently limiting their ability to meet the qualification requirement to comply with their FIA). Specifically, a partner would have limited ability to engage in effective decision-making and undertake activities to either improve their capacity for self-reliance from on-farm or off-farm activities without potentially adverse outcomes due to shared ownership and investment in the farm enterprise.

(h) the person is an Australian resident, and is in Australia

Paragraph 9(h) requires the partner to be an Australian resident who is in Australia, consistent with social security law. The requirement to be in Australia is subject to the FHA’s overseas portability provisions, which allow a FHA recipient to continue to receive payment while overseas for a limited time under specific circumstances.

(i) either:

(i)        the person has indicated, in writing, that the person is willing to enter into, and comply with, a financial improvement agreement; or

(ii)       a financial improvement agreement is in force in relation to the person

Paragraph 9(i) requires a person to indicate their willingness to enter into, and comply with a FIA. This requirement ensures that only partners of farmers who are willing to take action to improve their financial situation qualify for payment. Alternatively, a person may satisfy this requirement if they have already entered into a current FIA. The agreement details the actions the individual will undertake, such as training courses or education, to improve their income from on-farm activities or their prospects of gaining income from outside the farm.

Where both members of a couple are receiving FHA, their FIA may be linked to ensure that both members agree on the desired outcomes and associated activities.

(j) the person’s cumulative period of farm household allowance is 3 years or

 less.

Paragraph 9(j) limits payment to individuals who have received 3 years or less of FHA. This restriction creates a time-limited payment which recognises that partners of farmers need to be encouraged to take action to improve their circumstances and avoid entrenching dependence on income support.

Section 10: Grace period for farmers’ partners

This section provides that farmers’ partners can continue to receive FHA for up to 14 weeks after they cease to be a member of a couple with the farmer or the farmer is imprisoned or undergoing psychiatric confinement (and therefore unable to contribute significant labour and capital to the farm enterprise). Situations in which a partner would no longer be considered to be a member of a couple include where the farmer dies or the partner leaves the relationship due to domestic violence. Without a grace period, the partner would cease to qualify for FHA (as they are no longer the partner of a farmer), yet their capacity to financially support themselves would not have changed. The 14 week grace period provides a former partner with temporary income support while they test their eligibility for other income support payments such as newstart allowance or age pension and/or place their farm assets on the market to qualify for such payments under asset hardship provisions.

The length of the grace period for farmers’ partners mirrors the length of time covered by the social security bereavement payment (available when a member of a couple who was receiving income support dies). The grace period begins on the day that the relationship ends, or the farmer is imprisoned or undertakes psychiatric confinement, and ends when the partner ceases to qualify for FHA by failing to meet the qualification criteria or 14 weeks after the grace period commenced.

Section 11: Persons with temporary incapacity exemption may be taken to meet the labour requirement

This section provides that farmers who are exempt from the activity test due to a temporary incapacity are considered to have also met the farmer qualification requirement to contribute significant labour to the farm enterprise, so long as they met the labour test immediately prior to becoming incapacitated. This ensures that farmers who are incapacitated for a period due to temporary medical condition or injury are not disqualified from payment.

Section 12: Persons not qualified if Secretary determines that they do not effectively control the farm enterprise

This section provides that a farmer must have effective control of the farm enterprise to qualify for FHA. Likewise, a partner of a farmer ceases to qualify if the associated farmer does not have effective control of the farm enterprise. For example, a farmer who is bankrupt, has had their farm repossessed by their mortgagee, or who has been served an eviction notice would not be considered to have effective control of the farm enterprise. This requirement is not intended to exclude sharefarmers who qualify for payment as a farmer but may not have full managerial control of the farm enterprise under their sharefarming agreement.

Section 13: Determination of matters relating to qualification for farm household allowance

This section provides that the Secretary’s Rules may prescribe matters that are to be taken into account in deciding whether a person meets the significant labour and capital test or whether a farm enterprise has a significant commercial purpose or character.

Division 3—Financial improvement agreements

Division 3 outlines the requirement for a person to enter into, and comply with a FIA. The agreement contains activities that a person is required to undertake to satisfy the activity test and receive payment. This division explains the purpose and terms of the FIA, including the types of activities it can and cannot contain. The agreement can be reviewed or cancelled at any time and a person must notify of any circumstances that affect their capacity to comply with the terms of their agreement.

Section 14: Requirement to enter financial improvement agreement

This section requires an individual to enter into a FIA if they have claimed, or are receiving, FHA. Furthermore, a person who has entered into a FIA can be required to enter into a new agreement, which cancels the original agreement.

A FIA is a planning tool for farmers and their partners to work towards improving their capacity for self-reliance. The FIA is negotiated between the individual claiming or receiving FHA, their partner and the Secretary (in practice, this is delegated to a DHS case officer) based on the person’s goals, resources and any relevant personal factors that may serve as a barrier to them taking action to improve their circumstances. The agreement contains approved activities that are designed to assist them to achieve their objectives and make progress towards their goals.

The requirement to enter into a FIA ensures that a person who has applied for, or is receiving, FHA is undertaking actions to improve their situation and is receiving case management support to do so. Subparagraph 14(1)(b)(ii) provides for a person whose claim for FHA has not yet been granted to enter into a FIA prior to their claim being granted. The effect of this is to allow case management to begin as early as possible so that the recipient can receive a full three years of case management even if there is a delay in granting their payment.

Section 14 requires a person to enter into a FIA within 28 days of receiving a written notice of the requirement. This period can be extended by 28 days. The notice contains the places and times at which the agreement is to be negotiated, the period within which the person must comply, and the consequences for non-compliance. 

Section 15: Terms of financial improvement agreement

This section requires a FIA to contain one or more suitable activities that a person is required to undertake to satisfy the activity test. Suitable activities may include training and/or study, obtaining advice, seeking or undertaking paid work in Australia or other activities relevant to improving the individual’s self-sufficiency. The agreement cannot require a person to undertake certain activities prescribed in the Secretary’s Rules.

Subsection 15(4) allows for an agreement to include activities that the person is not required to undertake. The purpose of this provision is to recognise the additional efforts of recipients to improve their situation.

Section 16: Approval of requirements

This section requires all FIAs to be approved by the Secretary, whose power can be delegated to a DHS case manager. When deciding whether to approve a FIA, a case manager will consider the person’s individual needs and their capacity to comply with the requirements. In practice, this means that individual circumstances affecting a recipient’s ability to undertake certain types of activity will influence the kinds of mandatory activities that will be included in their FIA.

These considerations are similar to those taken into account when determining whether a person is exempt from, or has a partial capacity for, the activity test requirements for newstart allowance. Unlike newstart allowance, there is no requirement for a person who has claimed or is receiving FHA to undertake a minimum number of hours of activities to satisfy the activity test. This recognises the substantial workload of running a farm which varies over time for the same farm and between different types of farms (for example, broadacre farms compared to dairy farms). As a result, it is more appropriate for the FHA activity test to have consideration for limiting factors when determining whether to approve activities in a farmer’s or their partner’s FIA.

Section 17: Variation, cancellation and review

This section allows a FIA to be reviewed and renegotiated with the person to whom it applies. A FIA can be cancelled after the review or when the person enters into a new FIA. It is intended that a DHS case manager review a person’s FIA at least every three months to ensure that the person is able to meet the requirements in their agreement (thus satisfying their qualification requirements). A person can request a review at any time, for example, where they need to renegotiate the terms due to a change in their circumstances or to reflect a change in their goals for self-reliance.

Section 18: Notification of circumstances preventing or affecting compliance

This section requires a person to notify the Secretary of any circumstances preventing or affecting their capacity to comply with the requirements in their FIA within 14 days of the circumstances occurring.

A person may not be required to notify within this period if the Secretary determines that the person could not have reasonably been expected to give the notification under the circumstances. The effect of this section is that a person who does not notify a DHS officer of their inability to comply with their activity test within 14 days of the relevant event has their payment cancelled from the date that the Secretary determines unless the Secretary is satisfied that it would have been unreasonable to expect them to notify under the circumstances.

A determination under subsection 18(3) does not constitute a legislative instrument within the meaning of the Legislative Instruments Act 2003 .

Division 4—The activity test

This Division sets out the conditions under which an individual satisfies the activity test for FHA. Where applicable these requirements mirror those that apply to the newstart allowance activity test. As the purpose of the FIA is to specify activities that are likely to improve the individual’s capacity for self-reliance, some types of activities are specific to FHA recipients.

Section 19: The activity test

This section outlines the activities a person can undertake to satisfy the activity test. A person can meet the activity test by participating in training, receiving advice, undertaking study, or actively seeking or undertaking paid work in Australia that is required in their FIA. Other activities can be considered adequate to meet the activity test provided the Secretary is satisfied that the activity is consistent with the purpose of a FIA.

Section 20: Training and advice to be provided by appropriately qualified person

This section sets out who an appropriately qualified person is for the purpose of providing training. In circumstances where the provider is not a registered training organisation, the Secretary has the discretion to authorise the delivery of training by another person or body. This discretion recognises that in some circumstances, registered training organisations may not be available to provide the suitable training for the purpose of a FIA.

Subsection 20(2) provides that the Secretary’s decision to approve a person or body to provide training is not reviewable by a tribunal. This is because the Secretary’s decision takes account of the relevance of the training in relation to improving an individual’s capacity for self-reliance, rather than a training organisation’s compliance against an accepted standards framework. A third party could not test the appropriateness of the Secretary’s determination against this objective.

Subsection 20(3) provides that a person providing advice must be independent from the person obtaining the advice, suitably qualified to provide that advice, and have no right or interest in that person’s farm or assets.

Section 21: Determining whether work is unsuitable

This section sets out the matters the Secretary must take into account when determining whether certain work is unsuitable to be included in an individual’s FIA.

The matters that the Secretary must take into account when determining whether work is suitable, as well as the types of work that are unsuitable, are based on the equivalent provisions in the Social Security Act. These have the effect of protecting an individual from being required to undertake work that is unreasonable for a person in their circumstances. The workload associated with the operation of the farm is also recognised here, noting the aim of FHA is to assist people to improve their capacity for self-reliance, not prevent them from running their farm.

Division 5—Exemptions from the activity test

This Division sets out the conditions under which an individual can be temporarily exempt from the activity test for FHA. A permanent inability to comply with the activity test would render an FHA applicant or recipient ineligible for the payment. As an FHA recipient can satisfy the activity test without complying with a set minimum number of hours per week, not all circumstances that automatically result in an activity test exemption for a newstart allowance or youth allowance recipient apply to FHA.

Subdivision A—General exemptions determined by Secretary

This Subdivision provides for activity test exemptions for FHA that are determined at the discretion of the Secretary. As FHA is available for a maximum of three years and the purpose of the payment is to assist recipients to improve their capacity for self-reliance, there are time limits on the activity test exemptions that can be granted.

Section 22: Determination of exemption by Secretary

This section provides that the Secretary can make a determination about whether a person receiving FHA is exempt from the activity test for a period. This provision allows the Secretary to revoke their determination if they are satisfied that the grounds on which the determination was made no longer exist.

Section 23: Essential farm activities

This section outlines the concept of essential farm activities . Under this section, a farmer may be temporarily exempt from the activity test if the Secretary is satisfied the farmer is required to undertake activities that are essential to the operation of the farm. The effect of this is to ensure that the individual is not prevented from running their farm business during times of intensive workload but that they are still required to satisfy the activity test for the majority of their time on payment.

Under subsection 23(2), the Secretary may determine in writing the period for which the farmer is exempt. This period must not exceed six weeks and cannot be extended. A determination under subsection 23(2) does not constitute a legislative instrument within the meaning of the Legislative Instruments Act 2003 .

Exemptions for essential farm activities cannot be granted where the farmer has already received an exemption for essential farm activities twice in the previous 12 months, regardless of the length of the exemptions or whether FHA was payable during the periods.

Section 24: Domestic violence etc.

This section provides that the Secretary can grant an exemption from the activity test for a person who has been subjected to domestic violence or other special circumstances and is the principal carer of at least one child.

In circumstances where a person is granted an exemption due to domestic violence, the period of exemption may be determined by the Secretary based on what is appropriate for each individual. The exemption cannot exceed 16 weeks. Additional exemptions of up to 16 weeks can be granted. This approach is consistent with the equivalent Social Security Act provisions regarding newstart allowance.

Section 25: People with disabled children

This section provides that the Secretary can grant an exemption from the activity test for a principal carer of a dependent child where that child has a disability, illness, mental health condition or physical condition whose care needs prevent the person from meeting the activity test.

The period of exemption is determined based on the individual’s circumstances. The initial exemption cannot exceed 12 months. At the end of the exemption period, additional exemptions can be granted subject to a review of current care needs.

Section 26: Inclusion in prescribed class

This section allows the Secretary to specify an exemption from satisfying the activity test for a prescribed class of people. This means that people receiving FHA who meet the class requirements are temporarily exempt from the activity test. For example, a prescribed class may include recipients affected by a disease outbreak in a certain region; or those affected by a natural disaster or other situation that would prevent affected people from undertaking activities in their FIA. The period of exemption is determined based on the circumstances that have triggered the exemption. The exemption period cannot exceed 12 month, but additional exemptions of up to 12 months may be determined.

Section 27: Exemption where requirement for person to satisfy the activity test would be unreasonable

This section allows the Secretary to grant an exemption where it is unreasonable to expect the person to satisfy the activity test. This may include consideration of the person’s ability to meet the activity test in relation to the location of a DHS office, difficulties with transportation and the person’s educational, cultural or religious background.

Section 28: Special Circumstances

This section provides for the Secretary to grant an exemption from the activity test for individuals in special circumstances. Under social security law, such circumstances may include a major personal crisis, jury duty, emergency volunteer duties or temporary caring responsibilities.

The period of exemption is determined based on what is appropriate for an individual’s circumstances. This period cannot exceed 13 weeks and cannot be extended.

Subdivision B—Automatic general exemptions

Sections 29 and 30: Member of Defence Reserves and Prenatal and postnatal exemption

These sections provide for automatic general exemptions from the activity test for a person who is attending a training camp as a member of the Defence Reserves and for pregnant women during certain periods of the pregnancy and for six weeks before and after the birth of the child. These automatic exemptions are consistent with those that apply to the activity test for newstart allowance.

Subdivision C—People temporarily incapacitated

This Subdivision provides for persons with a temporary incapacity to be exempt from the activity test for a specified period. The incapacity exemption for FHA is consistent with social security law.

Section 31: Temporarily incapacitated person exempt from the activity test

This section provides for a person to be exempt from the activity test where, because of illness or injury, that person would temporarily be prevented from undertaking any activities for the period for at least eight hours per week.

To request an exemption from the activity test, a person must provide the Secretary with medical evidence which includes a person’s medical diagnosis, prognosis and expected period of incapacity.

In deciding if a person meets the requirements for an incapacity exemption, the Secretary must comply with the Minister’s Rules.

Section 32: Time limit for exemption—end of person’s maximum exemption period

This section specifies the maximum period for which a person can apply for an incapacity exemption. The effect is that a person can initially receive an activity test exemption for a period of up to 13 weeks (or the period stated on their medical certificate; whichever is the lesser period) and that the exemption can be extended by up to 13 weeks at a time with a medical certificate or four weeks without a medical certificate (at the Secretary’s discretion).

People with a permanent incapacity who are unable to undertake any activity for the period of at least eight hours per week cannot be granted an exemption under this section. Consistent with other allowances that have an activity test requirement, people with a permanent incapacity are able to test their eligibility for a more appropriate payment such as disability support pension or age pension.

Division 6—Payability

This Division outlines additional criteria a person must meet to receive payment of FHA. Once a person qualifies for payment of FHA as a farmer or a partner, a person must then be payable . In practice, this means that the person must hold assets valued below certain limits, receive income below a set limit, not be in receipt of another payment or benefit, and not be serving a waiting period.

Subdivision A: Situations where allowance not payable (assets test)

This Subdivision details the assets test for FHA, which is a two tier test. Applicants first have their non-farm assets tested, and then their farm assets tested against the respective asset value limits. The purpose of the assets test is to ensure that the payment is provided only to those individuals with limited assets available for their own self-support. Consistent with mainstream social security, applicants with assets above the asset value limits are expected to draw on these assets for their self-support.

Section 33: Non-farm asset value limit

This section provides that FHA is not payable to a person if their non-farm assets exceed the non-farm asset value limit. The non-farm asset value limit includes all non-business and liquid assets, including a person’s cash, shares in public companies, money owing or any other realisable assets. Farm management deposits, and cash held to purchase farm assets such as property, are considered liquid assets. Consistent with other social security payments, the family home is excluded from the non-farm and farm assets tests. Applicants whose non-farm assets exceed the non-farm assets value limit are not payable.

The non-farm asset value limit is aligned with the asset value limits for newstart allowance. The asset limits (as at 1 January 2014) are:

•           single recipients: $196,750 (homeowner); $339,250 (non-homeowner)

•           partnered recipients: $279,000 (homeowner); $421,500 (non-homeowner)

The non-farm asset value limit applies the limit prescribed for newstart allowance in the Social Security Act. This limit is indexed on 1 July each year.

Section 34: Farm asset value limit

This section provides that FHA is not payable to a person if the net value of their farm assets exceeds the farm asset value limit. The value of farm assets are calculated by deducting any debt secured against an asset from the value of that asset.

The farm asset value on commencement of FHA is $2.55 million. This limit will be indexed in line with CPI on 1 July each year thereafter.

Section 35: Meaning of farm assets and non-farm assets

This section provides definitions of farm assets and non-farm assets . Farm assets include a right or interest in things such as land, livestock, crops, plant or equipment. Additionally, where a loan has been made by a beneficiary of a trust or shareholder of a privately controlled company, that loan is treated as a farm asset for the purpose of the asset test. The Bill sets out the circumstances when this treatment applies.

Non-farm assets are assets other than farm assets.

Section 36: Meaning of value of assets

This section details how assets are attributed to a person for the purpose of determining the person’s payability. The value of a person’s assets includes the value of their partner’s assets and is worked out in accordance with the rules for estimating the value of assets in the Social Security Act. The provision ensures that the value of assets held in private companies and trusts are attributed to an individual in line with social security law.

This section also provides that, in line with social security law, where an individual has destroyed or disposed of an asset (for example by way of gifting), the asset is included under the asset test as if the person still owned the asset for five years from the date of disposal. Disposed farm assets are treated as non-farm assets and are included in the non-farm asset test. This creates a disincentive for individuals to dispose of farm assets that they could otherwise use for self-support so that they can qualify for FHA.

Subdivision B—Situations where allowance not payable (general)

This Subdivision details situations where FHA is not payable to an individual because they would receive a nil rate of payment, or are receiving another pension or benefit.

Section 37: Farm household allowance not payable if allowance rate nil

This section provides that FHA is not payable to a person if they would receive a nil rate of payment. This means that when a person receives a nil rate of payment on a day, the day does not count towards their three cumulative years of FHA.

However, if a person would have been eligible for a payment of FHA, but the payment has been reduced to nil on a day because the person had been paid an advance of the pharmaceutical allowance, this day counts towards the individual’s three cumulative years of FHA. This is consistent with social security law which considers any day that a person is payable for an allowance or benefit as a day on payment.

Section 38: Multiple entitlement exclusion

This section sets out the circumstances when a person cannot receive FHA because they are receiving another pension, benefit, supplement or allowance.

Where a person is eligible for more than one payment they must elect to receive the payment most appropriate for their circumstances. To maintain consistency with other social security payments made under other Acts, there are two exceptions to the multiple entitlement exclusion for FHA. The first applies to a woman who has been receiving a specified service pension since before 1986 and was also receiving a social security benefit before the Veterans’ Entitlements Act 1986 commenced; the second for a person who is receiving FHA and has made an application for a payment under the ABSTUDY scheme.

Subdivision C—Situations where allowance not payable (waiting periods)

This Subdivision details situations where an individual meets the qualification criteria to receive a payment of FHA, but is not immediately payable because they are required to serve a waiting period. This is consistent with provisions applying to other social security payments. Any waiting periods served by an individual do not count as a day on payment for the purpose of calculating their three years of entitlement.

Section 39: Waiting periods

This section provides that a person, despite being eligible for FHA, is not payable if they are serving any one of three waiting periods, until they have served that waiting period.

Section 40: Ordinary waiting period

This section provides that a person must serve an ordinary waiting period unless they meet one of the criteria specified in this section that means the waiting period does not apply. Circumstances where an ordinary waiting period does not apply include where the person has been receiving another income support payment within the last 13 weeks and in some instances following the death of a person’s partner. The Secretary may prescribe rules to accommodate other circumstances.

Section 41: Duration of ordinary waiting period

This section provides that a person’s ordinary waiting period is seven days from either the person’s start date or the end date of any liquid asset test waiting period. The duration of the waiting period is consistent with other social security payments.

Section 42: Newly arrived resident’s waiting period

This section provides that, in line with social security law, applicants for FHA must serve a newly arrived resident’s waiting period (NARWP) of 104 weeks unless an exemption applies. This means that migrants may not have immediate access to FHA when they first arrive in Australia.

Section 43: Duration of newly arrived resident’s waiting period

This section provides for the duration of a person’s NARWP. The NARWP is either 104 weeks from the date that the person arrived in Australia or 26 weeks if the person held a valid designated temporary entry permit and meets the other prescribed criteria.

Section 44: Liquid assets test waiting period

This section provides that FHA applicants must serve a liquid assets test waiting period (LAWP) where the value of their liquid assets (i.e. cash and any asset that could readily be converted into cash) exceeds the relevant threshold; the maximum reserve is as defined by the Social Security Act.

From 1 July 2013, the maximum reserve is $5,000 (if single) and $10,000 (if partnered or single with a dependent child). The maximum reserve will change in line with any subsequent amendment to the Social Security Act.

This waiting period only applies where neither the recipient nor their partner has served a liquid asset test waiting period at any time within the previous

12 months.

Section 45: Duration of liquid assets test waiting period

This section provides how a LAWP is calculated. In practice, a LAWP is calculated from the day that a person applies for payment. If an applicant has liquid assets that exceed the maximum reserve, their first payment of FHA is delayed by one week for every $500 (if single) or $1000 (if partnered, or single with a dependent child) they hold in excess of the maximum reserve, up to a maximum of 13 weeks.

Section 46: Waiver for severe financial hardship

This section provides that applicants for FHA can apply for a waiver of a waiting period where they are, or would otherwise be, experiencing severe financial hardship due to unavoidable and reasonable expenditure incurred during the period in which the waiting period applies. The Secretary may make rules that set out the ways in which unavoidable and reasonable expenditure can be substantiated.

In practice, examples of unavoidable and reasonable expenditure include but are not limited to: essential repairs to a person’s home, car or machinery; medical expenses and essential expenses that relate to the farm business.

The maximum reserve allows for the reasonable costs of living expenses such as mortgage payments, food, petrol and utilities are not considered to be unavoidable or reasonable expenditure.

Section 47: Effect of being subject to more than one waiting period

This section provides that where a person is serving more than one waiting period either consecutively or concurrently, they are not payable until all of the waiting periods have been served.

Subdivision D—Other situations where farm household allowance not payable

This Subdivision details other situations where FHA is not payable to an individual because of income that they have received through seasonal work.

Section 48: Seasonal workers

This section details the circumstances under which a person must serve a seasonal worker preclusion period (SWPP). The SWPP applies to a recipient if they or their partner have been engaged in high-income seasonal, intermittent or contract work in the six months prior to claiming FHA.

Under the SWPP rules, a person is precluded from receiving a payment for the period of time it would take an average wage earner to earn the same. This rule only applies to single people whose earnings from seasonal work exceeded the Average Weekly Ordinary Time Earnings (AWOTE) or to couples whose combined earnings were more than twice the AWOTE. For example, a person may work at a native plant nursery for six weeks every summer harvesting native grass seed by hand. They are paid $1000 per day for this period for earnings totalling $30,000. If Average Weekly Ordinary Time Earnings are $1500 then, the person would serve a SWPP of 20 weeks.

The purpose of the SWPP is to ensure that these workers use their employment income before accessing FHA during the ‘off-season’. Income that is earned through the farm business enterprise in which an individual has a right or interest would not normally be considered as seasonal work. However, work that is undertaken on an unrelated farm enterprise, for example fruit picking, may be considered seasonal work.

Division 7—Overseas portability

This Division contains the rules for overseas portability of FHA. These rules are generally consistent with those provided under social security law for other social security payments.

It is a qualification requirement of FHA that a person ‘is an Australian resident, and is in Australia’. A person would normally cease to be eligible for FHA as soon as they leave Australia. The overseas portability provisions allow for a person to continue to receive or be granted FHA while outside Australia under certain circumstances.

Section 49: Division does not affect need for qualification

This section provides that portability provisions do not excuse a person from having to meet the eligibility criteria for FHA in order to be payable even if their failure to meet a qualification criterion is caused by their absence.

Section 50: Person to whom the division applies

This section has the effect of making overseas portability provisions applicable to individuals who are already in receipt of FHA and those who are granted FHA while they are overseas.

Section 51: Farm Household Allowance portable

This section specifies that the period for which FHA is payable during an absence is not necessarily equal to the period of their absence. Section 51 provides both that FHA may cease to be payable if a person’s absence extends beyond their portability period and that FHA is payable to a person who is undertaking defence reserve service overseas.

Section 52: Amounts added to rate

This section has the effect of ceasing payment of rent assistance and pharmaceutical allowance, to which a person may otherwise be entitled, when FHA ceases to be payable.

Section 53: Meaning of allowable absence and portability period

This section provides the meaning of allowable absence . An allowable absence has the effect of allowing a recipient of FHA to continue to be paid for up to six weeks if they travel overseas for certain medical, family or humanitarian purposes. This section also defines portability period ; that is, when this period begins and ceases.

Section 54: Secretary may extend the portability period

This section provides for the Secretary to grant an extension of a person’s portability period where specified circumstances prevent their return or where the person qualifies for financial assistance under the Medical Treatment Overseas Program.

Division 8—Rate of farm household allowance

This Division specifies how the rate of payment for a person in receipt of FHA is determined. The rate of FHA is aligned with either the basic rate for newstart allowance or youth allowance, depending in the age of the person. In addition to the basic rate of payment, a range of amounts including the remote area allowance, rent assistance, pharmaceutical allowance and the clean energy supplement may also be payable.

Telephone allowance may be payable as a quarterly supplement. The rate of telephone allowance is determined separately from the calculation of FHA. Recipients of FHA are also entitled to an automatic issue health care card. This card does not affect the rate of payment, but assists recipients with certain health costs, by allowing access to specific services at a concessional rate. The telephone allowance and health care card are provided for by application of the Social Security Act under Division 2, Part 5 of this Bill.

Not all of the supplements, allowances and incentives that may be payable in relation to newstart allowance and/or youth allowance are applicable to FHA. Examples include the approved program of work supplement; the national jobs corps supplement; and payments under the community development employment projects scheme. This is partly because the qualification criteria for these amounts are not compatible with the qualification criteria for FHA. More significantly, certain amounts apply to other allowances because they support the objective of those allowances.

In the case of FHA, it is a payment to farmers and their partners to assist them improve their financial situation and support them to undertake activities to improve their financial circumstances in the longer term; not necessarily because they are a student or unemployed. While neither the activity supplement nor the farm financial assessment supplement affects the rate of payment of FHA, these supplements are more closely aligned with the objective of FHA than amounts payable in addition to the basic rate of other allowances.

Subdivision A—Persons who have turned 22

This Subdivision applies to persons who have turned 22.

Section 55: How to work out the rate of a person’s farm household allowance

This section provides that the rate of payment for an individual who has turned 22 is to be determined using the Benefit Rate Calculator B in the Social Security Act. This has the effect that these recipients are paid at the equivalent rate of newstart allowance.

Section 56: Maximum basic rate

This section provides how the maximum basic rate of FHA payable to a person who has turned 22 is calculated. This has the effect that the rate of FHA is the same as the rate of newstart allowance that is payable with the exception of point 1068-B5 of the Social Security Act.

Not applying point 1068-B5 of the Social Security Act has the effect that the parenting payment single rate is not payable. This is because the qualification requirements, in particular the activity test requirement, for a newstart recipient to be eligible for payment at the pension parenting payment single rate differ from the qualification requirements for FHA. This is in part due to the flexibility of the FHA activity test.

Section 57: Pension supplement does not apply

This section provides that the pension supplement is not payable to a person receiving FHA, irrespective of whether they have reached pension age.

Section 58: Clean energy supplement

This section provides that all individuals receiving FHA who have turned 22 receive the same rate of the clean energy supplement in addition to their fortnightly entitlement. The rate of this supplement is not affected by a person reaching pension age.

Section 59: Pharmaceutical allowance

This section has the effect that the pharmaceutical allowance is payable to people who have turned 22 and have been granted an incapacity exemption and single parents who are principal carers of a dependent child.

Subdivision B—Persons who have not turned 22

This Subdivision applies to persons who have not turned 22.

Section 60: How to work out the rate of a person’s farm household allowance

This section prescribes that the rate of payment for an individual who has not turned 22 is determined using the Youth Allowance Rate Calculator in the Social Security Act. This has the effect that these recipients are paid at the equivalent rate of youth allowance as though they are independent. This reflects the typical circumstances of a person of this age who is applying for FHA. Eliminating the requirement for a person to demonstrate they meet independence criteria reduces the administrative burden for those individuals and means the same basic rate is applicable to all persons below 22.

Section 61: Maximum basic rate

This section prescribes the maximum basic rate of FHA that is payable to a person who has not turned 22. This has the effect that the rate of FHA is the same as the rate of youth allowance that is payable with the exception of point 1067G-B3A of the Social Security Act.

Not applying point 1067G-B3A of the Social Security Act has the effect that the parenting payment single rate is not applicable to individuals receiving FHA. This is because the qualification requirements, in particular the activity test requirement, for a youth allowance recipient to be eligible for payment at the pension parenting payment single rate differ from the qualification requirements for FHA. This is in part due to the flexibility of the FHA activity test.

Section 63: Pharmaceutical allowance

This section has the effect that pharmaceutical allowance is payable for people who have not turned 22 and have been granted an incapacity exemption and single parents who are a principal carer of a dependent child.

Section 64: Youth disability supplement does not apply

This section has the effect that the youth disability supplement does not apply to FHA. This is because the eligibility requirements for the supplement are not compatible with the activity test for FHA.

Section 65: Student income bank does not apply

This section provides that the student income bank does not apply to FHA recipients. This is because unlike youth allowance, FHA is not a student payment.

Subdivision C—Income test

This Subdivision applies to the income test.

Section 66: Deemed income from financial assets

This section provides that the outstanding amount of a loan that has been made from a beneficiary of a trust or shareholder of a privately controlled company is treated as a farm asset - and not as a financial asset - for the purpose of the FHA income test. The Bill sets out the circumstances when this treatment applies. The effect of this section is that the outstanding loan amount, to the extent that it qualifies under this section, is not subject to deeming. It does not therefore impact on the rate of FHA. Consistent with social security law, deeming assumes that financial investments are earning a certain rate of income, regardless of the amount of income they are actually earning.

Section 67: Allowable deductions from ordinary income

This section provides the framework for possible deductions from the calculation of ordinary income. In the same way that section 1075 of the Social Security Act specifies permissible reductions for business income for items such as losses and outgoings that relate to the business, this provision allows the Minister to make a rule that will allow for the deduction of certain amounts.

 

Under this rule-making power, the Minister can prescribe a kind of deduction that is allowed. In prescribing a kind of deduction, any criteria that a deduction must satisfy to be considered as a deduction may also be prescribed. The Minister’s rules may also prescribe a maximum amount that will apply to a kind of deduction.

 

The purpose of the deductions provided for by the rules made under this provision is to ensure, within the parameters set out in the rules, that only the income a person has available to them for self-support is taken into account when determining a person’s rate of FHA.

Section 68: Determination of rate may be based on estimate

This section allows for an estimate of an individual’s business income to be used to determine their rate of payment to the extent that the rate is affected by this amount. This is because, unlike employment income (which is paid fortnightly or monthly), farm business income can be irregular and highly variable from year to year.

To determine a rate of payment based on an estimate of business income, the Secretary must consider the estimate to be reasonable. Reliance on a reasonable estimate of income for determining the rate of FHA reduces the likelihood that a person will receive an overpayment.

Section 69: Date of effect of determinations based on estimate of business income

This section allows the Secretary to reassess a person’s rate of payment for a prior financial year and make a new determination where the person’s rate of FHA was based on an estimate of their business income.

Where a person’s estimate of business income differs from their actual business income, they may either be entitled to a ‘top up’ payment in relation to an underpayment or have a debt raised where an overpayment has been made. Any adjustment will be equal to the difference between the amount paid and the person’s actual entitlement.

Section 69 operates despite section 109 of the Social Security Administration Act, which would otherwise limit the ability to pay a ‘top up’ payment to 13 weeks from the date of the decision to determine the rate based on the original estimate. It does not however limit the operation of section 109 of the Social Security Administration Act which allows for a review of the new determination.

This section also clarifies the treatment of any debt that may arise as a result of a new determination in that it will be recovered in accordance with the Social Security Act.



 

Section 70: Debts arising from payments of farm household allowance based on estimates of business income

This section provides that payments of FHA that were based on an estimate of business income will be raised as a debt where a person fails to comply with a notice to provide information. In practice, the notice will require the person to provide details of their actual business income in that period, allowing a new determination to be made with respect to that period.

Where a person has failed to comply with a notice to provide business income, their entitlement to FHA is cancelled from the first day of payment in the period to which the notice relates. A debt will be raised equal to the amount of FHA paid in that financial year. This is because, in the absence of the actual business income, it is not possible to determine if the person was entitled to receive FHA.

Division 9—Compliance with obligations in relation to farm household allowance

FHA supports farmers and/or their partners while they take steps towards improving their capacity for self-reliance. The qualification criteria for farmers and farmers’ partners require them to enter into a FIA.

Central to this agreement is the person’s undertaking to participate in activities (reciprocal obligations) that are in some way related to improving the individual’s financial situation. In implementing this agreement, consideration will be given to a broad range of matters that may affect their ability to comply with the agreement. Matters that may be taken into account include education and skills, health, family and caring responsibilities as well as responsibilities associated with being a farmer or any other employment. In addition, there are a range of temporary exemptions from the activity test for which a person may qualify.

This Division describes two types of failures: qualification failures and conduct failures; and the consequences associated with these failures.



 

Section 71: Qualification failures

This section allows the Secretary to determine that a person has committed a qualification failure. Qualification failures are linked directly to things a person is required to do to qualify for the payment.

Qualification failures include a failure to:

•           comply with a notice to enter into a FIA

•          notify of circumstances that are preventing or affecting their capacity to comply with requirements in their agreement

•           satisfy the activity test.

Under this section, the Secretary may also revoke a determination if the failure is rectified within 13 weeks of the day it began. In practice, a qualification failure is revoked once the person notifies of a change in circumstances that affects their ability to comply with the requirements in their agreement and either enters into a new FIA or satisfies the activity test by undertaking required activities in their FIA.

Section 72: Consequences of qualification failures

This section provides that FHA is not payable from the day a person commits the qualification failure to the day the determination is revoked. If the determination is not revoked within 13 weeks, the person ceases to qualify for FHA.

Section 73: Conduct failures

This section allows the Secretary (or a delegate) to determine that a person has committed a conduct failure if they have:

•           engaged in misconduct while undertaking an activity in their FIA

•           refused or failed to accept an offer of suitable employment in accordance with their FIA

•           committed an act that resulted (directly or indirectly) in them becoming unemployed, and it was reasonably foreseeable that their behaviour could cause them to become unemployed.

Consistent with mainstream social security law, conduct failures are imposed when a person deliberately behaves inappropriately. This may include being uncooperative, aggressive, violent or offensive when undertaking activities under the FIA; or being under the influence of illicit drugs or alcohol while undertaking an activity.

Section 74: Consequences of conduct failures

This section provides that FHA is not payable from the day the Secretary determines a conduct failure has occurred until the day the Secretary revokes the determination, or eight weeks elapses, whichever is sooner.

Section 75: Revoking a determination relating to a conduct failure

This section allows for a conduct failure to be revoked if the non-payment period would cause the person to experience severe financial hardship. In practice, a person would generally make an application for the conduct failure to be revoked in these circumstances. However, the Bill allows for the Secretary to revoke the failure without a request.

Where a decision has been made to revoke the conduct failure on the grounds of severe financial hardship, the end date of the waiting period is the day before either: the request to revoke was made by the person; or the Secretary makes a determination on their own initiative.

Section 76: Reasonable excuses

This section provides that a determination that a qualification or conduct failure has occurred can be taken to have never been made if the Secretary is satisfied the person had a reasonable excuse for the failure.

Reasonable excuse is not defined by this section. Instead, the Bill establishes criteria that the excuse must meet to be considered reasonable. These criteria include where a person notifies a relevant person, such as a DHS officer, in advance that they are unable to undertake the activity.

Additionally, the Secretary’s Rules may specify the matters that should be taken into account when determining whether an excuse is reasonable. Under these rules, there is no limit to the matters that may be taken into account when deciding whether the person has a reasonable excuse.

Section 77: Day of determination

This section provides that the day of the Secretary’s determination of a qualification or conduct failure is the original day of determination, irrespective of any subsequent decisions in relation to the determination as the result of a review.

Section 78: Relationship with section 80 of the Social Security Administration Act

This section clarifies that nothing in Division 9 affects the power of the Secretary to cancel FHA under section 80 of the Social Security Administration Act. Section 80 of the Social Security Administration Act allows the Secretary to cancel or suspend a payment if the person is or was not qualified or where the payment is or was not payable.



 

Part 3—Activity supplement

Section 79: Simplified outline of this Part

This section outlines the main provisions of Part 3 of the Bill. These provisions include that a person may qualify for the activity supplement if they undertake an activity specified in their FIA. The activity supplement is for the purpose of funding, wholly, or partially, the cost of an activity specified in the FIA (up to a maximum amount). A person can receive the activity supplement in more than one instalment (up to the maximum amount) and elect to receive the activity supplement directly or have it paid to a provider.

As the activity supplement is social security payment, the rules governing its administration are that same as those that apply to other payments.

Section 80: Qualification for the activity supplement

This section outlines when a person qualifies for the activity supplement. A person may qualify for the activity supplement for activities already undertaken (after 1 July 2014) and activities they intend to undertake in accordance with their FIA. This ensures that the activity supplement is used to assist individuals to take steps towards improving their capacity for self-reliance while fulfilling their requirements for FHA.

Where an individual undertakes training or advice, they must provide evidence or a declaration that the advice or training was provided by an appropriately qualified person.

A person is required to make a claim for the supplement within two months of receiving the invoice for the activity from the service provider. If the person elects to be paid the supplement directly, they must also provide evidence or a declaration (in an approved form) that they paid the service provider for the activity. A person cannot qualify for the supplement if they have already used the maximum amount of activity supplement.

Section 81: Electing method of payment

This section provides flexibility for a person who makes a claim for the activity supplement to elect either: to pay the service provider themselves and claim a reimbursement from DHS; or to have DHS pay the service provider on their behalf.

 

Section 82: Amount of activity supplement

This section provides for the amount of activity supplement payable to a qualified person. The amount of the supplement is the lesser of: the maximum amount prescribed in the Minister’s Rules; the cost of the activity; or the person’s remaining activity supplement. This means that the activity supplement can be used to wholly or partly fund an eligible activity depending on the remaining value of the person’s activity supplement. 

Section 83: Determination of eligible activities

This section provides that the Secretary’s Rules may prescribe the types of activities that would be eligible for the activity supplement and conditions that must be met for the supplement to be payable. Providing the Secretary with the discretion to amend the rules around eligible activities ensures flexibility in responding to changes in the training and advice needs of farmers in hardship without the requirement for legislative amendment.



 

Part 4—Farm financial assessments

Division 1—Simplified outline of this part

Section 84: Simplified outline of this Part

This section outlines Part 4 of the Bill. The provisions in Part 4 allow the Secretary to require a person to have a farm financial assessment conducted if the person is receiving, or has made a claim for, FHA.

A farm financial assessment is an assessment, to be undertaken by an independent prescribed advisor, of the person’s financial position (taking into account both the farm enterprise and other personal financial resources), and the options for improving that financial position.

A person who has a farm financial assessment conducted may qualify for the farm financial assessment supplement to cover the cost of the assessment (up to the maximum value).

As a social security payment under social security law, the rules governing the administration of the farm financial assessment supplement are in the Social Security Act and the Social Security Administration Act.

Division 2—Farm financial assessments

Section 85: Requirement to have a farm financial assessment conducted

This section provides that the Secretary may require a person who has claimed, or is receiving FHA, to have a farm financial assessment conducted within 28 days of being notified of the requirement. The Secretary may extend this period by a further 28 days. This requirement ensures that a person is able to use the farm financial assessment to inform the development of their FIA.

This section also provides that the notice of a requirement to have a farm financial assessment conducted must contain a description of the assessment and sufficient information for the person to organise the assessment. This ensures that the individual can adequately prepare for the assessment and select an appropriately qualified person to conduct the assessment.

This section also specifies that the notice must include a description of the the consequences of failing to comply, including ceasing to be payable.

 

Section 86: Requirement for farm financial assessment to be conducted by independent prescribed adviser

This section requires a farm financial assessment to be conducted by a prescribed adviser who is independent from the individual obtaining the assessment (and their partner if they are a member of a couple) and does not have any right or interest in the person’s assets or farm. The requirement for independence minimises the risk of bias or misleading farm financial assessments that do not support effective decision making and planning by the person on payment. 

The Minister’s Rules prescribe who is a prescribed advisor for the purpose of the Bill.

Division 3— Farm financial assessment supplement

Section 87: Qualification for farm financial assessment supplement

This section outlines the qualification criteria for the farm financial assessment supplement, which is available to eligible persons to cover all or part of the cost of the assessment. To qualify for the supplement, a person must supply a completed assessment to the department. The person must also provide the required evidence that the assessment was conducted by a prescribed adviser.

This section also requires a person to provide evidence that they have paid the prescribed adviser for the assessment if they elect to receive the supplement directly.

Section 88: Electing method of payment

This section allows a person to elect to be reimbursed for a farm financial assessment that they have already paid for or have it paid to the prescribed adviser who conducts the farm financial assessment.

Section 89: The amount of farm financial assessment supplement

This section provides that the value of the farm financial assessment supplement is the lesser of the maximum value prescribed by the Minister’s Rules or the cost of the farm financial assessment.

 

 



 

Part 5—Modifications of the Social Security Act and the Social Security Administration Act

Division 1—Introduction

Section 90: Simplified outline of this Part

This section outlines the substantive provisions of Part 5. This Part modifies how the Social Security Act and the Social Security Administration Act operate so that those Acts can apply in relation to payments made under the Bill.

FHA is generally treated in the same way as newstart and youth allowance. This means that where there is a reference in those Acts to newstart or youth allowance, it is treated as a reference to FHA. Similarly, where there is a reference to a concept that is defined to include these allowances, it is as if that concept were also defined to include FHA. Examples of these concepts include ‘social security benefit’ and ‘social security payment’.

The Bill treats FHA, the activity supplement and the farm financial assessment supplement as if they were social security benefits. This means that the general rules of the Social Security Act and the Social Security Administration Act relating to making claims, review of decisions and debt recovery apply in relation to payments provided for under the Bill.

The modification of these concepts has flow-through effects to other acts, such as the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 .

Section 91: Purposes of this Part

This section provides that Part 5 modifies the Social Security Act and the Social Security Administration Act so that these Acts apply to payments provided for under the Bill. These modifications also apply when any other Act refers to the Social Security Act.

The example provided in the Bill clarifies the operation of this section:

‘Subsection 3(2) of the Social Security Administration Act gives expressions used in that Act the same meaning as in the Social Security Act. So, for example, a reference in the Social Security Administration Act to a social security payment is taken, as a result of this Division, to include a reference to farm household allowance, activity supplement and farm financial assessment supplement.

Section 92: Further modifications of the Social Security Act and the Social Security Administration Act

This section provides that the Minister’s Rules can provide that any modifications to this part, the Social Security Act and the Social Security Administration Act as prescribed have the same effect as section 91. That is, the Minister’s Rules can further modify those Acts as necessary to make payments provided for under the Bill. Subsection 92(2) sets out in more detail the types of modifications that are envisaged under subsection 92(1), without limiting that subsection.

This section thus enables application of the Minister’s Rules to correct any unintended consequences of the substantial interaction between the Bill as passed with the Social Security Act. This ensures that any modifications that are required for the efficient and effective operation of FHA are provided for without the need for further legislative change.

Division 2—Application and Modification of the Social Security Act

Section 93: Application of the Social Security Act

This section contains a table that modifies the operation of the Social Security Act. This table, in conjunction with section 94 (which sets out certain provisions that do not apply) and section 95 (which details modification of certain provisions), modifies the general operation of the Social Security Act. The effect of this modification is that references to particular provisions within that Act, such as ‘newstart allowance’, also include a reference to the relevant term in the Bill, for example ‘farm household allowance’.

Items in the table that are of particular importance to understanding the operation of section 93 include:

•                      items 1 to 5: translate the terms newstart, youth allowance, income support payment, social security benefit and social security entitlement to mean farm household allowance

•          item 6: translates social security payment to mean farm household allowance, activity supplement and farm financial assessment supplement

•          item 7: translates the meaning of Minister to the Agriculture Minister

•           items 8 and 9: translate the meaning of Secretary and Department to the Agriculture Secretary and Agriculture Department

•           items 10: translates the purpose of the Social Security Act to the purpose of the Bill

•           item 11: translates the meaning of social security law to mean the Bill

•           item 12: translates the meaning of a payment under the Social Security Act to be a payment under the Bill

•           items 14 to 16: translate the reference to a waiting period in the Social Security Act to a comparable waiting period in the Bill

•           Item 21: translates the purpose of the assets test under the Social Security Act to the asset test provisions under the Bill (Part 2, Division 6, Subdivision A)

•           Item 28 translates the meaning of the youth allowance assets test or the newstart allowance asset test to the test provisions under the Bill (Part 2, Division 6, Subdivision A)

•           Item 29: translates the meaning of the youth allowance liquid assets test or the newstart allowance liquid asset test to the test provisions under the Bill (Part 2, Division 6, Subdivision A).

Section 94: Certain provisions do not apply

This section sets out the provisions of the Social Security Act that do not apply in relation to the operation of the Bill. These provisions reflect situations where the settings for newstart and youth allowance do not apply or differ substantially from those of FHA and would therefore interfere with the operation of FHA.

Where FHA settings differ from other payments under Social Security law, for example in relation to qualification, payability and overseas portability, the Bill establishes provisions relevant to FHA. Where a Social Security provision does not apply because it is entirely inconsistent with the object of the Bill, no equivalent provision has been established. This includes some payments, supplements, allowances and concessions as well as some treatments applied to income.

 

Section 95: Modification of certain provisions

This section sets out a table that modifies particular provisions of the Social Security Act. These modifications are necessary because, while the provisions in the Social Security Act are similar to those for FHA, they are not directly applicable. As a result of the modifications made by section 95, the listed provisions in the Social Security Act can be applied to FHA, avoiding the need to include a separate provision in the Bill.

Items of particular importance to understanding the operation of section 95 include:

•           item 1: modifies the definition of ‘excluded amounts—general’ in subsection 8(8) of the Social Security Act to include a reference to an adjusted disability pension. This means any income from an adjusted disability pension is not treated as income for the purpose of FHA

•           item 2: modifies paragraph 1061SB(2)(c) of the Social Security Act so that a person does not need to be of age pension age to be eligibility to receive an increased rate of phone allowance for home internet under FHA

•           items 3 and 5: modify indexation provisions in the Social Security Act (table item 28 in section 1190 and section 1192) to apply to the farm assets value limit under FHA. This means that the farm asset value limit will be indexed annually in line with the Consumer Price Index from 1 July 2015

•           item 12: modifies section 1122 of the Social Security Act so that the value of a person’s farm assets includes any outstanding amount of money lent for the purpose of spending relating to farm assets.

The remaining modifications at items 6 to 11 and item 13 change the reading of these provisions in the Social Security Act so that they treat a person’s assets in the way necessary to give effect to FHA. The treatment of a person’s assets under FHA addresses the circumstances unique to farmers which would typically exclude them from accessing other social security payments. 

Section 96: Application of Division 10 of Part 2.11 and Division 9 of Part 2.12 (bereavement payments) of the Social Security Act

This section provides that a person continues to be qualified for bereavement payments for the full period set out in the Social Security Act in the event that a person would cease to receive FHA because they have used up their full three years of cumulative support.

Section 97: References to youth allowance and newstart allowance

Subsection 97(1) disregards any requirement or condition that a person is or is not undertaking full-time study and is or is not a new apprentice in relation to youth allowance in the Social Security Act.

This means that the conditions which apply to a person as result of a reference to youth allowance apply to a person undertaking an activity in relation to their FIA, irrespective of the activity they are, or plan to, undertake. This includes the rate of payment which should apply.

Similarly, subsection 97(2) disregards any reference to a requirement or condition that a person has a partial capacity to work where a reference is made to newstart or youth allowance in the Social Security Act.

These exclusions are required because, in approving the requirements of a FIA, the Secretary must have regard to, amongst other things: disability, illness, mental health condition or physical condition that impact on that person’s ability to participate in those activities. This consideration accommodates a person who has a reduced capacity to undertake activities under FHA.

Division 3—Application of the Social Security Administration Act

Section 98: Certain provisions do not apply

This section provides that certain provisions in the Social Security Administration Act do not apply to the Bill.

These provisions are necessary because they would otherwise have unintended consequences for the operation of FHA and are not required for its operation.

Paragraphs 98(a) to (e) are not required as they do not align with the objectives of the Bill. No equivalent provisions are required for the administration of FHA.

Paragraphs 98(f) and (g) are not needed as the requirement to which they relate(the annual report and appropriation, respectively), are dealt with by provisions in the Bill.

While certain provisions do not apply, the Social Security Administration Act operates in relation to FHA and the two supplements payable under FHA as if they were social security payments, except where modified by section 99. This allows the provisions relating to the general administration of social security law (Part 2), provision of benefits (Part 3) review of decisions (Part 4), information management (Part 5) and offences (Part 6) to apply consistently for the purpose of payments provided for under the Bill as they would to other social security payments.

The application of these provisions means that, amongst other things, a person receiving a payment under the Bill is entitled to the same mechanisms for the review of decisions by the the Social Security Appeals Tribunal and the Administrative Appeals Tribunal. The consistent application of these mechanisms means that an individual’s rights to seek a review are the same as they are under social security law. It also means the powers such as those relating to the gathering of information, the protection of that information and offences are equivalent.

Section 99: Modification of certain provisions

This section sets out a table that modifies particular provisions of the Social Security Administration Act. In combination with section 98 (which sets out certain provisions that do not apply), the effect of the table is to translate the general operation of the Social Security Administration Act for the purposes of FHA. This is necessary because while the provisions in the Social Security Administration Act are similar to those for FHA, they are not directly applicable. The modification applied by this section means that these sections can be applied to FHA, avoiding the need include these provisions in the Bill.

Items in the table that are of particular importance to understanding the operation of this Division include:

•           item 1: modifies subsections 10(2) and (3) of the Social Security Administration Act so that the any agreement between the Secretary and Employment Secretary to administrative arrangements to further the objectives of Part 2.12 of the Social Security Act and subsequent delegation of function to officers of the Department of Employment do not apply in relation to Part 2 of the Bill

•           item 2: modifies subsection 64(2) of the Social Security Administration Act so that the effect of failing to comply with a requirement to attend the department is consistent for all FHA recipients

•           item 3: modifies subsection 69(6) of the Social Security Administration Act so that a person is not required to comply with a notice under this section before the day the first claim for FHA was made, rather than being limited to 13 weeks before an event, circumstance or matter arose. This change is necessary for the operation of Subdivision D of Division 8, Part 2 that allows the Secretary to make a new determination of business income where a person is no longer on payment and has not been for more than 13 weeks

•           item 4: modifies paragraph 81(1)(a) of the Social Security Administration Act so that the effect of not complying with certain notices is consistent for all FHA recipients 

•           items 5 to 12: modify the date of effect rules in the specified provisions of the Social Security Administration Act to remove any distinction between a person ‘who has reached pension age’ and a person who has not. The Bill does not distinguish between people on the basis of them having reached pension age or not 

•           item 13: modifies section 125 of the Social Security Administration Act so that a decision made by an officer under an instrument made under the Bill is taken to be a decision under social security law

•           items 14: omits clause 5 of Schedule 2 of the Social Security Administration Act because the concept of an exclusion period does not apply to a person receiving a payment under the Bill

•           item 15: modifies clause 5A of Schedule 2 of the Social Security Administration Act so that FHA is not treated as a participation payment in relation to determining the start days for parenting payment for another member of that couple



 

Part 6—Miscellaneous

Section 100: Simplified outline of this Part

This section deals with miscellaneous matters, including delegation of powers, annual report, appropriation and rules.

Section 101: Delegation of powers

This section provides that the Agriculture Secretary may delegate his or her powers and functions provided for under the Bill, or the Social Security Act or the Social Security Administration Act, to an officer of the Agriculture Department, the Social Security Secretary, Chief Executive Centrelink or an officer of DHS.

These delegation powers are intentionally broad, due to the interaction of the Bill with the Social Security Act and the Social Security Administration Act. They are also necessary because payments under the Bill will be delivered by DHS. Case management by DHS is central to FHA and to achieving FHA’s objectives of supporting farmers and their partners who are in hardship while improving their capacity for self-reliance. Operationally, this will require DHS officers below the Senior Executive Officer level to have these powers delegated to them.

Section 102: Delegation by Secretary: references to the Secretary and the Department

The Agriculture Secretary has the power to compel an individual to provide information or documents to the Agriculture Department. This section provides that if this power is delegated to the Social Security Secretary, an SES employee or acting SES or the Chief Executive Centrelink, those persons can compel an individual to provide information or documents to DHS or the Social Security Department instead.

This section also allows the Secretary to make a rule that a reference to him or her should be read as a reference to the Chief Executive Centrelink, or a reference to Department should read as a reference to DHS instead. This would occur when the reference, in either the Bill or the Social Security Act, would otherwise be inappropriate.

Section 103: Approval of forms

This section allows the Secretary to approve a form for the purposes of the Bill.

  Section 104: Annual report

This section requires the Secretary give the Agriculture Minister a written report on the administrative operation of FHA during the preceding financial year as soon as possible after 30 June. Once the Minister receives the report, they are required to provide a copy of the report to each House of Parliament within 15 sittings days of that House.

Section 105: Appropriation

This section provides for all amounts payable to a person because of their qualification for FHA are payable out of the Consolidated Revenue Fund. Funds appropriated from the Consolidated Revenue Fund cover FHA, any supplement, payment or allowance that becomes payable under the Social Security Act (as a result of eligibility for FHA), the activity supplement and farm financial assessment supplement.

Section 106: Rules

This section provides that both the Minister and the Secretary may prescribe rules by legislative instrument.

The rules-making power under section 106 allows the Agriculture Minister or Secretary of the Department of Agriculture to make rules in relation to the Farm Household Support Act 2014 . A rule made under this provision is a legislative instrument within the meaning of the Legislative Instruments Act 2003 .




[1] See ICESCR art 2(1).

[2] CESCR, General Comment No 19 (2008), paragraph 2.

[3] CESCR, General Comment No 19 (2008), paragraph 23; paragraphs 29-31

  (non-discrimination).

[4] CESCR, General Comment No 19 (2008), paragraph 30.

[5] CESCR, General Comment No 14 (2000), paragraph 4.

[6] CESCR, General Comment No 12 (1999), paragraphs 8 and 13.

[7] CESCR, General Comment No 18 (2005), paragraph 3.

[8] CESCR, General Comment No 20 (2009), paragraph 7.

[9] United Nations Human Rights Committee, CCPR General Comment No 18 (1989),

   paragraph 13.

[10] CESCR, General Comment No 18 (2005), paragraph 13. (CESCR, General Comment

    No 20 (2009), paragraph 13 is in similar terms.)

[11] ‘Protected information’ is defined in Social Security Act 1991 subsection 23(1) and includes information about a person that was obtained by an officer under the social security law; and is or was held in the Department of Human Services’ records.

[12] Specifically, information disclosed by the application of Social Security Administration Act section 202 is also subject to the Information Privacy Principles set out in the Privacy Act 1988 . The Principles deal with all stages of the processing of personal information, setting out standards for the collection, storage, security, use, disclosure and quality of personal information. They also create obligations on agencies and organisations regarding access to, and correction of, an individual’s own personal information.