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Agriculture: advancing Australia: an integrated rural policy initiative of the Federal Governemnt for farmers and rural communities

OVERVIEW

The Liberal-National Government believes Australian agriculture, one of the mainstays of the national economy, has a strong, vibrant future. The sector, comprised almost wholly of family farm businesses, is a highly productive and competitive exporter, generating a quarter of the nation's export income. The sector also provides the raw materials for the value- - adding food processing industry, the nation's largest manufacturing sector and a substantial employer in regional areas.

We believe Australian agriculture, with its reputation as a leading supplier of competitively priced, high quality, clean, safe and sustainably produced food and fibre, must be encouraged to pursue the significant new market opportunities that are beginning to emerge, particularly in Asia, as a result of the relaxation of overseas barriers to trade in farm products.

The Agriculture - Advancing Australia initiative is a key element of the Coalition Government's overall strategy to build the competitiveness, sustainability and profitability of the sector, and in doing so maximise its contribution to the economic, social and environmental wellbeing of the nation. This strategy is being implemented at three general levels:

Level One - creating solid economic foundations: The Government has been establishing a stable economic foundation for the nation by balancing the Budget and undertaking reforms which run across the whole economy, delivering lower interest rates for farm businesses, a more flexible labour market, and preparing the ground for major tax reform.

Level Two - investing resources where it matters: The Government has been ensuring key activities in the primary industries portfolio are well resourced and make a positive contribution towards achieving our objectives for the sector. For example, providing funds for a strong rural RD program; unprecedented support for sustainable agriculture through the Natural Heritage Trust ($1000 million); supporting the Asian export market drive through the Supermarket to Asia initiative; and investing more resources in our quarantine system ($90 million) to secure the competitive advantages Australia enjoys as a result of our outstanding animal and plant health status.

Level Three -industry control of industry matters: The Government has been working closely with individual industries (for example, our wool, meat and wheat reforms) to remove undesirable statutory controls, particularly in the area of marketing, and allow each industry to take direct responsibility for determining how it operates in the future.

The Agriculture - Advancing Australia initiative fits into the second level of these reforms. It has four key objectives which will deliver benefits across the entire farm sector:

1. to help individual farm businesses profit from change

Key measures are the provision of help to farmers to build on their business management knowledge and experience and provide improved financial tools (the new Farm Management Deposits Scheme) which enhance farmers' capacity to manage the significant climatic and price risks inherent in farming.

2. to ensure the farm sector has access to an adequate welfare safety net

Key measures are the introduction of a new income support payment for farm families experiencing severe financial hardship and the extension of the welfare arrangements available to farmers in severe drought to other equally exceptional circumstances.

3. to provide positive incentives for ongoing farm adjustment

Key measures are the provision of targeted assistance to encourage farmers without a future in the industry to leave, and encouragement for retirement aged farmers to transfer ownership of the business to a younger generation of their family.

4. to encourage social and economic development in rural areas

Key measures are funding to assist communities to develop strategic regional plans for their futures, and the introduction of a flexible grants program to assist rural communities to use their assets, in particular their talented men, women and young people, to face their challenges in a positive way and build better futures.

BACKGROUND

Australia's farm sector, and the families and rural and regional communities so dependent upon it for their employment, livelihoods and sense of wellbeing, are in the midst of an unprecedented period of change. They are confronted by conflicting realities - firstly, that they are well positioned to capture the exciting opportunities which are opening up in overseas markets for agricultural products due to the liberalisation of world trade, but secondly, that the exceptionally difficult market and climatic conditions they have experienced during the past decade have left a great many family farm businesses seriously weakened financially.

The Agriculture - Advancing Australia initiative is a comprehensive response by the Government to the many challenges facing the farm sector and rural and regional communities. It will help rural people respond positively to these challenges so they can benefit from changing circumstances.

Over the past year, a series of reviews of existing government policies and programs have been conducted. The reviews have covered rural adjustment, drought policy, farm family welfare, the role of women in agriculture and rural community development. They have provided a clear direction for future rural policy - a direction that will see the Government working closely with the people of rural Australia, drawing on their knowledge, experience and determination to achieve a change in national focus from the "family farm" to the "family farm business".

Key elements of the Agriculture - Advancing Australia initiative

Farm Management Deposits

The Government will overhaul the existing Income Equalisation Deposit Scheme (IEDs) and Farm Management Bonds (FMBs) to improve their attractiveness as financial risk management tools for farmers. The new measure will be known as the Farm Management Deposit (FMD) Scheme.

Consistent with commitments in our election policy document, "Reviving the Heartland" the scheme will be fully commercialised, with financial institutions authorised to hold FMDs.

The key features of the enhanced scheme will be:

. a limit on holdings in the scheme of $300,000 per taxpayer;

. the investment component will be set at 100% on the first $150,000 of holdings in the scheme, and 80% on the balance thereafter;

. eligibility will be restricted to primary producers with a taxable non- - primary production income of less than $50,000;

. deposits will be fully tax deductible in the year of deposit and taxable in the year of withdrawal;

. a 20% withholding tax will be applied on each withdrawal;

. the rate of withholding tax will be able to be varied in times of financial hardship and no penalty tax will apply if the assessment is subsequently found to be incorrect. Financial hardship will be assessed against the criteria which currently apply to withdrawals made under the FMB scheme;

. other than withholding tax, no withdrawal conditions will apply to the scheme;

. interest will be taxable in the financial year it is earned;

. financial institutions will pay an interest rate determined in the market place;

Legislation to implement the Farm Management Deposit Scheme will be introduced in the autumn 1998 session of Parliament and it will have effect from Royal assent.

Farm Business Improvement Program (FarmBis)

Australian farmers have a well-deserved reputation as innovative business managers who respond positively to the often complex challenges presented by farming in a fragile environment that is subject to significant and unpredictable changes in climatic conditions, market fluctuations and volatile commodity prices. Their culture of continuous improvement is best evidenced by the popularity of agricultural field days, their use of State extension services and farm management consultants, and the enthusiasm with which men and women involved in agriculture have embraced the benefits of whole farm management planning.

Recent research conducted for the National Farmers' Federation has confirmed there are strong links between education and training and the levels of productivity, profitability and innovation achieved by individual farm businesses.

The FarmBis Program provides a framework for promoting a positive approach to change across the farm sector. It will assist all those involved in the farm business, including employees, to build on their existing skills and improve the performance of the farm business in terms of its profitability and sustainability.

Assistance will be provided by way of direct financial contribution towards the cost of the programs and training activities in which farmers participate. Activities supported will include skills development, farm business and financial planning/advice, farm performance benchmarking, quality assurance, risk management, rural leadership development, marketing and natural resource management.

FarmBis will commence operations on 1 July 1998. In the meantime, farmers will continue to be able to receive assistance in meeting the costs of building on their farm management skills and obtaining professional advice through the Rural Adjustment Scheme (RAS). The Group Training provisions of the RAS will also continue to operate, business as usual, until 1 July 1998.

Rural Adjustment Scheme - transitional arrangements

The Government announced in the Budget that it accepted the recommendations of the McColl Review of the Rural Adjustment Scheme and will discontinue funding for interest rate subsidies aimed at accelerating productivity improvements in farm businesses.

We believe the best way the Federal Government can help farm businesses maintain and improve competitiveness is to help them build on their business knowledge and risk management skills through FarmBis and the new Farm Management Deposit Scheme.

The Government will honour all commitments under the RAS, including eligible applications for interest rate subsidies and received by the cut-off date of 30 September 1997. Re-establishment grant applications will continue to be accepted until the new Farm Family Restart Scheme commences on 1 December 1997. Re-establishment grants under the new scheme will be available on more generous terms.

Farm Family Restart Scheme

The new Farm Family Restart Scheme (FFRS) will be the Government's key program for delivering improved welfare support to the farm sector, as well as providing adjustment assistance to farmers who wish to leave the industry.

The FFRS will begin operating on 1 December 1997, providing a welfare safety net for low income farmers experiencing financial hardship who cannot borrow further against their assets and/or who are not ready to make a decision to place their farm on the market and access welfare support under the Social Security hardship provisions.

The FFRS will operate as a decision support system for farmers considering exiting the industry by giving them access to professional advice on the future viability of their business and on employment opportunities if they choose to exit the industry. It will also offer them incentives to leave farming before their assets are severely depleted.

The Farm Family Restart Scheme is not a loan scheme - all support will be provided as a grant, unlike under the old Farm Household Support Scheme.

The key features of the scheme will be:

. income support will be paid at the Newstart Allowance rate (with partner component where applicable) and will be available for a maximum period of one year;

. recipients will not have to satisfy an activity test and will not have to put the farm on the market to obtain assistance.

. a binding obligation, and financial support, to obtain professional advice on the future viability of the business, and career counselling where appropriate;

. access to a re-establishment grant of up to $45,000 on the sale of the farm, but only available to farmers who enter the scheme during its first two years of operation;

. the value of income support used will be deducted from the re- establishment grant, providing an incentive to exit early;

. the re-establishment grant will be subject to an assets test: farmers may have up to $90,000 in assets to qualify for the maximum grant (current asset limit is $45,000); it will phase down by $2 for every $3 in assets above this threshold;

. farmers who have been on the scheme for less than six months and withdraw will be eligible to apply to rejoin the scheme, to complete their twelve months. Farmers who withdraw from the scheme after six months will not be able to rejoin.

Exceptional Circumstances (including drought)

The Agriculture - Advancing Australia initiative gives recognition to the fact that there are exceptional circumstances, such as the severe drought which has affected large parts of eastern Australia for much of this decade, that are beyond the scope of normal risk management, and that in these circumstances it is in the national interest for the Government to provide assistance.

However, consistent with the Coalition's move away from direct industry support, assistance in exceptional circumstances, delivered through the provision of interest rate subsidies, will be phased down during a transitional period. The level of interest subsidy will be reduced on the following scale: 100% in 1998-99, 85% in 1999-2000; 70% in 2000-01 and 50% in 2001-02. The need to continue business support in exceptional circumstances beyond 2001-02 will be reviewed in 2001-02.

This will allow time for farmers to achieve greater financial self- - sufficiency as they take up opportunities presented under this package to strengthen their business management capabilities and use the improved financial risk management tools being introduced. The exceptional circumstances provisions of the RAS allow the payment of interest subsidies to farm businesses with prospects of viability in the long term, but whose future is at risk because of exceptional circumstances.

The Government has also decided to introduce a new Exceptional Circumstances Relief Payment (ECRP). It will be identical to the current Drought Relief Payment (DRP) and will be available to eligible farmers in declared Exceptional Circumstances. DRP will continue to exist as a transitional arrangement. The ECRP will replace the DRP.

The DRP is (and ECRP will be) an income support payment equivalent to Newstart Allowance (including partner allowance where applicable). It is subject to an income test and an off-farm assets test. Eligibility for DRP also qualifies farm families for special access to a Health Care Card and Family Payments, and the exemption of farm assets from the Austudy assets test.

Drought Relief Payment - extended recovery assistance

The Coalition has made a number of changes to the Drought Exceptional Circumstances (DEC) assistance arrangements during the past 18 months. When we were elected, there was a six-month recovery period that applied when a Federal DEC declaration was revoked at the end of a drought. During this period, eligible farm families were able to continue to receive Drought Relief Payment. In November last year, the Coalition extended the recovery period to a standard 12 months to help relieve the continuing financial hardship being experienced by many farm families in areas where the recovery from drought was under way.

Twice this year, in June and September, the recovery period has been further extended for approximately 5500 farm families whose 12-month recovery period was due to end in June, with the loss of access to DRP. The extension was provided to ensure these farm families had ongoing access to an effective welfare safety net while the Government finalised its approach to new welfare arrangements as part of the Agriculture - - Advancing Australia initiative. The DRP extension for this group of families will now end on 30 November 1997 with the introduction of the Farm Family Restart Scheme from 1 December 1997. It will provide a welfare safety net for farm families in continuing financial hardship.

Farm Household Support (FHS) Scheme

The Farm Household Support Scheme was introduced by the former Government to assist farmers who were unable to meet their day-to-day living expenses and who were denied further commercial finance by their business lenders. The FHS was ineffective and was terminated in the 1996-97 Budget. The FHS was paid as a loan which could under certain circumstances be converted a grant. There is approximately $5 million in outstanding FHS debts owed by mostly low income farmers who do not have the capacity to repay it. All outstanding FHS loans will be converted to grants. Those farmers who have repaid their debts will be reimbursed.

Retiring farmer assistance - access to the Age Pension

The intergenerational transfer of the family farm from older farmers to younger generations is a major issue in rural Australia. Succession planning is extremely difficult for many families, particularly as the assets test that applies to the Age Pension discourages older farmers from gifting ownership of the farm to a younger generation. Current gifting provisions mean that people may be excluded from receiving a pension or allowance, or have their entitlement reduced, for a period of five years if they give away assets of more than $10,000 per year. The result is that many farm families live in hardship because farm businesses capable of supporting only one family are required to provide a living for two or more families.

The Coalition has had a long standing policy to deal with the problems faced by farming families in this situation. The Government has accepted the recommendation of the Special Rural Task Force for the introduction of a moratorium on the gifting provisions. This measure will remove a significant impediment to the intergenerational transfer of the family farm. All States and Territories currently exempt farmers from paying stamp duty on these transactions.

A special divestment provision for farmers will introduce a three-year "window of opportunity", effective from 15 September 1997, for Age Pension aged farmers to transfer the legal title of the family farm to a younger generation without affecting their eligibility for the Age Pension. The scheme will also apply to veteran pensioners and to those who transferred legal title of their property in the five years preceding the introduction date of the scheme.

The scheme will help farmers who want to retire and yet keep the farm in the family. The scheme will be open to farmers, or farming partners, who have equity, or combined equity, of up to $500,000. Farm assets include the value of the land plus any capital improvement, machinery or plant and livestock. Farmers must have owned the property for at least 15 years or have been actively involved in farming for 20 years. They must have had an average income of less than the Age Pension over the preceding three years and the younger generation must have been actively involved in the farm for the preceding 3 years.

Farm families interested in taking advantage of the moratorium are advised to plan carefully, seek legal advice and test their eligibility for the Age Pension before transferring title of the property. Payments will not be available until legislation is in place, however, the Age Pension will be backdated to the time of gifting where assets are gifted after 14 September 1997. Farmers who have gifted assets in the last five years and who are currently ineligible because of the gifting provisions may be entitled to Age Pension effective from 15 September. Those who are receiving a part pension because of the gifting provisions may find their entitlements have increased. However, payments will not be made or increased until legislation is in place.

Understanding Rural Australia

Men and women in rural Australia have faced unprecedented challenges in the last decade. Severe drought, depressed commodity prices, economic recession and farm cost pressures have placed considerable pressure on the farm sector and rural and regional communities. Changes to the way governments and other large organisations, such as banks, deliver services have also affected rural communities. However, much of our understanding of the social impact of change in rural Australia is anecdotal.

The Understanding Rural Australia project will provide information to Government on a range of social trends and issues in rural Australia. The project will involve:

. development of a data base of rural social information;

. a range of social research and information projects;

. establishment of a new consultative group to oversee the project.

Rural Women

The National Forum on Women in Agriculture and Resource Management recognised the important role women play in agriculture. Specific initiatives for women will be included in FarmBis, which will provide leadership development opportunities for women.

As well, research into how best to utilise the skills and experience of women to improve the profitability of agriculture will be included in the Understanding Rural Australia project.

The Rural Communities Program and the welfare and adjustment elements of the Agriculture - Advancing Australia initiative will also have a positive impact on the lives of women on farms and working in rural communities.

Rural Communities Program

The Government has an important role to play in assisting communities to manage change. The Rural Communities Program will give effect to the Rural Communities Access Program (RCAP) review and the Rural Adjustment Scheme review and will bring together the key elements of the Rural Partnership Program and the RCAP.

The Rural Communities Program (RCP) will provide grants to small rural and remote communities for the following purposes:

. assessment of the need for and employment of rural financial counsellors (free services involving assets/income analysis)

. telecentre facilities (promoting innovative delivery of services, education, training, information distribution and direct client/agency contact);

. community development, eg, seed funding to help establish community services for groups such as children and the aged.

In addition, rural communities will be able to apply for grants to develop regional strategic planning capacities to further their future development. Support will be available for:

. facilitators to work with regions to identify constraints on their performance and opportunities for development;

. professional assistance to develop strategic plans and gather information on regional issues;

. coordinators to promote community ownership and commitment to the development and implementation of regional strategic plans.

CreditCare

The highly successful CreditCare pilot service will be extended to 1999- - 2000, as recommended by the National Rural Finance Summit. CreditCare assists rural and remote communities to assess their financial services needs where banking and other financial services have been withdrawn.

CreditCare helps communities establish new services or extend existing credit unions. The Credit Union Service Corporation (Australia) Ltd (CUSCAL) delivers the scheme. More than 30 new services have been established already and a further 30 community groups are developing business plans.

Business Plan for Australian Agriculture

The Business Plan for Australian Agriculture is a project initiated at the National Rural Finance Summit. Improving farm profitability, sustainability and competitiveness will be key themes of the Business Plan. It is being prepared as a strategic action plan which identifies the opportunities for expansion of the farm sector and the challenges which need to be overcome to realise its potential. The Business Plan will indicate what needs to be done to achieve its objectives, a time frame, and the roles and responsibilities of the various participants in the sector, such as farmers, financial institutions, government and service providers.

The Business Plan is being developed in consultation with farmer organisations and a wide cross-section of people involved in rural industries. The Minister for Primary Industries and Energy has chaired roundtables on key issues for the Business Plan, while the Government has also engaged these people in conducting a SWOT (strengths, weaknesses, opportunities, threats) analysis for the sector. These processes have involved farm leaders, financiers, rural counsellors, conservationists, rural researchers, rural women's groups, rural educators, farm business consultants, natural resource managers and food and fibre processors.

Consultative Rural Finance Forum

The Government will establish a Consultative Rural Finance Forum to promote better communication between the farm sector, financiers and government on rural financial issues.

In the past high level meetings between the Government, farmers and banks have been ad hoc and mostly in the context of the recent drought.

The National Rural Finance Summit Activating Committee recommended that a forum be set up to promote regular consultation between the farm sector, financial institutions and government.

The Forum will be chaired by the Parliamentary Secretary to the Minister for Primary Industries and Energy, Senator David Brownhill, and will include representatives from major financial institutions, credit union associations, the National Farmers' Federation, the Rural Counselling Program, farm business people and government.

The Forum will be asked to develop Terms of Reference covering issues such as:

. the need to increase rural finance providers' understanding of the unpredictable nature of the commodity markets, climate and other factors which influence the profitability of farming;

. the need to increase rural clients' understanding of financial sector operations;

. current and future market information and financial product needs;

. voluntary and involuntary mediation processes between financial institutions and rural clients.

. the role of the finance and services sectors in promoting financial self-reliance, risk management, financial planning, business skills development and other business-related activities.

Climate Research and Development

Fluctuating climate and economic conditions significantly affect farm businesses. The development of improved forecasting systems resulting from agriculture focused climate research will help farmers plan for and manage climatic fluctuations. This element of the Agriculture - - Advancing Australia initiative will build on the National Climate Variability program with research and development into the effects, forecasting and management of climate variability and drought. It will look especially at the El Nino. The program will support:

. continued primary research into the effects of climate and weather on agriculture;

. development of agricultural climate and weather information systems;

. development of agricultural decision-support systems for farmers and other stakeholders.

SUMMARY

Agriculture - Advancing Australia is a positive and integrated approach by the Federal Government to helping the farm sector and rural and regional communities successfully adapt to change.

It has as its foundation a desire to work with the people of rural and regional Australia to overcome the many challenges facing our rural industries and communities and secure the profitability, sustainability and competitiveness of the farm sector. Through this partnership, we can build a better, more prosperous future for our rural communities and the nation. Substantial opportunities for growth and development are emerging for Australia's rural industries. Let's grasp them together.

John Anderson MP

Minister for Primary Industries and Energy

CONTACTS FOR FURTHER INFORMATION

The programs outlined above are the essential features of the Agriculture- - Advancing Australia initiative. As the initiative is progressively implemented over the next few months more detailed information will be made available. In the meantime, people with questions about any element of this important initiative should ring

. Countrylink on 1800 026222.

The Commonwealth Service Delivery Agency can also be contacted for information about the Farm Family Restart Scheme (phone 132850) and Retiring Farmer Assistance - Access to the Age Pension (phone 132300).

FARM MANAGEMENT DEPOSIT (FMD) SCHEME

The Government will amalgamate the present Income Equalisation Deposit (IED) Scheme and the Farm Management Bond (FMB) Scheme into one Farm Management Deposit (FMD) Scheme. The new Scheme will be delivered through financial institutions. Key Changes are as follows:

Under the current Schemes investment in FMBs is limited to $150,000 per taxpayer and the total investment by a primary producer in both IEDs and FMBs combined is capped at $300,000. The investment total for the new FMD scheme will be $300,000.

Currently the investment component is 100 per cent and 61 per cent for FMBs and IEDs respectively. The investment component allowed under the FMD Scheme for the first $150,000 deposited will be 100 per cent; funds deposited in excess of the first $150,000 will have an investment component of 80 per cent.

Primary producers with a taxable non-primary production income of less than $50,000 are eligible to lodge deposits. The same condition will apply in the new Scheme.

A withholding tax is currently imposed on the withdrawal of IEDs at the rate of 20 per cent. No withholding tax is imposed on FMBs. Under the new arrangements withholding tax of 20 per cent will apply to FMD withdrawals. The rate of withholding tax will be able to be varied in times of financial hardship.

Withdrawal of funds from the existing FMB scheme can only be made in times of financial difficulty. Funds invested in IEDs may only be withdrawn after the deposit has remained in the Scheme for a minimum of twelve months. Other than withholding tax, no withdrawal conditions apply to the new Scheme.

Interest earned on deposits is currently based on the short term bond rate as directed in the Loan (Income Equalisation Deposits ) Act 1976. FMD Scheme deposits will attract an interest rate determined in the market place.

Interest on deposits is currently taxable in the financial year it is earned. This will remain the same with the introduction of the FMD Scheme.

Deposits for both existing Schemes are deductible for income tax purposes in the year of deposit and funds are included as assessable income for tax purposes in the year they withdrawn. These arrangements will continue to apply in the new Scheme.

The current Schemes are administered by the Government via the Department of Primary Industries and Energy. The FMD Scheme will be fully commercialised with financial institutions authorised to hold deposits.

The new FMD Scheme is due to commence on 1 July 1998. Farmers will be able to transfer their IED and FMB deposits to the new Scheme without Penalty.

MID-TERM REVIEW OF THE RURAL ADJUSTMENT SCHEME

(THE MCCOLL REPORT)

The Mid-Term Review of the Rural Adjustment Scheme (RAS) examined the appropriateness of the RAS, future adjustment challenges in farming and strategies to effectively facilitate rural adjustment. A new FarmBis Program, recommended by the Review, will be introduced to help individual farm businesses improve management practices, skills and planning.

Interest rate subsidies should no longer be used; RAS '92 should be terminated, replaced by a scheme that identifies the adjustment issues of management skills, farmer re-establishment, savings and welfare. (Rec 1,2,3) Applications for interest rate subsidies under normal RAS will not be accepted after 30 September . RAS is being wound down and new programs are being introduced consistent with the elements identified by the Report. The Government has, however, elected to retain the Exceptional Circumstances provisions of RAS and will continue to provide interest subsidies in declared Exceptional Circumstances, but on a reducing scale.

Grants should be provided to individuals, members of farm management teams, industry and community groups and other bodies. (Rec 4) A new program called FarmBis will be introduced on 1 July 1998.

A farm re-establishment scheme: business advice/assessment; a grant with increased assets limit; facilitation of transfer of land ownership. (Rec 5, 14) These recommendations have been addressed under the Farm Family Restart Scheme which will commence on 1 December 1997.

Regional delivery of the FarmBis and Farm Re-establishment Scheme should be permitted. (Rec 6) The delivery model for the FarmBis program will be regionally based; re-establishment provisions are part of the Farm Family Restart Scheme.

The new program structure should contribute to a broad vision for agriculture, with each rural program having a clearly defined set of objectives, outputs and outcomes that are complementary to each other. (Rec 7) The Agriculture - Advancing Australia initiative has four complementary objectives which meet the requirements of a broad vision for agriculture.

The major elements should be delivered on a contestable tender basis; an efficient monitoring program should be established before the program commences; the new program should be effectively promoted; a new advisory panel should be established and replace the RASAC. (Rec 8,9,10, 11) These recommendations have been noted in developing the new programs. Details of a new advisory panel are still to be finalised.

IEDs and FMBs should be replaced with a single more attractive instrument, operating in the commercial sector; a non tax-linked Farm Savings Reserve should be developed. (Rec 12,13) Legislation for a Farm Management Deposit Scheme, fully commercialised, will be introduced. The development of a non-tax-linked farm savings reserve is not being pursued by the Government.

Risk management research to be given higher priority, especially concerning climate change, variability and prediction in farm decision making. (Rec 15) This is addressed under the Climate Research and Development element of the package.

REPORT OF THE NATIONAL RURAL FINANCE SUMMIT

ACTIVATING COMMITTEE

The majority of National Rural Finance Summit Activating Committee recommendations have now been addressed by the Government through the Agriculture - Advancing Australia initiative, or other initiatives, as follows:

. Recommendations in relation to profitability and education and training have been met through FarmBis and the Rural Communities Program. These Programs will promote farm planning; the development of networks; and improved communication and leadership skills (Recommendations 1 3). FarmBis will also involve industry and local expertise in the design and delivery of rural education and training (Recommendation 4 - part).

. A Consultative Rural Finance Forum is being established to address a range of issues associated with rural finance and financial management (Recommendation 7). The Forum will consider a wide range of issues, including codes of practice (Recommendation 6). Creditcare aims to assist rural and remote communities assess their financial services needs and establish new financial services (Recommendation 8).

. A new single commercialised Farm Management Deposit (FMD) Scheme will be introduced with relaxed conditions for withdrawal and interest paid on 100 per cent of the first $150,000 of holdings and 80 per cent on the balance above this amount up to a maximum holding of $300,000 (Recommendation 9).

. The new Farm Family Restart Scheme provides a package to encourage farms to make timely decisions about their future and either take steps to leave the industry with dignity or increase their long term viability (Recommendation 12).

. The Rural Adjustment Scheme has been replaced by the Agriculture - Advancing Australia initiative which will enhance the ability of farmers to manage change and the risks inherent in farming (Recommendation 13).

. Regional strategic planning activities under the Rural Communities Program will assist regions, and their local industries, to identify their needs and ways to address priorities (Recommendation 14 - part).

. The Understanding Rural Australia data project will provide social research and data centra to developing policies to address the broader pressures facing rural communities (Recommendation 11).

Wider recommendations such as Recommendations 3, 4 (part), 10 and 11 (part) have been or are being addressed through other initiatives within the context of the Government's reviews of the broader taxation, education and financial institutions reform agenda.

REPORT OF THE SPECIAL RURAL TASK FORCE

The Special Rural Task Force was established to consider the impact of the Social Security assets tests on customers in rural areas, the operation of the assets test hardship provisions, the social and economic implications of changing the asset test rules relating to intergenerational transfer of farms, and alternative approaches to valuing farm houses and curtilage. Measures under the Agriculture - Advancing Australia initiative meet a number of the Task Force's recommendations.

. FarmBis addresses Recommendation 8 through its refocussing of the Rural Adjustment Scheme, and by building on Property Management Planning. FarmBis will promote networking and integration of advice on farm business management planning, improve communications and promote intergenerational transfer.

. The Farm Family Restart Scheme addresses Recommendation 12 of the Report by providing a time limited payment, equivalent to the NewStart Allowance rate, to farm families in severe financial hardship, conditional upon farmers seeking professional financial advice on their viability.

. The new Farm Management Deposit Scheme addresses Recommendation 14 through the provision of an effective farm savings scheme to facilitate risk management and financial self-reliance.

. Divestment Modifications address Recommendation 15 through provision of a three-year "window of opportunity" for older farmers to legally transfer their properties to the next generation without being disqualified from receiving the age pension.

. The Understanding Rural Australia data project addresses Recommendation 20 to collect more information on farming families to aid better policy development.

. The above measures as a whole address Recommendation 13 by recognising the linkages between personal and business issues in managing rural adjustment.

The recently created Commonwealth Service Delivery Agency is also looking at measures to address recommendations directed to:

. improving service delivery to rural areas (Recommendation 19); and

. simplifying and improving the administrative procedures relating to the assets test hardship provisions and improving awareness of, and access to, social security programs in rural areas (Recommendations 3, 5, 6, 7 and 10).

. The Special Rural Task Force also suggested amendments to the Social Security hardship provisions to improve farmers' access to allowances and changes to the Activity Test (Recommendations 1 and 2). While these recommendations were not accepted, farmers have been given access to income support payments through the Farm Family Restart Scheme.