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Tuesday, 30 July 2019
Page: 1084

Senator DAVEY (New South WalesThe Nationals Whip in the Senate) (12:24): This isn't my first speech, but this is an issue that is very important in my home region, in the New South Wales southern Riverina, and right across eastern Australia where this drought is hitting. I and many of my colleagues across regional New South Wales, Queensland and Victoria are all in the grip of this terrible drought.

Last week in this place, we passed legislation establishing the Future Drought Fund. That's a measure to help our farmers and communities better manage, prepare and sustain their businesses in future drought. But this Farm Household Support Amendment Bill is about supporting our farmers now. It's about providing assistance to farmers and their partners right now during this current drought. This drought is the worst on record in the north of my state, New South Wales, and in the south of the state, it is doing its best to equal, if not overtake, the millennium drought. Often I hear people say, 'Drought happens and farmers need to prepare.' I agree with the principle, and so do most farmers I know. But I know farmers who have prepared for seasons of drought—one, two, sometimes even three bad seasons. They store fodder and grain, and they manage their pastures to make sure they don't overgraze. Croppers evaluate season by season to assess when and what to plant. Irrigators manage their water holdings across seasons where possible. But preparedness can never be indefinite. And, after one bad season, farmers have to reassess and re-evaluate just what they can achieve with the remaining on-farm stores and resources. After two bad years, resources have been pushed to the limit, if not completely depleted. And, after three or four years, as has happened in northern New South Wales, I challenge anyone to be prepared for that. That is why the Nationals have made drought a national priority. That is why we are working in government to invest over $6.3 billion in drought support.

In addition to the Future Drought Fund, which I touched upon before, we are taking other practical steps to support our communities in this current drought. We have the Drought Communities Program, which is an example of how we can stimulate our communities to provide immediate economic stimulus and keep them going through the drought. In my home state of New South Wales, rural and regional communities are seeing the benefit of this program. Fifty-two local government areas are eligible for funding under this program, and councils from all across the state—from Balranald to Bathurst, Carrathool to Cobar, Leeton to Lithgow and many places in between—are delivering infrastructure projects and activities to boost their local economies to support local jobs and address local community needs in a time when we really need the moral support. In the New England area, Armidale Regional Council is improving its local road network and delivering upgrade roads on the Kempsey Road, while Tamworth council is upgrading cattle grids and installing seven new bulk water refill stations. In the north-west, Narrabri Shire Council is undertaking much-needed infrastructure improvements to the racecourse, and Walgett Shire Council is delivering beautification programs in the main streets of both Lightning Ridge and Walgett. All of these projects are injecting money into the local communities to keep those communities alive. But drought-affected communities also feel the pain of their farmers who are struggling to make ends meet. And that is what this bill is for.

This bill is part of the drought assistance package that, like our Drought Communities Program, aims to support farmers and the communities that depend on their agricultural economy, as the flow-on impacts of this ongoing drought really start to hit home. And hit home it will, because a drought as severe as this current drought affects everyone. The Australian Bureau of Agricultural and Resource Economics and Sciences is estimating a decline in livestock production, down by six per cent. And while they do optimistically note the better start to the winter cropping season than we've had in a couple of years, they still expect winter cropping production to be down by around 10 per cent below the 10-year average, and production of irrigated crops, particularly broadacre irrigation, is expected to remain very low due to the ongoing conditions. And without a break in the drought, don't expect to have a summer irrigation program across any of New South Wales.

Overall, the forecast shows a decline in the net value of farm production of 12 per cent, and the net farm cash income declining by over eight per cent. Now, this impacts on the capacity of farmers to spend and to employ; and therefore it affects local contractors, local businesses, who all suffer as farmers tighten their belts. And importantly, it affects local productivity, which affects the price that consumers pay for their food at the end of the day. This drought will affect all of us in some way.

As a government, we can't make it rain. We can't make crops grow on dry dirt and we can't make livestock live off air. But, as a government, we can support our farmers so that when it does rain they are still there and they are ready to pick up the pieces and get going again. When that happens, we, in government, have established a restocking and replanting concessional loan through the Regional Investment Corporation so they can immediately rebuild and restore their business, because the hardest thing for a farmer at the end of a drought is if they can't access the funds to get going again. But those concessional loans are dependent on having farm businesses to rebuild, and that's what this bill that is before us today is about. It is designed to help our farmers get through the worst of it so that, at the other end, they are still there and ready to get going again.

Now, we have had the farm household allowance since 2014. Since its introduction, nearly 12,000 farmers have received assistance. Almost 7,000 are receiving payments now. We've paid over $330 million in fortnightly payments and related supplements and allowances. And while those receiving farm household assistance appreciate the support, we have heard that it's a difficult process. We have heard that some of the policy settings, including eligibility tests and assessment arrangements, aren't quite right, and that's what this bill is about. Where we can make it fairer and easier to access, we are making changes.

In September 2018, then minister David Littleproud, in his capacity as the Minister for Agriculture and Water Resources, appointed an independent panel to undertake a review of the farm household allowance—and on that note, I would like to acknowledge the efforts of panel members, including Michele Lawrence, Georgie Somerset and Professor Robert Slonim. The panel undertook extensive consultation, involving face-to-face and targeted stakeholder engagement, and they spoke to people from a range of organisations and interest groups, including both successful and unsuccessful applicants, farmers and industry groups, government agencies, accountants, bankers, financial counsellors, the Country Women's Association and the Isolated Children Parents Association. I'd like to thank all those who contributed to that review.

The panel's report, which was handed down earlier this year, provides us with a blueprint to rebuild the farm household allowance to ensure the program remains fit for purpose and continues to meet its objectives of providing income support and assisting structural change. While we've already taken some steps to implement the panel's recommendations, including changing the treatment of income from the forced sale of livestock, this bill goes further in progressing those recommendations. The farm household support amendment will maintain the net farm asset thresholds at $5 million, as recommended by the independent panel. It also clarifies the treatment of allowable deductions for the farm household allowance recipients.

The increase to the threshold will give more farmers access to the farm household allowance during times of hardship. It is what farmers have been telling us they need, because it will mean that they do not have to sell their assets and risk taking away some, or all, of their future income-producing capacity from their farm businesses. It also recognises that farm assets can be difficult to sell quickly and during tough times, and often, if they can do so, they do so well below what they're actually worth. It also means that farming businesses, such as cropping businesses, which typically carry larger asset levels, will now be able to access support under the farm household allowance. Businesses carrying larger levels of asset can still experience financial difficulty if they don't have sufficient cashflow, so this reform is particularly important across all agricultural communities.

The bill will also amend the treatment of income from business so allowable deductions can be claimed against related income. That is, allowable deductions associated with on-farm business income will be able to be deducted from that income, while off-farm deductions will be associated with the off-farm income. As a government we have already taken steps to increase the net asset threshold; however, that temporary measure ceased on 30 June. By passing this bill today, we can ensure that it applies retrospectively so all future applicants can access backdated payments to ensure no-one misses out. I urge the Senate today, as we all hope and pray for rain, to pass this bill to stand by our farmers as they struggle through this long, long dry and stand with our farmers so that, when it does rain, as a nation we're ready to rebuild.