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Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019

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2019

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

FARM HOUSEHOLD SUPPORT AMENDMENT

(RELIEF MEASURES) BILL (No. 2) 2019

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Agriculture,

Senator the Hon. Bridget McKenzie)

 



FARM HOUSEHOLD SUPPORT AMENDMENT

 (RELIEF MEASURES) BILL (NO. 2) 2019

GENERAL OUTLINE

The Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019 (the Bill) introduces improvements to the Farm Household Allowance (FHA) program payment settings through amendments to the Farm Household Support Act 2014 (the FHS Act) and the Farm Household Support Minister’s Rule 2014 .

The Bill is the government’s third instalment in response to the independent review into the FHA program. The review was undertaken in 2018 and released in May 2019 (Rebuilding the FHA: a better way forward for supporting farmers in financial hardship).

The improvements in the Bill are in addition to those provided in the Farm Household Support Amendment Act 2019 and the Farm Household Support Amendment (Relief Measures) Act (No.1) 2019 .

The Bill makes four sets of amendments:

 

·          The first set of amendments is to provide a rate of FHA that is not varied by the person’s income. That is, if FHA is payable to a person, the person’s income will not affect their final rate of FHA payment.

·          The second set of amendments is to simplify the assets test so that all assets (farm and non-farm) will be subject to a combined single net value threshold of $5.5 million. This set of amendments will include amendments to valuing water entitlement rights: under the amendments, the value of a person’s right or interest in farm property will be assessed together with the value of a water entitlement right connected to that farm property.

·          The third set of amendments is to remove the requirement to have farm financial assessments conducted by a person prescribed by the Minister’s rules, and clarify that the amount of farm financial assessment supplement is the amount provided in the invoice for the farm financial assessment (up to the maximum amount in the Minister’s rules). The amendments will also introduce a requirement that the person conducting the assessment must have either appropriate qualifications, or expertise.

·          The fourth set of amendments is to strengthen the case management approach to better support FHA recipients through periods of financial difficulty. The amendments increase the maximum amount of activity supplement to $10,000 and extend the amount of activity supplement to include travel and accommodation costs associated with eligible activities, provided the costs are reasonable as determined by the Secretary.

Rate of farm household allowance (Schedule 1)

Currently, FHA recipients are required to report fluctuations in their income (on-farm and off-farm) to ensure that their fortnightly rate of payment is correct. Variations in rate of payment can lead to confusion regarding FHA.

Providing that rate of payment is not varied by a person’s income means that a person will either be payable and receive the maximum applicable rate of payment, or not payable and their rate of payment will be nil. Casual or fluctuating income will continue to be assessed for the purposes of payability, as long as a person’s income is under the payability threshold they will receive their maximum applicable rate of payment.

Simplified assets test (Schedule 2)

Currently, FHA recipients are subject to two separate assets tests with different value limits. The non-farm assets (including liquid assets) value limit is that used for social security payments, and the farm assets value limit is $5 million. This means a person must satisfy both tests for FHA to be payable.

The assets tests will be simplified with the effect that all assets (farm and non-farm) will be subject to a combined single net value threshold of $5.5 million. This will make the eligibility criteria for receiving FHA much simpler, and the evidence requirements less burdensome.

Unlike other social security payments, this amount will not be indexed annually.

Schedule 2 also clarifies the value of a right or interest in farm property will be assessed as including the value of a water entitlement right attached to that property. The value of the water entitlement right will not be counted separately, preventing “double counting.”

Farm financial assessments (Schedule 3)

Currently, a farm financial assessment is a long and complex process, which can be burdensome for FHA recipients.

Removing the requirement for a farm financial assessment to be conducted by a person prescribed by the Minister’s rules will mean that FHA recipients are able to choose the most suitable person to undertake the assessment. The requirement that the person conducting the assessment be independent and have no interest in the farm or any related asset will remain. The person conducting the assessment will also be required to have appropriate qualifications or expertise to conduct the farm financial assessment.

Extending the activity supplement (Schedule 4)

Currently, FHA recipients can also access an activity supplement of up to $4,000. The activity supplement is payable for eligible activities such as legal or other advice, training or study and in some circumstances, counselling services.

The Bill will increase the maximum amount of activity supplement to $10,000, and extends the amount of activity supplement to include travel and accommodation costs associated with eligible activities, provided the costs are reasonable (as determined by the Secretary).

Increasing the maximum activity supplement amount, and extending the amount to travel and accommodation costs will assist recipients take up activities to build on existing skills and create extra income.



 

Consultation

Consultation was undertaken with the Department of the Prime Minister and Cabinet, the Attorney-General’s Department, the Department of Social Services and the Department of Human Services.

FINANCIAL IMPACT STATEMENT

The measures in the Bill are expected to have a financial impact of approximately $30 million through to 30 June 2023. The expected financial impact does not include flow-on impacts, including service delivery costs or taxation.

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

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 .

The full statement of compatibility with human rights is attached to this explanatory memorandum.



NOTES ON AMENDMENTS

Preliminary

Item 1                  Short Title

Clause 1 provides the short title of the Act is the Farm Household Support Amendment (Relief Measures) Act (No. 2) 2019 .

Item 2                  Commencement                                                

Subclause 2(1) provides that each provision of the Bill specified in column 1 of the table in that subclause, will commence, or will be taken to have commenced, in accordance with column 2 of that table.

Item 1 of the table in subclause 2(1) provides that the Bill commences on a single day to be fixed by Proclamation. However, if the provisions do not commence within the period of 6 months beginning on the day the Act receives the Royal Assent, the provisions will commence on the day following the end of that period.

Subclause 2(2) provides that any information in column 3 of the table in subclause 2(1) is not part of the Act. It also clarifies that information may be inserted in column 3 of the table, or information in it may be edited, in any published version of the Act.

Item 3                  Schedules

Item 3 provides that legislation specified in a Schedule to the Bill is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule has effect according to its terms. This is a technical provision to give operational effect to the amendments contained in the Schedules.

 



 

Schedule 1—Rate of farm household allowance

Overview

Currently, a person’s rate of payment is calculated using the applicable rate calculators in the Social Security Act 1991 (Social Security Act) (as applied and modified by the Farm Household Support Act 2014 ) (FHS Act): the Youth Allowance Rate Calculator and Benefit Rate Calculator B. The rate calculators apply an ‘income test’ to determine an ‘income reduction’, which is subtracted from the maximum applicable rate of payment.

The Bill will ‘switch off’ the income reduction elements of the rate calculators and provide a rate of payment that is not varied by a person’s income. That is, if FHA is payable to a person, the person’s income will not affect their final rate of payment. Changing how the rate of FHA is calculated means a person will either be payable and receive the maximum applicable rate of payment, or not payable and their payment rate will be nil.  Income from all sources will continue to be assessed for the purposes of payability; as long as a person’s income is under the payability threshold they will receive the maximum applicable rate of payment.

Farm Household Support Act 2014

Item 1                  At the end of Subdivision A of Division 8 of Part 2

Item 1 inserts a new clause 59A at the end of Subdivision A of Division 8 of Part 2 of the FHS Act.

Subdivision B of Division 8 of Part 2 of the FHS Act provides how rate of payment is worked out for a person who has turned 22.

Subclause 59A(1) operates to ‘switch off’ the income reduction elements (steps 5 and 6 and Module G) of Benefit Rate Calculator B, and the parts of the FHS Act that modify the income reduction elements of the calculator.

Subclause 59A(2) provides that paragraph (a) of step 7 in Benefit Rate Calculator B applies as if the provisional fortnightly payment rate were the amount worked out at step 4 i.e. the maximum payment rate.

Subclause 59A(3) provides that subclauses 59A(1) and (2) do not apply for the purposes of working out if FHA is payable to person. This means that steps 5 and 6 and Module G of Benefit Rate Calculator B will continue to be used to assess whether FHA is payable to a person.

A note is included to clarify that FHA is not payable to a person if the person’s rate of payment would be nil and that the income test in the Social Security Act (as modified by the FHS Act) applies in working out if FHA is payable.

Item 2                  At the end of Subdivision B of Division 8 of Part 2

Item 2 inserts a new clause 65A at the end of subdivision B of Division 8 of Part of 2 of the FHS Act.

Subdivision B of Division 8 of the FHS Act provides how rate of payment is worked out for a person who has not turned 22.

Subclause 65A(1) operates to ‘switch off’ the income reduction elements (steps 12 and 13 and Module H) of the Youth Allowance Rate Calculator, and the parts of the FHS Act that modify the income reduction elements of the calculator.

Subclause 65A(2) provides that paragraph (a) of step 14 in the Youth Allowance Rate Calculator applies as if the provisional fortnightly payment rate were the amount worked out at step 4 i.e. the maximum payment rate.

Subclause 65A(3) provides that subclauses 65A(1) and (2) do not apply for the purposes of working out if FHA is payable to a person. This means that steps 12 and 13 and Module H of the Youth Allowance Rate Calculator will continue to be used to assess whether FHA is payable to a person.

A note is included to clarify that FHA is not payable to a person if the person’s rate of payment would be nil and that the income test in the Social Security Act (as modified by the FHS Act) applies in working out if FHA is payable.

Item 3                  Application provision

Item 3 provides that the amendments made by Schedule 1 apply in relation to working out whether FHA is payable, or the rate of payment, for days on or after the commencement of this item.



 

Schedule 2—Assets test

Overview

Division 6 of Part 2 of the FHS Act sets out a two-tier assets test for farm assets and non-farm assets, respectively. If the value of a person’s assets exceeds the limit set out under either tier, FHA will not be payable.

Schedule 2 simplifies the assets test and replaces the current two-tier assets test with a single combined assets value threshold of $5.5 million. This means that farm assets and non-farm assets will be considered as a single pool. This Schedule also provides that the value of a right or interest in farm property will be assessed as including the value of a water entitlement right attached to that property.

Farm Household Support Act 2014

Item 1                  Sections 33 and 34

Item 1 repeals sections 33 and 34 and inserts a new assets value limit of $5.5 million. This means that FHA is not payable to a person if the sum of the total net value of the person’s farm assets and non-farm assets exceeds $5.5 million.        

Item 2                  At the end Subdivision A of Division 6 of Part 2

Item 2 adds a new clause 36A at the end of Subdivision A of Division 6 of Part 2 of the FHS Act. The new clause sets out the value of a right or interest in farm property will be assessed as including the value of a water entitlement right attached to that property. This will prevent “double counting” of a water entitlement right connected to the farm property.

Where a water entitlement right is used or held separately to the farm property, the value of the water entitlement right will be assessed separately.

Item 3                  Subsection 93(1) (table item 26)

Item 3 omits the reference to ‘sections 33 and 34’ and substitutes ‘Subdivision A of Division 6 of Part 2’ at item 26 of the table in subsection 93(1) of the FHS Act.

The table in subsection 93(1) of the FHS Act modifies the operation of the Social Security Act.

Item 4                  Subsection 93(1) (table item 28)

Item 4 omits the reference to ‘tests in sections 33 and 34’ and substitutes ‘test in section 33’ at item 28 of the table in subsection 93(1). This amendment is consequential to the amendment made by Item 1.

The table in subsection 93(1) modifies the operation of the Social Security Act.

Item 5                  Subsection 93(1) (table item 29)

Item 5 repeals item 29 of the table in subsection 93(1). This amendment is consequential to the amendment made by Item 1.

The table in subsection 93(1) modifies the operation of the Social Security Act.

Item 6                  Application provision

Item 6 provides that the amendments made by Schedule 2 apply in relation to working out whether FHA is payable for days on or after the commencement of this item.



 

Schedule 3—Farm financial assessments

Overview

Schedule 3 removes the requirement that a farm financial assessment must be conducted by an independent ‘prescribed adviser’. Presently, a prescribed adviser is a person who has relevant financial qualifications, and is a member of a professional body whose members normally provide financial advice (see section 5 of the Farm Household Support Minister’s Rule 2014). A farm financial assessment will now be able to be conducted by an independent person with appropriate qualifications or expertise to conduct the assessment.

The requirement that a person who conducts a farm financial assessment be independent and have no interest in the farm or any related asset will remain.

 Farm Household Support Act 2014

Item 1                  Subsection 5(1) (definition of prescribed adviser )

Item 1 repeals the definition of ‘prescribed adviser’.

Item 2                  Section 84

Item 2 replaces the reference to ‘prescribed adviser’ with ‘person who has appropriate qualifications or expertise to conduct the assessment’.

Item 3                  Section 84

Item 3 replaces the reference to ‘the adviser’ with ‘the person who conducted the assessment’.

Item 4                  Section 86 (heading)

Item 4 replaces the reference to ‘prescribed adviser’ with ‘person who has appropriate qualifications or expertise’.

Item 5                  Section 86

Item 5 replaces the reference to ‘prescribed adviser’ with ‘person’.

Item 6                  At the end of section 86

Item 6 adds a new paragraph (c) at the end of section 86, which sets out the requirement for a farm financial assessment to be conducted by an independent person who has appropriate qualifications or expertise.

This means that a person who conducts a farm financial assessment must be independent, have no interest in the farm or any related assets, and have appropriate qualifications or expertise to conduct the assessment.

This recognises that a person who conducts a farm financial assessment could be either appropriately qualified or have appropriate experience to conduct a farm financial assessment (for example a rural financial counsellor, or a farm consultant).

Item 7                  After paragraph 87(c)

Item 7 inserts a new paragraph (ca) after paragraph 87(c). This amendment provides that a person can only qualify for a farm financial assessment supplement if the cost of the assessment is greater than nil.

Item 8                  Subparagraph 87(e)(ii)

Item 8 replaces the reference to ‘prescribed adviser’ with ‘person’.

Item 9                  Paragraph 88(1)(b)

Item 9 replaces the reference to ‘prescribed adviser’ with ‘person’.

Item 10                At the end of paragraph 89(b)

Item 10 inserts a clarification at the end of paragraph 89(b). That is, the amount of farm financial supplement is the cost of the farm financial assessment, being the cost specified in the invoice for the farm financial assessment (or up to the maximum amount prescribed by the Minister’s rules).

Farm Household Support Minister’s Rule 2014

Item 11                Section 4 (definition of professional body )

Item 11 repeals the definition of ‘professional body’, which is redundant as a result of the amendments made by Schedule 3.

Item 12                Section 5

Item 12 repeals section 5 of the Minister’s rules (meaning of prescribed adviser), which is redundant as a result of the amendments made by Schedule 3.

Item 13                Application provision

Item 13 provides that the amendments made by Schedule 3 apply in relation to notices given under subsection 85(2) of the FHS Act on or after the commencement of this item.



Schedule 4—Activity supplement

Overview

Schedule 4 increases the maximum amount of activity supplement to $10,000 and extends the amount of activity supplement to travel and accommodation costs associated with eligible activities, provided the Secretary considers those costs are reasonable . This Schedule also clarifies that the cost of the activity is the cost specified in the invoice relating to the activity.

Farm Household Support Act 2014

Item 1                  Paragraph 82(1)(b)

Item 1 repeals paragraph 82(1)(b) and substitutes new paragraph 82(1)(b).

New paragraph 82(1)(b) extends the amount of activity supplement to include both the cost of the activity and the costs of travel and accommodation that are incurred in connection with the activity, to the extent that the Secretary considers those costs to be reasonable. The cost of the activity is the cost specified in the invoice mentioned at paragraphs 80(1)(g) or 80(2)(f) of the FHS Act.

Item 2                  Application provision

Item 2 provides that new subparagraph 82(1)(b)(ii) applies in relation to costs of travel or accommodation incurred on or after commencement of this item.

Farm Household Support Minister’s Rule 2014

Item 3                  Section 8

Item 3 increases the maximum amount of activity supplement to $10,000.

Item 4                  Application provision

Item 4 provides that the amendment made by Schedule 4 applies in relation to working out the amount of activity supplement payable to a person for an activity begun on or after the commencement of this item.



 

 

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019

Overview of the Bill

The Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019 (the Bill) introduces improvements to the Farm Household Allowance (FHA) program payment settings through amendments to the Farm Household Support Act 2014 (the FHS Act) and the Farm Household Support Minister’s Rule 2014 .

The Bill is the government’s third instalment in response to the independent review into the FHA program. The review was undertaken in 2018 and released in May 2019 (Rebuilding the FHA: a better way forward for supporting farmers in financial hardship).

The improvements in the Bill are in addition to those provided in the Farm Household Support Amendment Act 2019 and the Farm Household Support Amendment (Relief Measures) Act (No.1) 2019 .

The Bill makes four sets of amendments:

 

·          The first set of amendments is to provide a rate of FHA that is not varied by the person’s income. That is, if FHA is payable to a person, the person’s income will not affect their final rate of FHA payment.

·          The second set of amendments is to simplify the assets test so that all assets (farm and non-farm) will be subject to a combined single net value threshold of $5.5 million. This set of amendments will include amendments to valuing water entitlement rights: under the amendments, the value of a person’s right or interest in farm property will be assessed together with the value of a water entitlement right connected to that farm property.

·          The third set of amendments is to remove the requirement to have farm financial assessments conducted by a person prescribed by the Minister’s rules, and clarify that the amount of farm financial assessment supplement is the amount provided in the invoice for the farm financial assessment (up to the maximum amount in the Minister’s rules). The amendments will also introduce a requirement that the person conducting the assessment must have either appropriate qualifications or expertise.

·          The fourth set of amendments is to strengthen the case management approach to better support FHA recipients through periods of financial difficulty. The amendments increase the maximum amount of activity supplement to $10,000 and extend the amount of activity supplement to include travel and accommodation costs associated with eligible activities, provided the costs are reasonable as determined by the Secretary.

Human rights implications

The Bill engages, or has the potential to engage, the following rights:

 

·          Article 9 of the International Covenant on Economic, Social and Cultural Rights (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 6 of the ICESCR—right to work and rights in work

Right to social security

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. 

The Bill seeks to change the rate of FHA so that eligible FHA recipients will receive the applicable maximum payment rate. In addition, the Bill simplifies the assets test so that all assets (farm and non-farm) will be subject to a combined single net value threshold of $5.5 million. This means that farm assets and non-farm assets will be considered as a single pool.

While accessing FHA, a person is able to access a number of different support measures, including financial support, training and one-on-one case management. The Bill seeks to strengthen the case management approach by extending amount of activity supplement to related travel and accommodation costs (provided the costs are reasonable) and increasing the maximum amount of activity supplement to $10,000.

An FHA recipient is also automatically entitled to a Health Care Card, providing them with access to more affordable healthcare (refer to discussion below in relation to article 12(1) of the ICESCR). By increasing the maximum amount of activity supplement, and extending the amount to related travel and accommodation costs, simplifying the assets test, and changing the rate of FHA to the applicable maximum rate, the Bill will engage and promote the right to social security.

Summary

The Bill engages and promotes the right to social security in Article 9 of the ICESCR.

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

Article 11(1) of the ICESCR recognises 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.

Given that the livelihood of FHA recipients is subject to a range of factors beyond their control, the Bill seeks to promote this right by providing financial and social support to FHA recipients in times of hardship where they demonstrate a limited capacity to self-support.

Subject to eligibility criteria, FHA recipients are also entitled to additional rent assistance. The Bill makes it simpler for a person to access support through FHA and, as a result, indirectly protects the right to an adequate standard of housing.

Summary

The Bill engages and promotes the right to an adequate standard of living in Article 11(1) of the ICESCR.

Right to health

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

The CESCR has stated that this right is not confined to the right to health care.  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.

The Bill will make it simpler for FHA recipients to access FHA, and provide certainty to FHA recipients by providing a rate of FHA that is not varied by their income. FHA recipients are granted automatic access to a Health Care Card and, subject to eligibility criteria, other applicable mainstream social assistance measures.

The Health Care Card assists FHA recipients by allowing them to access health-related goods and services at a concessional rate. By making it simpler to access FHA and ancillary support and the health benefits, the Bill engages and promotes the right to health.

Summary

The Bill engages and promotes the right to health in Article 12(1) of the ICESCR.

Right to work

Article 6 of the ICESCR protects the right to work. Article 6(2) provides that, to achieve the full realisation of this right, States should take steps to 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”.

While receiving payment, FHA recipients are able to access an activity supplement to undertake agreed training and assessment activities as prescribed in the recipient’s financial improvement agreement. Increasing the maximum amount of activity supplement, and extending the amount of activity supplement to associated travel and accommodation costs, means FHA recipients will have greater access to technical and vocational training. This in turn, will increase their access to work. As a result, the Bill engages and promotes the right to work contained in Article 6 of the ICESCR.

Summary

The Bill engages and promotes the right to work in Article 6 of the ICESCR.

Conclusion

The Bill is compatible with human rights because it promotes the protection of human rights.

(Circulated by authority of the Minister for Agriculture,

Senator the Hon. Bridget McKenzie)