Tuesday, 3 December 2019
Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019; Second Reading
I begin by moving:
That all words after "That" be omitted with a view to substituting the following words:
"whilst not declining to give the bill a second reading, the House criticises the Government for:
(1) its ad hoc approach to drought assistance;
(2) failing to deliver a comprehensive drought plan; and
(3) forcing drought-affected farmers off the Farm Household Allowance".
If you were to serve a constituent in any electorate today around this country and ask them what they thought was the most pressing issue in our local communities, I'm very, very confident drought and water would be at the top of their responses. There is no doubt that Australians everywhere—not just those living in rural and regional Australia, but those living in our capital cities and on the urban fringes of them—are fully aware and conscious of the plight being faced by Australia's farming communities, and the rural communities which support them, which they in turn support. Yet I ask: where are the speakers on this bill? Where are they?
I hear one voice, one voice from the member for Nicholls. There he is, Mr Deputy Speaker, the member for Nicholls. Where is the National Party these days? Why isn't the National Party in here supporting our farmers, talking about the challenges they face, talking about their plight? The answer is: they're too busy fighting amongst one another outside. They're in a couple of fights. They're also in a fight with their coalition party. They are also in a fight with the Liberal Party. They are in a fight with the most arrogant Prime Minister in the history of the Federation, who does not give a toss about the National Party unless he needs their votes.
But in the good old days under 'Black Jack' McEwen, Tim Fischer and many others you could be sure that the National Party vote wasn't given over easily. You could always be sure that in the cabinet room 'Black Jack,' Sinclair and all those who followed him would be putting a price on their vote and that price would be a defence of those living in rural and regional Australia. But suddenly the National Party has gone silent. Their silence is deafening—deafening on a daily basis. It is clear to all Australians that the government's response to this drought has been piecemeal, ad hoc and even chaotic. You'd think members of the National Party would be in here talking about that today but they are not.
This is the 13th occasion since 2014 that this government has amended their farm household allowance. This is the legislation that Barnaby Joyce, the member for New England, told us in 2014 was the thing that would fix all things for our farmers in drought. Well, of course, it's been proven to be anything but. Think about that: 13 bills since 2014, each of which has a package of amendments, not just one amendment. The last time we dealt with a bill amending this legislation in this place was on 23 October. This is how regularly they are now coming to this House.
Back in 2014, the member for New England just said, 'There's nothing to see here. You just apply. You don't have to wait and you get the payment, no problem at all.' But, of course, farmers were pretty quick to realise that would not be the case and he was pretty quick to realise it would not be the case, because he doctored his Hansard to correct the record. An incident which led to the dismissal of one of the most highly respected departmental secretaries in this capital city. That was an event which remains of great regret to me and should be of great regret to all those who sit opposite—that a senior, respected public servant was forced out of his job because he had the audacity to stand up to the member for New England and challenge him for dragging his departmental people into the Hansardgate scandal. So that's where farm household allowance began. Back then the member for New England told us it was the best thing since sliced bread and here we are in 2019, almost in 2020, and the government is still trying to get it right.
This bill, of course, does a number of things.
Mr Chester interjecting—
I'm glad the minister's pleased. It adjusts the assets test again. I think we adjusted it to $5 million last time—I will stand corrected—and now it's going to $5.5 million. I don't know why; it's hard to say. Maybe it's because the government is now including water rights within the assets test. Maybe that's an add-on to accommodate that. If that is true, I'm not sure what the policy rationale is.
It creates an opportunity to offset farm losses against off-farm income from related businesses and vice versa. It liberalises the farm financial assistance rules so you no longer need, for example, an accountant to determine your farm liability; you can get some other adviser to do that. The information about the rules around that are pretty skinny. I'd be interested to hear the minister say some more about that measure.
It removes the taper rule on the income test. So, unlike for anyone else who is on government support of any sort, the income test won't have a taper rate. So if you qualify under the income test for $1 you get the lot, which is a pretty unusual measure. That will be given effect by an amendment to the Social Security Act. And, of course, it increases to $10,000 the activity supplement.
They're all improvements, and the opposition will support this bill on that basis, but it doesn't change the fact that this has been a problematic piece of legislation from the beginning and we'll probably be back here in February dealing with other amendments—you can almost bet your house on it.
The bill we dealt with last time did a number of things, including basically cutting people off the farm household allowance. The government say: 'Oh, no, we're not going to say now that you can have the farm household allowance for only four years; we're going to say that you can have it for four years and every 10 years.' That sounds great, doesn't it? That sounds like an improvement. But what it means is that someone who was cut off on 30 June this year will be able to apply in 2024—that's what it means. We all pray that the drought is not still ongoing in 2024.
I'll tell you what else it means. They tell us that now when they cut these people off farm household allowance—I don't know what the number's up to now; it's got to be up to a thousand farms by now—they'll get this supplementary payment of $7,500 for singles and $13,000 for couples. What they don't tell you is that, if you were cut off on 30 June this year, you won't get the payment until the last bill we dealt with becomes law and is proclaimed. So, for six months, 600 families cut off from the farm household allowance have been waiting for their supplementary payment—six months. Think about that. Some of these people have been in drought for up to six years. People in some parts of the country have been in drought for nine years. Many of these people have probably been in drought for six years. These are the people most challenged by this drought, otherwise they would not have been on the farm household allowance in the first place, because it's a very, very tough benefit to secure—very tough on so many fronts. So the government say: 'On 30 June there'll be no more payments for you. But don't worry—we'll give you a $7½ thousand payment or a $13,000 payment for the six months on your way out.' What they didn't say is that you wouldn't be able to get that payment until that last bill we debated is proclaimed—six months. They don't tell you that. They only like to tell you the good bits, like the Prime Minister's last announcement.
I haven't counted how many announcements there have been, but there have been plenty of them. It's always piecemeal—make the announcement, put a big dollar figure on it and hope it rains. That's the government's model. The last time the Prime Minister made an announcement, he talked about zero-interest loans. I didn't have time to check when the announcement was made, but it was many, many weeks ago now, probably months. What he didn't tell you is that the zero-interest loans aren't available until January next year, at the earliest. In fact, we won't see the guidelines until then. So maybe saying January is fairly optimistic in itself.
The government love loans. They love announcing concessional loans. Why? Because it allows them to talk about the capital value of the loans. They say, 'We're putting $2 billion worth of loans on the table' and people out there think, 'Two billion dollars for our farmers—that sounds like a lot of money; that sounds pretty good, Prime Minister.' But what the Prime Minister doesn't tell people is that that's the capital value of all those loans if they were lent. The government borrow at the bond rate and often dish these concessional loans out at what they call a concessional rate, but a rate higher than the bond rate. I accept that's not true of the zero-interest loans, but, again, they're not going to be available until at least January next year. It's always been about concessional loans for this government. That's so they can talk about the big dollar figure.
The fact is that, for most farmers in trouble as a result of the drought, in this record low-interest environment—the lowest interest rate environment in our lifetime—more debt or shuffling debt is not the answer. They need cash for food on the table and they need cash flow for their business. They need cash to keep their stock alive, including their breeding stock, so they have a business to rebuild when the drought breaks. That's what they need. Concessional loans do not deliver that for most farmers. But that's been the focus of the government's announcements, or at least where the government has wanted the focus to be.
Then there was the Future Drought Fund and all the fanfare that was created around it. Remember: they stole the money out of the Building Australia Fund—$3.9 billion—money which would have been used in large part for investment in road projects in regional Australia. They robbed that to put it into this new Future Drought Fund. They hope to grow that to $5 billion. It will grow to $5 billion because they will not be taking much out of it along the way. From, I think, 1 July next year, they are going to be drawing down a hundred million dollars to build, they say, drought resilience in our farming communities. A hundred million dollars is a lot of money in anybody's language, but in this context it's chicken feed. Already you can see the states asking: how much are we going to receive in our states? With six states and one territory affected, divide that by seven and it's getting pretty skinny straightaway. It shouldn't be spent in proportion in each of the states—that would be the wrong way to spend the money—but that's where the expectation is growing already.
The key point is that drought affected farmers won't see one cent of that dollar. The Prime Minister likes to say we've got a future drought fund—a hundred million dollars coming down every year. Well, not till next year, Prime Minister, not till midway through next year, but not one cent of that will go to our farmers. I support the idea of building a fund to do the research and to develop the innovation and technology to build further resilience in our farming communities—to work on soil health, to embrace the latest innovation in water efficiency, whatever it might be. But don't pretend, Prime Minister, that you're spending a hundred million dollars a year from 1 July next year on our drought affected farmers, because it simply is not true.
Prime Minister, you should stop misleading the Australian community, which is what you've been deliberately doing since you took the top spot and said you would make drought and our farmers your No. 1 priority, something you clearly have not done. Your constant repeat of this $7 billion figure—thankfully now exposed both in our newspaper and in Senate estimates as a lie—has been designed to do only one thing: pretend you are making our farmers your No. 1 priority.
Prime Minister, they see it. They understand it. They see this $7 billion figure and they say: 'Well, where is it? Because I'm not getting any of it.' I don't know who the Prime Minister thinks he is talking to, although I do suspect. I acknowledged earlier that people in our capital cities and our suburbs of our capital cities are as concerned about our farmers as are people in rural communities. So in fact he's talking to the people in the capital cities and on the urban fringes, where he thinks he needs the votes most. He knows that they don't know the $7 billion is not getting there, because they're not out suffering on the land. But, when people suffering on the land hear him say it, they certainly ask the question. No wonder they are angry. No wonder they are parked on the front lawns of Parliament House as we speak, complaining not only about the government's inadequate response to the drought but about its total mismanagement of the implementation of the Murray-Darling Basin Plan. It is a total failure on that front.
I saw the Deputy Premier of New South Wales muscling up this morning, threatening again to walk away from the plan. He is not prepared to say, of course, whether he has the support of his Premier, which is a rather interesting dynamic, but that takes me back to where I began. National Party members of parliament aren't in here defending their dairy farmers, because they're too busy outside this chamber, fighting with their state counterparts, fighting with their coalition partners or, indeed, fighting amongst themselves. We know about the great divide between the southern and the northern Nats and how they are ripping themselves apart.
Out of respect to you, Mr Deputy Speaker, I will try even harder.
I know it hurts very much when you are a junior coalition partner and you're being pushed around by the Prime Minister. I know it hurts. It's a tough time. Black Jack McEwen would be rolling in his grave. Black Jack, Sinkers, Anderson, Fischer—none of them would have allowed themselves to be pushed around like this National Party is being pushed around by this bullying Prime Minister. So I'd be up on my feet too, Minister. I'd be embarrassed too. It is never too late to start counting the numbers either, Minister, because the vulnerability is writ large and very obvious.
The other thing that is most critical to the agriculture sector, of course, is our biosecurity. How is that going for the government? Wendy Craik did a review of the Intergovernmental Agreement on Biosecurity back in, I think, 2017. She recommended a levy be put in place to build the resources we need to properly defend our borders on the biosecurity front. Here we are, almost Christmas of 2019, and where is the levy? Again, we don't have a levy after all that time, because they're fighting amongst each other on that side. They can't get agreement. The Prime Minister managed to turn this not into a scheme to build our biosecurity defences but into a plan to build a budget surplus. Here we are again, watching the Prime Minister putting his trophy surplus ahead of the needs of our farmers and, more than that, ahead of the security of the food supply system in this country. No wonder they've gone into hiding.
The National Farmers Federation has a strategy to grow Australia's agriculture sector to the value of $100 billion by 2030. That's a great aspiration to have. We on this side have been happy to support it and to commit ourselves to doing all we can to make sure that our farmers are able to secure that objective. Sadly, it isn't looking too good. We have no overarching strategic plan to respond to the drought. As the president of the NFF, Fiona Simson, has said, 'This government does not have a plan to grow our agriculture sector.' This government does not have a strategic plan for Australian farmers or the agribusiness sector. How do we get to $100 billion by 2030 when there is no strategic guidance from government? And how do we get to $100 billion by 2030 when we are still facing what is almost undoubtedly now the worst drought in our history? You can't. It's hard enough, but you can't get there without a comprehensive response on drought from the government and without a strategic plan for the agricultural sector.
I heard the Prime Minister in question time yesterday boast that greenhouse gas emissions have fallen in the last quarter. It's hardly surprising that he would be taking this opportunity and boasting, because it's the first time. They've been growing every quarter since 2014. The interesting thing is this: why did they fall? I think it was by about 0.3 of one per cent, by the way.
It would pay the minister to listen to this. He's a southerner. He is in the southern faction, and he might not understand this: our cattle herd is now the lowest it has been for 30 years. And, of course, our cattle make a very substantial contribution to our greenhouse gas emissions.
So here's our Prime Minister taking the first opportunity in six years to claim a reduction in greenhouse gas emissions, as small as the fall was, but what he's celebrating is not his capacity to get them down in the energy sector or the transport sector; he's celebrating the fact our agricultural sector is in crisis. He is putting it up on the mantle like a trophy. It's that he's allowed the agriculture sector to fall into such a bad state. If there were any farmers listening to question time yesterday, they must have been well and truly shaking their head at the fact the Prime Minister was celebrating the challenges they are facing in their own farming communities and in their own farm businesses.
The bill is okay. It further improves the farm household allowance. Each bill has, actually. But you wouldn't want to have been a farmer in 2014-15, trying to secure farm household allowance or trying to survive on farm household allowance, because, on this 13th occasion, you can see what the improvements have built. If you were there before these improvements, you were in trouble.
This bill is another admission that since 2014 this government has been getting farm household allowance wrong. Again, I suspect we'll be back some time in the new year doing another amendment. Income support is just one piece of the jigsaw puzzle. Income support is important. By the way, I think the government has spent $375 million, or thereabouts, allocating farm household allowance to a total of 12½ thousand farmers over time. Again, $375 million sounds like a lot of money, and it is in anybody's language, as I said earlier, of the $100 million, but if you said to an elector in Blacktown, 'Does $375 million for our farmers sound like a lot?' they would say: 'What? Didn't the Prime Minister promise the Americans $150 million to send a man from the moon to Mars?' That's what they would say. They would say, 'That doesn't sound like a lot of money to me.'
The government can't have it both ways. They can't say, 'We're spending $7 billion' one day, when we know that to be untrue, and then make out that farmers everywhere are benefitting from the farm household allowance when, in aggregate, the total spend has been $375 million. I think that figure alone gives people who aren't close to this subject a pretty good indication of the investment the government is making in our farmers who are facing drought.
I want to return to the supplementary payment because there's been a lot of spin from the other side about this. The government decided to cut the farmers off again—probably a thousand farming families have already been cut off, and many more will be cut off into the new year—and then, when they realised they were in trouble, they decided to give them what was described not by them but by the media, rightly, as an 'exit payment', a payment on the way out. What is the policy rationale for cutting people off and then giving them an upfront six-month payment? There is none. Again, that's not very helpful to those who didn't qualify for that, because that bill had not yet passed this parliament. No, the rationale here is to set up an arrangement where the government can defer expenditure to chase that trophy budget surplus again. This is all smoke and mirrors so that the Prime Minister can grab that trophy surplus.
Then, of course, when this gained momentum and the government realised they were in trouble, they said: 'Oh, there's a ministerial rule. We can give them another bonus payment six months after that.' But there is no guarantee. They made that announcement only because they were in trouble politically. Farmers have no way of developing a budget, because they have no way of knowing whether or not the government will make good on that promise. They're on the never-never there. They don't know what is next. Why can't the government simply say, 'We won't take any more people off farm household allowance while this severe drought is ongoing'?
Some on the other side will say, 'Well, everyone agreed back in 2012 that farm household allowance should be time limited.' Yes, they did. It seemed a reasonable proposition. You were given three years and, during that period, you either remodelled your farm business, grew your farm business, or thought about getting out and doing something else. But no-one could have conceived in 2012 that we would have a drought so long and so severe as this, and, when the facts change, you change your mind. We on this side certainly have had a very significant change of mind. We've supported in a bipartisan way every proposition the government has put forward, and I say again: 'Put the proposition forward to just leave people on farm household allowance while this drought is ongoing, and we will support it. You do not have to have concerns about opposition resistance to that change; in fact, you will have our very, very strong support.'
In closing, I offer bipartisan support on another matter. Our dairy industry is in crisis. We heard last week that, in Queensland, we're losing a dairy farmer a week. When does it end? When will the Prime Minister finally recognise we have a very significant problem here? When will he realise that we are at real risk now of losing our dairy industry and being almost entirely import dependent for our dairy products, including our drinking milk? That's how bad it is, and there are plenty of people out there on the lawns who agree with this proposition today.
We gave the government the opportunity in the Senate this week to support a bill to put in place a minimum farmgate price. I know it's not strictly in the economic textbook, but we have a real problem here and it will get fixed only through significant structural intervention. The refusal by those on the other side to join us on this matter is, quite frankly, a disgrace and has dairy farmers everywhere shaking their heads.
A code of conduct is great. We've supported that for four years, at least. The ACCC recommended a mandatory code of conduct 20 months ago now, but do we have one? No, we still don't, because, again, those on the other side are fighting about what it should look like. But, even if we do finally get a mandatory code of conduct, it will not be enough. It won't address the market failure that Senator Susan McDonald spoke about last week in the other place. We need something more than that. We need intervention, and we need to ensure that our dairy farmers know that for the next 12 months and the 12 months after that they will get a payment for their milk somewhere above their cost of production. Their costs continue to rise, exacerbated by drought, but the price they receive for their milk remains very stubbornly flat, and it's about time we did something about that, and it's about time those on the other side, particularly those from the National Party, joined us in doing something about it.
I look forward to these amendments to the Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019 that have been put forward by the government in relation to the farm household allowance making its way through the parliament. These amendments are further refinements of farm household allowance and effectively come in four sets of amendments. The first of those sets is to provide a rate of farm household allowance that is not varied by a person's income, effectively making it so that if you are eligible for one dollar then you are eligible for the full amount. The second is to simplify the asset test and effectively take onboard the value that many farmers have—the value of their water—and make sure that it doesn't preclude farmers from having access to farm household allowance.
A series of ministerial rules have been prescribed against somebody who is set to receive farm household allowance. Again, that financial assessment will not be pushing people away from the farm household support that they are currently eligible for. And the fourth set of amendments is simply to strengthen the management approach to better support farm household allowance recipients through periods of financial difficulty, with an amount to $10,000 to extend the amount of activity supplement to include travel and accommodation costs for eligible activities, provided that the costs are reasonable as determined by the secretary.
The member for Hunter has effectively taken every opportunity to complain and whinge and bellyache about the changes that we continually bring to this place in relation to the worsening of the drought. Quite simply, that is exactly the way I think a responsible government should treat this worsening drought. If the drought starts to bite, the government starts to act. If the drought persists, the government pushes harder. If the drought continues to bite, even harder, the government goes away and comes back with a new set of support mechanisms that are going to enable their farmers to work their way through the drought. The drought bites differently in different regions, so the government reacts with different proposals in each of those different regions. Many of these drought assistances are simply rolled out through regulations, through a grant program. Other support mechanisms need to be put through the House as changes to legislation.
I also want to pull up the member for Hunter, because he spent an awfully large amount of his 30 minutes talking about those farming families who are going to be coming off farm household allowance, as they have reached the four-year maximum. He was effectively telling the House, telling Australia, that those farmers are going to have to wait until the middle of next year. I will take this opportunity to say that the member for Hunter is wrong.
I think you'll find that you said that money will not be available for those families until the middle of next year. So, if you've been waiting for four years and you have effectively just come off farm household allowance—saying that they're going to have to wait six months for their supplement payments, that is not true. Those support payments will be available in a couple of weeks. So I think we need to have an opportunity for them—
Thank you. The way that the government has reacted to this current drought is very sensible, very reasonable, and these new sets of amendments are simply the way a responsible government should continue to act. The Labor Party needs to have a very strong think about the way it is handling itself in this drought. To bring up a drought water policy on the edge of an election will make most farmers in a drought's life go through more pain, go through more doubt, about the future of their business. But introducing a policy that included mainly buybacks in the water policies on the eve of an election is something that was incredibly painful for people looking at a very tough period.
We all know that water buybacks are the most dangerous and destructive of all policies, and to have the then shadow water minister pushing a policy that was going to see more and more water purchased out of agriculture and returned to the environment is exactly why we have 3,000 protesters in Canberra today. They are calling on the politicians in this House to, effectively, see things through their eyes as opposed to seeing things through the eyes of the environmental watering purposes.
The Labor Party need to have a really strong look at this. If the Labor Party want to stand up in this House and say they're ready to take a bipartisan view to this, how about they come on board with some of the views that we have in relation to water policy? Look at the Murray-Darling Basin Plan and the damage it is causing agriculture. Why don't the Labor Party put their hands up and say, 'We are happy to come and support the government if it's looking to change the Murray-Darling Basin Plan and some of the opportunities within that'? But they won't do that.
I take a point of order under standing order 66(a) and suggest the member might take a question from me, because if he's prepared to indicate what policy change he wants under the Murray-Darling Basin Plan we'll be happy to consider it. Which policy change would the member like?
I'm not going to take questions while I'm in my presentation. But I'm happy to sit down with the Labor Party at any stage and put forward changes to make agriculture the beneficiary of some of the environmental water we have.
We have 450 gigalitres, still hanging around the necks of our farmers, referred to as the '450 upwater'. We have dodgy science based around the Lower Lakes of South Australia. We have a whole range of opportunities for changes to improve the lot of our farmers. At the moment, our farmers are being asked to carry the losses associated with the running of the rivers. They're commonly referred to as conveyancing losses. This is coming out of the allocation that is annually available to our farmers. But the environment bears none of these conveyancing losses. When the environment is asked to help agriculture, their answer is generally a flat no.
We have to look at this in a serious manner. This is a Labor Party in opposition calling for a floor price in the dairy industry as a way of helping those farmers who are going through very tough times, when they know in their heart of hearts that a floor price in the dairy industry cannot work, when they know that the dairy industry itself is not calling for a floor price—because the dairy industry itself knows that a floor price in the dairy industry cannot work.
This is what the Labor Party are doing, with a whole series of what we would generally refer to as hoaxes, right throughout the whole industry. How can you set a floor price in the dairy industry that is above the cost of milk production? How can you do that? It's impossible to do it because every farming business produces milk at a different cost. They have different levels of debt. They have different access to water. They have different sized herds. They have different feed systems. And on it goes. From farmer 1 to farmer 2 to farmer 3 to farmer 4, they will all be producing milk at a different price. They'll be producing different-quality milk and getting different prices for their milk throughout the sector. The Labor Party, with this hoax, are effectively saying that they're going to fix this with the flick of a wrist—they're going to put in place a floor price that's going to be across the price of production. They know it is wrong. They know it is false. They know it simply cannot work. But they're happy to keep perpetuating this throughout the whole sector. They must understand that the dairy industry are not calling for this.
However, what we're here today to talk about is the farm household allowance. My first intensive look at this was after the milk price collapsed in 2016 and many farmers were being asked by their processors to go into a repayment plan of anywhere from $50,000 to several hundreds of thousands of dollars to pay back what were called clawbacks once the floor price crashed—on the back of, firstly, Murray Goulburn and, secondly, Fonterra following them. There was a collapse in the price of milk, one of only three times in the history of milk pricing when the price actually went backwards, and it went dramatically backwards. That caused an enormous amount of pain and anguish throughout the dairy industry, and many farmers have been on the back foot ever since then.
This is a really, really tough time, and many of the farmers who went through that clawback process had not got their heads above water when they were hit with this drought. Prices for water are spiking up to $600 and beyond on the temporary market, and many farmers are simply not able to compete at that price. Dairy farmers have always had to be in a market against horticulture and fruit, and now they're finding themselves in a market against other commodities that can pay considerably more.
This is a very, very serious issue. The government is doing whatever it can to help in relation to putting food on the table for our families, ensuring that they can pay a few household bills, trying to give them the dignity of an existence. It is not enabling them to supplement their farming business in any way, but it is at least enabling them to put some food on the table, pay some household bills, get the kids off to school and make sure that they can live that modest life around the household while they go through the trials and tribulations of their farming business as the drought worsens. I think the government is acting in a very responsible manner. These changes will enable these farming families to stay in the industry at a greater rate. They will ensure that the farmers coming off farm household allowance can receive this once-off supplementary payment on the way out in a timely fashion. We get whingeing, complaining and bellyaching from the opposition. Sometimes they just need to come along and say: 'We support these measures. The government is doing the right thing with this, and we all support this.'
The Farm Household Support Amendment (Relief Measures) Bill (No. 2) 2019 incorporates the third tranche of amendments to the Farm Household Allowance Program as foreshadowed by the government last month. Centre Alliance supports the steps taken by the government to bolster the financial standing of farmers and promote a resilient business model. The bill makes four changes to the program, aimed at addressing difficulties within the existing farm household allowance scheme—namely, reporting variable income, simplifying the assets test, broadening the class of persons able to conduct a farm financial assessment and, finally, increasing the activity supplement.
Many of the issues were explored in the independent review of this scheme, prepared on behalf of the department earlier this year. The report, entitled Rebuilding the FHA: a better way forward for supporting farmers in financial hardship, made six strategic recommendations, including strengthening the mutual obligation requirement in order to prioritise a meaningful mutual obligation process and putting the focus on long-term viability and structural change. Schedule 1 of the bill seeks to support long-term viability by ensuring farmers are able to pursue opportunities to improve their financial standing without fear of incurring a debt. Currently farmers are required to estimate their income each fortnight to ensure that they receive an appropriate rate of payment, noting that the income earned may reduce the payment they receive. The bill amends the scheme such that, provided a farmer does not earn more than the payability threshold of $984 for each member of a couple or $1,075 for a single, they're eligible to receive the full allowance for that fortnight. This will allow a single farmer to earn $1,074 per fortnight without any reduction in the payment received through the farm household allowance scheme. The measure provides farmers with certainty in an unpredictable business environment.
The independent review heard evidence of perverse outcomes whereby farmers were reluctant to generate additional off-farm income for fear of accruing an overpayment debt. While I recognise that farmers operate in a sphere that is dependent on a number of external factors, and that that fact should warrant some exceptions to the ordinary social services framework, the amendments proposed are unusually generous when compared to other welfare payments. For example, Newstart recipients often work in casual roles with ad hoc shift arrangements where pay cheques can vary wildly from week to week, yet they must report their income on a fortnightly basis, knowing that, when they do so, their payments may reduce as a result. My comments should be viewed not as a criticism of those who will receive the farm household allowance, nor of the amount they are entitled to receive, but rather as a need to review the adequacy of other welfare payments and the manner in which they are administered. Setting to one side the generous framework proposed by the bill, I also question whether this measure will achieve the long-term structural change that was recommended by the independent evaluation of the farm household allowance scheme.
Similarly, schedule 3, which amends the farm financial assessment requirement, is unlikely to promote an attitude of long-term behavioural change. The farm financial assessment has attracted criticism from both farmers and the Rural Financial Counselling Service for being little more than a tick-box exercise. While some farmers have meaningfully engaged with the process and have undertaken activities to improve their long-term circumstances, the review concluded that it did not promote behavioural change and did not provide farmers with a plan to escape their financial fate, only to delay it. The bill does not remove the requirement for a farm financial assessment but will instead widen the class of people who are able to conduct an FFA. This will enable more Rural Financial Counselling Service providers and other suitably qualified advisers to carry out farm financial assessments in regions that do not always have access to the prescribed assessors. It's a sensible amendment and one that I believe will improve the administration of the scheme.
However, if a farmer makes the agonising decision to leave their farm and pursue another career, it is reasonable to expect that there be some form of additional training required to facilitate that transition. This will be provided through the Farm Household Allowance Program as part of an activity supplement payment. The activity supplement payment is currently $4,000; however, in schedule 4 of the bill this will increase to $10,000. The $10,000 activity supplement sits as a credit to be drawn down once the activity is added to the financial improvement agreement and can be either reimbursed or paid upfront for a recipient to undertake an activity, whichever the person prefers. The increased payment takes into consideration the additional travel and accommodation costs often incurred by rural, regional and remote farmers who must travel to metropolitan centres to complete valuable training courses.
While it's disappointing that the bill makes no change to the mutual obligation requirements, it does address some of the issues raised in the report and supports the overarching objective of the scheme, which is to promote financial resilience. Another way to improve the financial standing of our farmers is not to increase welfare payments or make them jump through irrelevant administration hoops but to change the way our banks deliver their financial services to our farmers. That is what I've tried to achieve in my private members' bill, the Banking Amendment (Rural Finance Reform) Bill 2019. It's currently before the House of Representatives Standing Committee on Economics.