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2004-2005
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FARM HOUSEHOLD SUPPORT AMENDMENT (EXCEPTIONAL
CIRCUMSTANCES RELIEF PAYMENT) BILL 2005
EXPLANATORY MEMORANDUM
(Circulated by the authority of the Minister for Agriculture, Fisheries and Forestry,
the Hon Warren Truss MP)
FARM HOUSEHOLD SUPPORT AMENDMENT (EXCEPTIONAL
CIRCUMSTANCES RELIEF PAYMENT) BILL 2005
GENERAL OUTLINE
1. The purpose of the Farm Household Support Amendment (Exceptional
Circumstances Relief Payment) Bill 2005 (the Bill) is to bring into effect an
element of the 2005 Drought Assistance Package (the Package) announced by the
Prime Minister on 30 May 2005. The Bill seeks to provide changes to the income
test for the Exceptional Circumstances Relief Payment (ECRP), to be implemented
from 1 July 2005, subject to the passage of legislation. The Bill also seeks to
implement changes to the procedure for farmers obtaining Exceptional
Circumstances (EC) Certificates.
2. In order to implement the change to the ECRP as announced on 30 May 2005 and
the EC Certificate procedures, amendments must be made to the Farm Household
Support Act 1992.
3. The ECRP income test changes have emanated in recognition that the severity and
extent of the drought is continuing to have an immense impact on rural Australia
and is unquestionably one of the most severe in the last 100 years. As a result, in
many drought affected regions, farmers and their partners are increasingly turning
to employment opportunities off-farm to supplement their farm income. To take
these circumstances into account, the Prime Minister announced on 30 May 2005,
that from 1 July 2005 farm families will benefit from a $10,000 annual exemption
of off-farm wages and salaries from their income test assessment for ECRP, in
addition to existing exemptions.
4. The new test will be available to all current ECRP recipients and new applicants
from 1 July 2005, (subject to the passage of legislation). The new test will be
reviewed before June 2006 to determine if the prevailing drought conditions and
outlook warrant any extension.
5. The Bill also brings into effect a change to the process by which farmers obtain an
EC Certificate. A person applying to receive an EC certificate will no longer need
to apply to their state Rural Adjustment Authority to do so. This change reflects
the Australian Government's ongoing commitment to streamline the EC assistance
arrangements to ensure they are more efficient and effective for farmers. The
change will also address the concerns raised in the recent report by Australian
National Audit Office (ANAO) `The Auditor-General Audit Report No.50 2004-
05 Performance Audit. Drought Assistance' regarding the accuracy of information
contained in the EC Certificates issued by the relevant state Rural Adjustment
Authority. The bill seeks to shift responsibility for EC certificates to the Secretary
of Human Services, then it is anticipated that the Secretary will delegate these
powers to Centrelink. The Bill seeks to simplify the EC Certificate process for
farmers and address the ANAO concerns by using a consistent delivery mechanism
- Centrelink. Subject to the passage of legislation, from 1 October 2005, EC
certificates will be issued nationally by Centrelink to EC declared farmers. This
will not require consequential amendment to other legislation which refers to EC
certificates.
6. The Bill will give effect to the Government's decision to provide an exemption of
up to $10,000 from off-farm wages and salaries to a person and their partner as of
1 July 2005. It will also give effect to the Government's decision to change the
process for reviewing EC certificates.
a) It repeals subsection 8A(2) and replaces it with a subsection giving the
Secretary of the Department of Human Services the authority to issue an EC
certificate.
b) It inserts provisions at the end of section 24A which provide the basis for the
calculation of a person's exemption limit per fortnight. This will lead to an
increase in the amount of benefit that a person can receive under ECRP, while
also supplementing their income through off-farm employment.
1. Consultation has been undertaken with Centrelink, the Treasury, and the
Departments of Finance and Administration, Family and Community Services and
Employment and Workplace Relations. Consultation has also been undertaken
with the Australian Government Solicitor, the Attorney General's Department and
the Office of Legislative Drafting and Publication.
FINANCIAL IMPACT STATEMENT
2. This Bill will require an estimated additional $50 million under the Farm
Household Support Act 1992 Special Appropriation Bill.
NOTES OF CLAUSES
Clause 1 - Short Title
This Bill is to amend the Farm Household Support Act 1992.
Clause 2 - Commencement
3. (1) specifies the commencement date for Provision 1 - Sections 1 to 3 and
anything in this Act not elsewhere covered by this table, as the date the Farm
Household Support Amendment (Exceptional Circumstances Relief Payment)
Act 2005 receives Royal Assent. The commencement date of Provision 2 -
Schedule 1, item 1 is the day on which the Act receives Royal Assent as referred
to in Column 2 of the table. The commencement date of Provision 3 - Schedule 1,
items 2 and 3 is 1 October 2005 as referred to in Column 2 of the table. The
commencement date of Provision 4 - Schedule 1, item 4 is the day on which this
Act receives Royal Assent as referred to in Column 2 of the table. The
commencement date of Provision 5 - Schedule 1, item 5 is 1 October 2005 as
referred to in Column 2 of the table.
4. (2) refers to additional information in column 3 that is not part of this Act.
Information in this column may be added to or edited in any published version of
this Act.
Clause 3 - Schedule(s)
5. Clause 3 provides that the amendments to any Act specified in a Schedule to the
Act, and any other items in a Schedule, are amended or repealed as set out in the
applicable items in the Schedule concerned. Any item in a Schedule to this Act has
effect according to its terms.
SCHEDULE 1 - Exceptional circumstances relief payment
Item 1 - Subsection 3(2)
6. This item inserts reference to the meaning for off-farm salary and wages, which is
given by subsection 24A(7).
Item 2 - Subsection 8A(2)
7. This item repeals subsection 8A(2) and substitutes a new process for issuing an EC
certificate. It shifts responsibility to the Secretary of Human Services, then it is
anticipated that the Secretary will delegate these powers to Centrelink. An EC
certificate is issued for a specified period to a person who is a farmer, and relates
to the farm enterprise, or any of the farm enterprises, in respect of which the
person is a farmer. This certification process was previously conducted by state
Rural Adjustment Authorities. The need to streamline the procedure for farmers
obtaining EC Certificates for the purposes of accessing ECRP has been highlighted
over the past two years through the EC policy reform process. More recently, EC
Certificates were subject to an adverse finding in the `The Auditor-General Audit
Report No.50 2004-05 Performance Audit. Drought Assistance'. This change is
to ensure that the process for farmers obtaining EC certificates is streamlined, and
provided in an accurate and consistent manner.
Item 3 - At the end of section 8A
8. Item 3 inserts (4) at the end of section 8A. This states that an exceptional
circumstances certificate is not a legislative instrument. This provision is included
to assist readers, as the instrument is not a legislative instrument within the
meaning of section 5 of the Legislative Instruments Act.
Item 4 - At the end of section 24A
9. Item 4 inserts a provision to disregard a maximum of $10,000 in off-farm salary
and wages from a person's income. It brings into effect the Government's decision
to do so, as announced by the Prime Minister on 30 May 2005. This means that a
farmer and their partner can earn an additional $10,000 in off-farm salary or wages
before their rate of income support under the ECRP is reduced. This provision
does not affect existing Farm Help customers, who are also covered by the Farm
Household Support Act 1992.
10. Item 4 inserts (4) - from 1 July 2005 to 30 June 2006 $10,000 will be exempted
over the financial year in off-farm wages and salary for both the farmer and his or
her partner. This amount will be disregarded in calculating the rate of ECRP
payable to a person for a fortnight, all or part of which falls during the period.
There is also provision for an extension to this time period to be prescribed
through a regulation, where the Government decides that this provision should be
extended.
11. Item 4 inserts (5) which provides the process and the formula that are to be used
to calculate the amount to be disregarded, where the closing day is 30 June. It
provides definitions of the amount previously disregarded in that financial year and
the number of days remaining in that financial year.
12. Item 4 inserts (6) which provides process and the formula that are to be used to
calculate the amount to be disregarded, where the closing day is not 30 June. It
provides definitions of the amount previously disregarded in the period and the
number of days remaining in the period.
13. Item 4 inserts (7) which provides a definition of a person's off-farm salary and
wages. These are salary and wages that are not earned from work that is in any
way related to a farm enterprise in which that the person or the person's partner is
a farmer. Examples of off-farm salary and wages include, but are not limited to,
teaching and casual laboring.
Item 5 - Transitional provision - existing exceptional circumstances certificates
14. Item 5 inserts a transitional provision for a person who holds an existing EC
Certificate. If the existing EC Certificate, was issued under subsection 8A(2) of
the Farm Household Support Act 1992, as in force immediately before 1 October
2005, the certificate would continue to be in effect on and after 1 October 2005.
Such an EC Certificate would not be affected by the amendment made by Item 2
of this Schedule, and a person would not be required to have the EC Certificate
re-issued by Centrelink for the period that the EC Certificate issued by the
relevant state Rural Adjustment Authority is valid.