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2019
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
FARM HOUSEHOLD SUPPORT AMENDMENT
(RELIEF MEASURES) BILL (NO. 1) 2019
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Agriculture,
Senator the Hon. Bridget McKenzie)
FARM HOUSEHOLD SUPPORT AMENDMENT
(RELIEF MEASURES) BILL (NO. 1) 2019
GENERAL OUTLINE
The Farm Household Support Amendment (Relief Measures) Bill (No. 1) 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 FHA program currently provides eligible farmers and their partners a maximum of
1,460 cumulative days (four years) of support to meet basic household needs while they make
decisions about the future of their farm and take action to improve their circumstances.
While receiving payment, FHA recipients can access separate funds for a range of
professional advice and support and training and are given one-on-one case management to
help them achieve long-term financial stability.
The Bill will:
Introduce an expanded off-farm income offset, broadening the circumstances in which
the offset can be applied and increasing the upper limit from $80,000 to $100,000.
Increase the maximum time a person is able to access the FHA program, from four
years over their lifetime to four years in each specified ten year period.
Introduce a one-off lump sum payment for recipients who have exhausted 1,460 days
of FHA by 1 July 2020 and the capacity for the Minister's rules to prescribe further
lump sum payments, if required.
The Bill is the first instalment of the government's response to the independent review into
the FHA program. The review was undertaken in 2018 and released in May 2019.
Increasing the maximum time on payment (Schedule 1)
The maximum time on payment is currently set at a cumulative 1,460 days (or four years)
over a person's lifetime. The Bill expands access to the FHA program for eligible farmers
and their partners to four years in every specified ten year period, recognising that farmers
can face more than one period of hardship in their lifetime. The next specified ten year period
will commence on 1 July 2024.
Expanded off-farm income offset (Schedule 2)
Currently, some FHA recipients can claim deductions from their 'ordinary' income for the
purposes of the FHA income test. This setting is not available to other social security
recipients.
The expanded income offset provisions in the Bill will increase the maximum offset amount
from $80,000 to $100,000 per couple, per financial year. This will allow FHA recipients (or
couples where applicable) who have incurred a farm business loss to have their income
reduced by $100,000 under FHA's income test.
It will also broaden the circumstances in which the offset provisions can be claimed by a
recipient, including income from a farm enterprise and businesses that are directly related to
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the farm enterprise (such as agistment activities). Income from other sources such as wages,
interest, dividends, and rent may then be offset.
The purpose of the measure is to allow FHA recipients who are facing financial hardship to
access the FHA program with a fairer assessment of their income and losses, with more
business activities being assessed together with the farm enterprise.
Relief payment (Schedule 3)
For those FHA recipients who have been payable for 1,460 days of payment by 30 June 2020
(inclusive), the Bill provides for a one-off lump sum payment of $7,500 for a single recipient
or $6,500 for a recipient who is a member of a couple.
Additionally, Schedule 3 provides the Minister with a power to determine who may qualify
for, and the amount of, future relief payments.
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
$47 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.
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NOTES ON AMENDMENTS
Preliminary
Item 1 Short Title
Clause 1 provides for the short title of the Act to be the Farm Household Support Amendment
(Relief Measures) Act (No. 1) 2019.
Item 2 Commencement
Clause 2 provides for the commencement of each provision in the Act, as set out in the table.
The Act is to commence 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 following day.
Subclause 2(2) provides that any information in column 3 of the table 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
Clause 3 provides that legislation that is specified in a Schedule to the Act 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.
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Schedule 1--Time limit on payment
Overview
Schedule 1 increases the maximum time a person can receive payments under the Farm
Household Support Act 2014 from four years over a person's lifetime to four years in each
specified ten year period, with the next specified ten year period commencing on 1 July 2024.
Prior to 1 July 2024, eligible farmers and their partners will continue to be entitled to access
payments for up to four cumulative years.
Farm Household Support Act 2014
Item 1 Paragraph 3(a)
Item 1 of the Bill amends the object of the Farm Household Support Act 2014 to increase the
amount of time a person can receive FHA to four years in each specified ten year period.
Item 2 Section 4
Item 2 amends section 4 to reflect the increased entitlement to receive FHA for four years in
each specified ten year period.
Item 3 Subsection 5(1)
Item 3 repeals the definition of 4 years or less and the definition of cumulative period of
farm household allowance.
Item 4 Subsection 5(1)
Item 4 inserts two new definitions to subsection 5(1).
The term meets the 4 years or less requirement has the meaning given by subsection 6(1A).
The term specified 10 year period has the meaning given by subsection 6(1).
Item 5 Section 6 (heading)
Item 5 provides a new heading for section 6.
Item 6 Subsection 6(1)
Item 6 provides the substantive meaning for two concepts.
A specified 10 year period is a period of 10 years beginning on 1 July 2014 or a tenth
anniversary of 1 July 2014.
The purpose of this provision is to commence the first specified 10 year period on 1 July
2014, with a new period to commence immediately following the conclusion of each
specified ten year period.
Additionally, Item 6 adds subsection 6(1A). Subsection 6(1A) provides a means to determine
if a person meets the 4 years or less requirement. Under subsection 6(1A), a person meets
the requirement if, in a specified 10 year period, they have not been payable for more than
1,460 days.
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Item 7 Subsection 6(3)
Item 7 repeals subsection 6(3). Subsection 6(3) provides a means to determine if a person's
cumulative period of Farm Household Allowance is 4 years or less. The mechanism is no
longer required.
Item 8 Section 7
Item 8 amends Section 7 to reflect the increased time allowed on Farm Household Allowance
from four years to four years in each specified ten year period.
Item 9 Paragraph 8(h)
Paragraph 8(h) requires that a farmer's cumulative period of Farm Household Allowance is
4 years or less for them to qualify for Farm Household Allowance. Item 9 repeals the
requirement in paragraph 8(h) and replaces it with a requirement that a farmer has met the
4 years or less requirement.
Item 10 Paragraph 9(j)
Paragraph 9(j) requires that the partner of a farmer's cumulative period of Farm Household
Allowance is 4 years or less for them to qualify for Farm Household Allowance. Item 10
repeals the requirement in paragraph 9(j) and replaces it with a requirement that the partner of
a farmer has met the 4 years or less requirement.
Item 11 Subsections 96(1) and (2)
Subsections 96(1) and 96(2) of the Farm Household Support Act 2014 preserve a person's
access to bereavement payments where they cease to receive Farm Household Allowance in
certain circumstances. Item 11 of the Bill amends subsections 96(1) and 96(2) to reflect the
change to ensure that the mechanism will continue to function with the new concept of
'meets the 4 years or less requirement'.
The purpose of this amendment is to ensure that a person who is receiving both Farm
Household Allowance and certain bereavement payments can continue to receive
bereavement payments if they expend their allowable four years in each specified ten year
period.
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Schedule 2--Farm business losses
Overview
Schedule 2 of the Bill amends the Farm Household Support Act 2014 and the Farm
Household Support Minister's Rule 2014 to broaden and simplify the income offset
provisions for the Farm Household Allowance program.
As many farms are inter-generational, the broadened offset is available to all FHA recipients
involved with the farm business. The loss that may be claimed is equal to the FHA recipient's
share of that loss. The $100,000 limit applies to a single recipient (or a couple if applicable)
and not to a farm business.
For example, if a farm business has a loss of $200,000, and there are two couples that are
both receiving FHA, each couple is entitled to offset their share of that loss.
Farm Household Support Act 2014
Item 1 Section 67
Item 1 repeals section 67 and inserts a simplified way of calculating allowable deductions
from a person's income for the purpose of the Farm Household Support Act 2014.
Farm Household Support Minister's Rule 2014
Item 2 Section 4
Item 2 inserts a number of definitions into section 4 of the Farm Household Support
Minister's Rule 2014.
Item 3 Part 2
Item 3 repeals sections 6 and 7 and inserts new clause 6, clause 7, clause 7A and clause 7B.
Clause 6 provides that, for the purposes of FHA, Part 2 of the Farm Household Support
Minister's Rule 2014 applies if a farm business operates at a loss for a tax year.
Clause 7 provides that an FHA recipient (and their partner if applicable) can reduce their
ordinary income for the tax year by the amount of loss being carried by their farm enterprise
and any directly related businesses, up to the limits in clause 7A. To determine if a person's
farm businesses have made a loss, any farm enterprises and any directly related businesses
must be assessed together.
Subclause 7A(1) provides that the total amount of a farm business loss that may be used to
reduce the ordinary incomes of a person and their partner's (where applicable) income must
not exceed $100,000. Members of a couple are not entitled to individual $100,000 offsets, but
are entitled to share a single $100,000 offset.
Subclause 7A(2) further clarifies that an FHA recipient's ordinary income must not be
reduced below zero.
Subclause 7A(3) provides that where a farm business is carried on by an FHA recipient with
other persons, the other person's portion of the loss must not be used to reduce the income of
the FHA recipient or their partner (where applicable).
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Clause 7B provides a range of definitions relating to the income offset.
Subclause 7B(1) defines the new concept of a farm business, which includes both farm
enterprises (within the meaning of the Farm Household Support Act 2014) and any directly
related business.
Subclause 7B(2) provides the circumstances where a business is considered directly related to
a business that is a farm enterprise, and the requirement that the operation of both businesses
must rely, to a large extent, on sharing the use of equipment or other shared physical assets.
Subclause 7B(3) provides the circumstances for where a FHA recipient's farm business is
considered to be operating at a loss.
Subclause 7B(4) provides the definition of the amount of the loss of a farm business.
Subclauses 7B(5) and 7B(6) define what is considered to be income from a farm business,
and how reductions to that farm business income are to be applied, subject to the assumptions
in subclause 7B(6). The reductions are applied in conjunction with Division 1A of Part 3.10
of the Social Security Act 1991.
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Schedule 3--Relief payment
Overview
Schedule 3 of the Bill provides for a relief payment. A relief payment will be payable to an
FHA recipient who has exhausted 1,460 days of FHA prior to 1 July 2020.
Schedule 3 also provides for a rule-making power for the Minister to make further lump sum
payments, if required.
Minister's rules made under the Farm Household Support Act 2014 are legislative
instruments for the purposes of the Legislation Act 2003, and are subject to tabling and
disallowance procedures.
Farm Household Support Act 2014
Item 1 Section 4
Item 1 corrects the simplified outline of the Act in section 4 to reflect the addition of the
relief payment and a Minister's Rule.
Item 2 Subsection 5(1)
Item 2 provides that a relief payment is an amount payable under Part 4B.
Item 3 After Part 4A
Item 3 inserts Part 4B. Part 4B contains provisions relating to relief payment.
Clause 89D is a simplified outline of Part 4B.
Qualification for relief payment
Clause 89E provides the situations in which a person will be qualified for a relief payment.
The Bill provides that there are two ways a person is qualified to receive a relief payment.
A person qualifies for a payment under subclause 89E(1) if the person has had 1,460 payable
days of FHA prior to 1 July 2020. 1,460 days is equivalent to four years of payment.
A person qualifies for a payment under subclause 89E(2) if they satisfy circumstances
prescribed by the Minister's rules (if any).
Amount of relief payment
The amount of relief payment a qualified person will receive is calculated under clause 89F
as follows:
If a person's rate of FHA on their 1,460th (or final) day of FHA is calculated with reference to
the person being a member of a couple, the amount of the payment is $6,500. If both
members of a couple each qualify for a relief payment, they are entitled to receive $6,500
each.
If a person's rate of FHA on their 1,460th day is calculated without reference to a person
being a member of a couple, the amount of the payment is $7,500.
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If a person qualifies for relief payment under Minister's rules referred to in subclause 89E(2),
the amount of relief payment is determined by Minister's rules that relate to the qualification
of the person.
Subclause 89F(3) provides that an amount of relief payment that is incorrectly paid to a
person is not a debt due to the Commonwealth. However, subclause 89F(4) provides that
subclause 89F(3) does not apply if an amount of relief payment is obtained by fraud.
Item 4 Section 90
Item 4 amends the simplified outline of Part 5 of the Act in section 90 to reflect the addition
of the relief payment.
Item 5 Section 91 (example)
Item 5 corrects the example in section 91 to reflect the addition of the relief payment.
Item 6 Subsection 93(1) (table item 6)
Item 6 amends table item 6 of subsection 93(1). Section 93 modifies how the Social Security
Act 1991 (SS Act) applies to FHA. The amendment to table item 6 ensures that a reference in
the SS Act to a social security payment includes a reference to the relief payment.
Item 7 Section 95 (table item 14)
Item 7 amends table item 14 of section 95. Section 95 modifies how certain provisions of the
SS Act apply (or do not apply) to FHA. The amendment to table item 14 ensures that for
paragraphs 1231(e), (f) and (g) of the SS Act, a reference to social security payments does not
include a reference to relief payment.
Item 8 Subsection 105(3)
Item 8 amends a reference in subsection 105(3) to ensure that payments of all amounts
payable to, or in relation to, a person who qualifies for relief payment are made out of the
Consolidated Revenue Fund and are appropriated accordingly.
Social Security (Administration) Act 1999
Item 9 Section 12L
Item 9 repeals section 12L of the Social Security (Administration) Act 1999 (SSA Act) and
inserts a new provision to ensure that a claim is not required for a payment of FHA
supplement or of relief payment.
Item 10 Subsection 47(1) (after paragraph (hx) of the definition of lump sum
benefit)
Subsection 47(1) inserts relief payment into the list in that subsection. Subsection 47(1)
defines what is a lump sum benefit for the purposes of section 47 of the SSA Act.
Section 47(4), which is not being amended by the Bill, provides for the circumstances in
which a lump sum benefit (including relief payment due to the amendment in Item 10) must
be paid to a person.
Item 11 Section 47CB (at the end of the heading)
Item 11 amends the heading in section 47CB to include a reference to relief payment.
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Item 12 Section 47CB
Item 12 amends section 47CB to include a reference to the relief payment. Section 47CB of
the SSA Act provides for rules of when, and how, FHA supplement or relief payment must be
paid.
Item 13 Subclause 1(1) of Schedule 1
Item 13 inserts a definition for relief payment into subclause 1(1) of Schedule 1. Schedule 1
of the SSA Act is the Dictionary for that Act.
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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. 1) 2019
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.
Overview of the Bill
The Farm Household Support Amendment (Relief Measures) Bill (No. 1) 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 FHA program currently provides eligible farmers and their partners a maximum of
1,460 cumulative days (four years) of support to meet basic household needs while they make
decisions about the future of their farm and take action to improve their circumstances.
While receiving payment, FHA recipients can access separate funds for a range of
professional advice and support and training and are given one-on-one case management to
help them achieve long-term financial stability.
The Bill will:
Introduce an expanded off-farm income offset, broadening the circumstances in which
the offset can be applied and increasing the upper limit from $80,000 to $100,000
Increase the maximum time a person is able to access the FHA program, from four
years over their lifetime to four years in each specified ten year period.
Introduce a one-off lump sum payment for recipients who have exhausted 1,460 days
of FHA by 1 July 2020 and the capacity for the Minister's rules to prescribe further
lump sum payments, if required.
The Bill is the first instalment of the government's response to the independent review into
the FHA program. The review was undertaken in 2018 and released in May 2019.
12
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 increase the amount of time a qualifying person is able to access the FHA
program. In addition, the Bill introduces a new income offset that will allow qualifying
recipients to retain additional income while continuing to receive assistance through the FHA
program in certain circumstances.
While accessing the FHA program, a person is able to access a number of different support
measures through financial support (including relief payment), training, one-on-one case
management. 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 number of people who will be able
to access the program, 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 farmers is subject to a range of factors beyond their control, the
Bill seeks to promote this right by providing financial and social support to a greater number
farmers and farmers' partners in times of hardship where they demonstrate a limited capacity
to self-support, including through the relief payment.
Subject to eligibility criteria, FHA recipients are also entitled to additional rent assistance.
The Bill operates to increase the circumstances in which a person may continue to access
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support through the FHA program 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 extends all elements of the FHA program, including ancillary benefits contained in
Part 2, Division 8, Subdivisions A and B by increasing the number of eligible people, and
amount of support, that can be accessed through the FHA program. In particular, 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.
In extending the health-related benefits of the FHA program (and extending the amount of
support that can be accessed) to additional people, 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".
Examined as a whole, the Bill seeks to increase access to the FHA program and increase the
time a recipient can receive assistance through the program. While receiving payment, FHA
recipients are able to access an Activity Supplement to undertake agreed training and
assessment activities as prescribed in their Financial Improvement Agreement. By making the
program more widely available to farmers and farmers' partners, the Bill will provide
opportunities for a greater number of farmers and their partners to access the Activity
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Supplement for the purpose of increasing their technical and vocational training skills.
Indirectly, engaging in technical and vocational training will support recipients to 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)
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