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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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. 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.
13
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.
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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
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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)
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