Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Primary Industries, Fisheries and Forestry) Share this | Hansard source

This bill amends the Farm Household Support Act 1992, the Social Security Act 1991 and the Age Discrimination Act 2004 to allow agriculturally dependent eligible business operators access to the same exceptional circumstances assistance that is already available to farmers who have been adversely impacted by drought. While the opposition supports the Farm Household Support Amendment Bill 2007, we are concerned about whether the initiatives that are proposed in this bill work to give relief, given the dismal failure of a previous attempt to provide relief to drought affected business.

The contents of this bill were announced by the Prime Minister on 7 November 2006—namely, to allow agriculturally dependent eligible business operators access to the same exceptional circumstances assistance that is already provided to farmers. This assistance includes exceptional circumstances relief payments and ancillary benefits, such as a health care card and concessions under the youth allowance and Austudy means tests. This assistance will be made available to eligible business operators until 30 June 2008 unless extended by regulation.

Labor supports the thrust of this bill as regional and rural communities are being affected by the worst drought in possibly a thousand years and it is important that relief goes to where it is most needed, including those businesses directly affected by their community’s suffering through the drought. Forty-four per cent of the nation is declared to be in exceptional circumstances. Labor sees this as a desperate situation for all affected communities. Agriculturally dependent eligible business operators are currently able to access exceptional circumstances relief through ex gratia payments. This bill will formalise this arrangement for exceptional circumstances relief payments and allow agriculturally dependent eligible business operators to access a health care card and concessions under the youth allowance and Austudy means tests.

This bill includes provisions for farmers who have diversified into agriculturally dependent eligible businesses as a drought management mechanism. As these farmers are no longer deriving a significant proportion of their income from their farm, they would not be eligible for exceptional circumstances relief payments as farmers and their continued ownership of the farm assets would affect their eligibility under the business assets test.

The bill provides for farmers who have diversified into agriculturally dependent business to have farm and eligible business assets exempted from the relevant assets and means tests. The bill will apply to agriculturally dependent eligible business operators who derive 70 per cent or more of their gross business income from providing farming related goods and services to farmers in exceptional circumstances declared areas. This assistance will be made generally available to eligible businesses until 30 June 2008. However, to allow for the potential of continuing drought, this bill allows these end dates to be extended by regulation. Labor broadly supports these changes and expects that the government will implement them better than their previous dismal efforts.

It has to be said that it was Labor that put together the first comprehensive drought assistance package in 1992. At that time that drought was the worst on record. In many ways the 1992 drought was a pivotal moment in the history of Australian farming. It caused the nation’s farmers to rethink the way they ran their farms, it forced Australia’s banks to rethink the way they financed agribusiness and it caused policymakers to rethink the way they engaged with the farming community. Labor’s drought package was underpinned by a number of key principles which still stand to this day.

Those principles were: to encourage primary producers and other sections of rural Australia to adopt self-reliant approaches to managing climate variability; to facilitate the maintenance and protection of Australia’s agricultural and environmental resource base during periods of climate stress; and to facilitate the early recovery of agricultural industries consistent with long-term, sustainable levels. Labor’s drought policy reforms recognised for the first time a key principle that also survives to today—that is, despite a strong commitment from farmers toward drought preparedness, severe droughts will occur that the best farmer could not reasonably be expected to prepare for. That is the true meaning underpinning the policy of exceptional circumstances.

A region was declared EC if it could be demonstrated that the drought event was rare and severe and had led to a severe and prolonged downturn in farm income. Labor’s drought policy reforms offered eligible farmers access to exceptional circumstances business assistance, or ECBA. This was given effect to through the rural adjustment schemes, which offered farmers grants or interest rate subsidies of up to 50 per cent for eligible investments to improve the resilience of their farm businesses or to further enhance their business skills. The policy goal of Labor’s early reforms was to facilitate change in the way our farming communities approach the business of farming in Australia. It was about encouraging our farming businesses to operate in a natural climate which includes extensive periods of intense drought.

Labor’s early reforms also included many initiatives to improve training and skilling of our farm communities in relation to business management and drought preparedness. As a consequence of the 1993-94 drought, Labor recognised that further reform was needed. The then Labor government introduced the drought relief payment, the DRP, which provided farm families with a fortnightly welfare payment commensurate with unemployment benefits. The DRPs were provided to families within the exceptional circumstances declared regions. Like exceptional circumstances, these days the DRP still exists, only now it is referred to as an exceptional circumstances relief payment.

One of the key aspects of Labor’s early drought policy reforms was the introduction of the Income Equalisation Deposit Scheme, which was the precursor to the Farm Management Deposit Scheme. The two schemes have much in common, with a major difference being that the latter scheme was run by the Department of Primary Industries and Energy, while deposits under the FMD are made with private institutions. The idea was to build a scheme so that people could put aside money in the good times without being taxed, and to allow them to draw it down in the bad times. It was a simple idea that has turned out to be a great success.

According to the recent review of the FMD Scheme, as at 30 June 2006 more than 42,000 primary producers held a total of $2.797 billion in the FMD Scheme. Only recently has there been a decline in deposits, and this coincides with persistent poor seasonal conditions across Australia.

It was Labor who introduced the early basis of the Farm Management Deposit Scheme, and it was Labor who initially developed the key principles underpinning drought policy. In May 2006, the National Farmers Federation former policy manager, Mr Peter Arkle, wrote the following retrospective critique of Labor’s 1992 national drought policy in the Farm Policy Journal:

The severe drought of 2002 to 2005 has provided an opportunity to reflect on the contribution of National Drought Policy. Encouragingly, Australian farmers were better prepared than in previous droughts, and there is evidence to indicate that the NDP has played a major role in providing farmers with improved risk information, enhanced farm risk management skills and, to a lesser extent, assistance in building financial and physical risk reserves. This enhanced preparedness also appears to have reduced relative demand for exceptional circumstances assistance, suggesting that farmers are making strong progress towards self-reliance.

It is reasonable to say that, by and large, there has been bipartisan support over the years for drought policy. However, there have been some differences, the most notable of which is the Agriculture Advancing Australia package. Soon after its election in 1997, the Howard government abolished the Rural Adjustment Scheme and introduced the AAA package. The Howard government’s AAA package includes the business assistance and relief payments schemes which Labor introduced; however, it also includes a number of other initiatives, with which the Howard government has had mixed success.

In 2004, the Howard government conducted an independent review of the performance of the AAA package. Across Australia, 2,550 producers were surveyed across 14 different industry groupings. Some aspects of the survey—in particular those relating to exceptional circumstances, the Farm Management Deposit Scheme and family welfare payments—were quite pleasing and corroborate Mr Arkle’s assessment, which I referred to earlier. However, some other results of the survey were quite disturbing. For example, uptake of some of the AAA programs has been very poor. The survey found uptake across all farm businesses was as follows: Rural Partnerships program, one per cent; Climate Variability in Agriculture program, two per cent; FarmHelp, three per cent; Farm Innovation Program, four per cent; and the Women in Rural Industries Program, four per cent.

The survey made the following key findings. Firstly, there is limited provision in the AAA programs to enhance market related skills for producers or trade readiness for regions and industries. Secondly, work is needed to increase trade readiness of regions and industries in the face of declining commodity prices. Thirdly, participation in the AAA natural resource management courses remained low. Fourthly, there is very poor awareness of the FarmHelp, Women in Rural Industries and Rural Partnerships programs.

Perhaps the most concerning finding of the government-commissioned independent report was this: 25 per cent of producers who believe they would have a significant problem in drought have done nothing about it, and more than 30 per cent of respondents felt they could have been better prepared. That is a policy failure which must be addressed. It must be remembered that the basis for drought policy was to ensure our farming communities and farm businesses are geared toward drought and have a business model which is all about drought preparedness. But the government’s own independent study found nearly one in four farmers have done nothing about it.

I want to turn my attention to the government’s performance in relation small business assistance, in particular the Howard government’s earlier attempt at designing an assistance package for non-farm small businesses affected by drought. The Howard government recognised the need to assist non-farm small businesses back in 2002 and announced the Small Business Interest Rate Relief program. Sadly, the government’s attempt to provide assistance to non-farm small businesses was a dismal failure. The Australian National Audit Office 2004-05 performance audit into drought assistance noted that it was forecast that up to 17,500 applications would be received and that 14,000 applications would be successful. Sadly, however, only 452 applications were received and 182 applications were successful. How is it that so few applications were made? How is it possible that the government could get it so wrong?

What has the National Party done to address this policy failure since its last attempt back in 2002? The fact is that businesses did not access the government’s previous business support program because the government made it too difficult to access. Criticism of the previous program from affected businesses included that small business operators were too busy to complete the forms, the forms were too complex and the effort to complete the forms was greater than the benefit available. Previously businesses found it difficult to prove that 70 per cent of income comes from farm businesses, and this process could be a costly and administratively demanding process for business.

The government needs to ensure that the application process for any assistance is not complicated and tied up in red tape. The government needs to go back to basics on drought policy and ensure that support goes out to those businesses and individuals who are eligible for assistance, and the government needs to get out there and make it easier for them to actually apply for assistance. Drought affected businesses deserve to receive a better go with drought relief than the government provided last time around.

It is time for us all to reflect on what needs to be done to improve drought preparedness in our farming communities and rural economies. Labor believes it is critically important to: improve drought policy communication and information dissemination; increase the number of drought-ready farming businesses; broaden the reach of drought policy to non-participating farms; ensure Commonwealth-state cooperation to drought policy—specifically comprehensive, integrated and consistent implementation of policy within an agreed framework of responsibilities; and better align drought preparedness programs and communication programs with rural R&D corporations.

Exceptional circumstances arrangements should not artificially support producers who are not viable over the short term or reduce the need for responsible risk management. Therefore, we also need to ensure there are positive incentives built into our policy framework to increase the number of drought-ready farming businesses. Labor is prepared to take the hard decisions and engage in partnership with farm leaders and rural communities on the challenges which face them. And drought continues to be one of the major challenges facing rural Australia today.

The drought is not just impacting on our businesses; it is having a major impact on the fabric of our regional communities. Most importantly, we as policymakers must heighten our collective consciences to the greatest tragedy of drought, and that is the loss of life and the loss of quality of life due to mental illness. According to the New South Wales Farmers Rural Mental Health Network, the percentage of deaths from suicide for male farmers and farm workers is approximately double what it is for the Australian male population. There are also a significantly higher number of ‘accidents’—for example, death by firearm and car accidents—occurring in the bush, particularly in remote areas.

Despite the disproportionately high levels of depression and other mental illnesses in rural and remote areas, communities in these areas continue to have poorer access to mental health support. This is a problem that must be addressed as a matter of urgency. In this regard, I wish to draw the Senate’s attention to the outstanding leadership of the New South Wales Farmers Association on this important issue. In response to the increasing despair being caused by the drought in regional New South Wales, in May 2005 the New South Wales Farmers Association held a drought summit in Parkes. Two thousand farmers attended and told personal tales about the significant personal and emotional impacts of drought on their families and friends and communities. This summit was a turning point for rural communities in terms of acknowledging and seeking to address the growing problem of mental illness.

As a result of the summit, the New South Wales Farmers Association brought together a group of key stakeholders in the area of rural mental health to discuss how best to work together to address rural and remote mental health issues. This forum resulted in the creation of a formal Rural Mental Health Network and a New South Wales farmers blueprint for maintaining the mental health and wellbeing of the people on New South Wales farms. The network includes 19 organisations, including St Vincent de Paul, Anglicare, the Salvos, beyondblue, the Black Dog Institute, the Centre for Rural and Remote Mental Health, the Australian Rotary Health Research Fund, the New South Wales DPI, Centrelink, the Country Women’s Association and the Rural Doctors Association. It identifies a number of challenges to be addressed, but the government should be looking at what additional assistance is available to the Rural Mental Health Network and the potential for this model to be scaled up to the national level.

As I have been meeting with our farm leaders in recent months there are two areas of the government’s AAA policy that consistently get a mention. The first is the Rural Financial Counselling Service. After lobbying from farm groups, the government postponed a foreshadowed change to the service until 30 June last year, and consequently last year’s federal budget boosted funding for the Rural Financial Counselling Service. However, this additional support only carries the service through until June 2008. The government cannot simply hope that the drought goes away and then withdraw this vital service. The government should be looking at making a serious long-term commitment to ensure that services provided by rural financial counselling groups around the country continue to be accessible, in good times and in bad.

The other AAA program that comes up consistently is the FarmHelp program. This represents the largest component of AAA and aims to support farmers in managing change. But the message I am consistently receiving from farmers and their leaders is that the eligibility criteria are too rigid. The criteria are so strict, and access to the program is so difficult, that there have been considerable underspends in the FarmHelp program over the past few years. We support the National Farmers Federation call to reform FarmHelp to remove the impediments to farmers wanting to access the program and to increase the level of incentive offered for farmers to take up the FarmHelp re-establishment grant and exit farming.

It is crucial that policymakers keep these important social issues at the forefront of their minds when developing future drought policy frameworks. Why not let this issue become the new benchmark for future generations to determine how successful we have been in learning how to respond to and live with drought?

Last week my office was fortunate enough to have a visit from Mr Brian Egan, the founder of a community initiative called Aussie Helpers. Mr Egan has provided my office with DVDs of case studies of the extent of the despair currently facing rural Australia. I note that Brian Egan appeared on this week’s Australian Story program on the ABC. I hope that my Senate colleagues will join with me in commending Mr Egan and the New South Wales Farmers Association and the Rural Mental Health Network for their leadership on the issue of rural mental health.

There are a couple of issues that I will need to address in the committee stage. Firstly, this bill needs to be amended. While we broadly support it, we will be moving an amendment in the committee stage in relation to the definition of a small business. I will deal with that later.

Let me conclude by saying Labor introduced drought reform policy more than 15 years ago. We will be supporting key elements of drought policy in the future, but more work needs to be done and we intend to be part of it to make sure that the framework for drought policy is more accessible to farmers.