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

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

The Greens are supportive of the Farm Household Support Amendment Bill 2007. However, it raises a number of issues that we think are important and need to be given an airing and discussed. Drought, we know, has a devastating impact on the agricultural community—on farms themselves, on farmers and on their families. Senator O’Brien has mentioned the impact on mental health. Drought also has an impact on small businesses, on businesses within the agricultural community, on towns, on the health of towns and on the environment and natural resource management.

We believe it is important that Australia provides assistance to our farmers and to our rural communities; however, we believe we are ignoring the elephant in the room—that is, that climate change and its interaction with drought has an impact on Australian agriculture and on our farmers. In the second reading speech by the Parliamentary Secretary to the Minister for Agriculture, Fisheries and Forestry, Ms Ley said:

The Australian government is committed to building the sustainability of the agriculture sector and providing assistance when it experiences severe downturns during rare and severe climatic events.

We are all witnessing the devastation of the current drought.

We have been in drought for a considerable period of time and it is having a devastating impact, but the Greens would argue that this can no longer be treated as a rare and severe climatic event. We are entering a period of climate change and of greater climate variability than Australian farmers have ever faced before. We need to acknowledge that fact and begin planning to ensure that our policy initiatives of financial support and the incentives we provide to the agricultural community take that fact into account.

I am not convinced that the government has got it yet. I highlight the Prime Minister’s comments that he made on 6 February this year in the House of Representatives when talking about the interaction between climate change and drought. He said:

I do think that the jury is out on the connection between climate change and drought, and that is a view shared by the shadow minister, the member for Kingsford Smith. I thank the House.

The point there is that he has not acknowledged and does not acknowledge the link between drought and climate change, and I am desperately concerned that we will see an ongoing cycle of having to provide exceptional circumstances support to an ever-expanding group of farmers who are increasingly affected by drought that is in fact increased climate variability caused by climate change. It is time that we reflected this in policy formulation and in the way that we structure other programs such as adjustment.

Just last year or in 2005, when Mike Young, then a senior CSIRO scientist, dared to produce a paper looking at the impact of structural readjustment on water reform, he was panned outrageously, I believe, by the now Minister for Agriculture, Fisheries and Forestry, Mr McGauran, implying that he was scaremongering and that he did not have the facts right and questioning how he could attack adjustment and exceptional circumstances. Mr Young was pointing out that adjustment, as it has been carried out in Australia over a number of past decades, was not having the desired satisfactory impact. He had been through the research and established that these adjustment packages were not producing the required and desired policy outcomes.

Mr Young also looked at exceptional circumstances and drought risk. He pointed out that there is a risk that adverse climate change may be mistakenly interpreted simply as prolonged drought, which I think is exactly what is happening. So while we agree that of course right now we need to help our farmers, we also need to acknowledge that we are living in a drying climate and we need to be planning for that. Australia is the driest inhabited continent on the planet. We are going to be subject to climate variability and climate change that will inevitably have an impact on our farmers.

The limited research that has taken place to date indicates, certainly in Western Australia, that farmers are finding it increasingly harder to adjust to climate change. Western Australia—and it is nothing to shout about—is probably being subjected to climate change earlier than the rest of Australia. As I have said in this place before, the Western Australian government has taken that into account, for example, when planning for our water resources. It is an absolutely documented fact that our rainfall in Western Australia has decreased substantially. Our farmers have been adjusting and adapting to this, but it is reaching a point where they will no longer be able to adapt. So assistance and help are needed in order for them to adjust to these drying circumstances and we need to be looking at that in our policy formulation.

I note that the National Farmers Federation has in fact been calling for a change and an update to the national drought policy and for policy reform. I have been tracing some of the correspondence and some of the public calls that have been put out. I noticed they go back a number of years, so I spent some time on websites today looking at where Australia is up to on that. The latest information on drought policy reform that I could find on the website of the Minister for Agriculture, Fisheries and Forestry was a reference to it in June 2006, when there had been some discussion on drought policy reform but in fact no significant progress. There is no new drought policy in this country. I would have thought that drought in this country would have warranted much more active policy discussion, considering the long-term drought that we are in and also considering the impact that climate change is having on agricultural communities.

It is essential that we start addressing this issue into the long term or we are all going to be in this place every year talking about exceptional circumstances that will no longer be exceptional circumstances. Long-term changes are happening as a result of a combination of seasonal variation and climate change, and they need to be factored into assistance packages and adjustment packages. The Greens will be supporting this particular bill, but we want to see some pretty dynamic change in the way the government addresses climate change. An acknowledgement that there is an interaction between drought and climate change and that we are no longer dealing with rare and severe climatic events would be a good start. We are going to be dealing with frequent, more dramatic events and with long-term change into the future.

This morning a number of senators, I think, and a number of members of the House of Representatives were at a forum, put on by Land and Water Australia, on how farmers are managing climate change. Our farmers are trying to address climate change, but I believe that not enough is being done to help farmers address climate change. In particular, when you look at the more marginal areas, farmers in those areas are going to be hit earliest, are now being hit, and climate change will progressively impact on other farmers in areas that traditionally we have not seen as marginal.

The sooner we get our heads around these facts, the better: we can no longer do business as usual and these will not be ‘exceptional’ circumstances. We need to consider what policy mechanisms are needed into the longer term, including, for example, stewardship support, further and more intense research on alternative crops, and industry development. We need to put money into research into alternative crops and industry development, so that people can have a diversified cropping system but also diversified income sources so that they can deal with climate variation. These are all things that need to be addressed; otherwise, every year we are going to be back here talking about ‘exceptional circumstances’. These circumstances are no longer exceptional; they are the norm, unfortunately.

Sandy Macdonald (NSW, National Party) Share this | Link to this | Hansard source

I rise to speak on the Farm Household Support Amendment Bill 2007. I am pleased that the Greens are going to be supporting this legislation, as is the opposition. I will pick up on a couple of things that Senator Siewert said before I make my contribution.

Certainly, climate change is real, but a drought is a drought, and this, substantially, over the last three or four years, has been a drought. Where I live, we have records that go back about a hundred years, and there have been some very dry times before and, I guess, there will be some very dry times in the future. Every dry time is painful, and I do not think we should forget that. But I do not think we should immediately say that this particular drought is climate change. Climate change is certainly a fact of life, but I do not think we should use climate change as a means by which we can be distracted from an immediate problem.

I might say that, over the last decade—certainly after the drought of 1994-95—on the Liverpool Plains, which is west of where I live, some of the crops that have been grown, particularly with the wheat and sorghum crops are quite remarkable when you consider the amount of rain that has been available to those farmers. They are innovative, and they are using technology and methods of farming which would have been unthought of a decade ago. And it is a great compliment to them that they have been able to adapt and will continue to adapt. The yields of these crops are absolutely extraordinary, so that when they get a good season they will be even better.

I have pleasure in making a short contribution supporting this Farm Household Support Amendment Bill 2007, which responds to the announcement by the Prime Minister on 7 November last year to allow agriculture-dependent small businesses access to the same exceptional circumstances assistance that is provided to farmers more generally. This assistance includes EC relief payments and ancillary benefits such as the healthcare card and concessions under the Youth Allowance and Austudy means tests. Assistance to small business operators will be available until 30 June 2008, unless extended by the government—and I am sure that it would be extended by the government if the need were apparent.

Drought, unfortunately, is part of Australia’s climatic make-up. The resilience of Australian farmers and their commitment to survive under the most difficult economic and seasonal conditions is well understood. The real price of drought can, unfortunately, never be felt by anyone who has not suffered or experienced it. It tears at the very soul of farmers and farming communities, and the impact of climate goes far beyond sound management and commonsense. There are many Australians in rural areas who know the pain that I am talking about. As I have said, I am a farmer in north-western New South Wales and for the last few years we have had a very difficult time.

Governments cannot make it rain, but they can address the needs of the farming community in an intelligent, empathetic and generous way. Our government has certainly attempted to do this consistently since we came to office in 1996, and particularly as the 2001 dry took a grip over much of southern and eastern Australia.

While there are some encouraging signs that the drought may be breaking, it will require some years of above-average rainfall for the watertable to be recharged. And the publicity that is given to the current crisis in the Murray-Darling has made it clear to even the most urbanised Australians that we have a real water problem in this country—a problem which the government is responding to, of course, with its $11 billion package, which is essentially about using our water with greater accountability and with greater recognition of its value.

As I have said, we must be positive and hope that the skies will soon open to provide relief for the more than 50 per cent of agricultural land across Australia which remains drought-declared. I think I am right in recalling that, as of earlier this week, that now includes the whole of Victoria.

It is vitally important that we support all agriculture in these times of need, because we cannot risk failure. This would lead to a decreased production of food and fibre within Australia, and this would mean that as a nation we would have to import more than we do already—and we would certainly diminish our export potential.

The farm contribution may be only around three per cent of GDP but, in terms of overall employment, export earnings and the way we think about ourselves as an agricultural superpower, the farm sector remains incredibly important to our economic and social wellbeing. As a nation we currently produce over four times more than we can consume and it is economically vital that we continue to grow our export industries as we move into more sophisticated trading arrangements, including FTAs when they are in Australia’s best economic interests.

I commend the Australian government for its contribution to assisting not only those farmers struggling through this drought but also the small businesses in our rural communities, which those of us who come from rural communities understand. We hope that they will be able to access this EC assistance. As at 9 March 2007, the Australian government had provided $1.4 billion directly to Australian farmers since the drought began in 2001. We have committed to providing more than $2.1 billion, but I do not imagine for one moment that, whatever is needed to move forward, the government will forget its farmers and its farming communities, who are reliant on each other. This assistance has helped over 60,000 farm families and has meant that these families have been able to stay in the region and continue farming. The government has also run initiatives such as the drought bus, an excellent initiative which took counsellors and Centrelink drought officers directly to farmers.

This bill recognises the financial hardships of all businesses in our rural and regional communities and that the viability of many agriculturally dependent small businesses is highly dependent on the viability of farm businesses. To confirm what this legislation does—and from the indications given by Senator O’Brien and Senator Siewert I know it will pass—the Farm Household Support Amendment Bill 2007 will allow small businesses to access the same exceptional circumstances assistance that is already provided to the farming sector. This includes EC relief payments and ancillary benefits such as the healthcare card and concessions under the Youth Allowance and Austudy means tests. It is a useful piece of legislation. It meets an undertaking that we made to regional communities. I commend the legislation’s finetuning of the assistance provided to the rural community and I will conclude by saying the government will continue to do whatever it can to soften the impact of the worst drought in our history.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

I also rise to support the Farm Household Support Amendment Bill 2007. The agricultural sector in Australia is certainly fundamental to our economic wellbeing as well as to our sense of identity and way of life. It is also increasingly important in our guardianship of the environment and deserves support.

Our own state of South Australia, Mr Acting Deputy President Ferguson, is a major producer of agricultural commodities. Its markets are worth $672 million in grapes, $522 million in wheat and $306 million in barley. As well, the fisheries in South Australia contribute significantly, in my view far exceeding their importance in dollar figures. As well as being vital agricultural industries in their own right, these industries are part of the broader regional sector. Unfortunately, in South Australia this is relatively small and we feel the need to nurture it to some extent.

The nature of our produce, particularly that of the wine and seafood industries, provides a focus for tourism in the area as well as supporting many environmental programs and providing an important part of the social fabric of our state. Incidentally, it is also a significant employer of scientific talent. My first job was at an agricultural research centre looking at calf DNA and it probably gave me my first interest in the agricultural sector—although I did grow up in Mount Gambier. My father was one of those small business people whom this kind of bill might have assisted.

So I am well aware of the importance of the full range of businesses in country areas. I know that if the shops, the mechanics, the truck drivers or the fencing contractors are not getting business then that jeopardises all kinds of other services in country towns. Unfortunately, we have already seen many closures of banks, schools and government agencies in country areas. I do not think any of us would want to see the drought impact further on those. As Senator Sandy Macdonald said, all farmers would acknowledge that the services and products of small businesses in regional areas are absolutely critical to the continuation of the contribution that agricultural services make to our earnings and to the social life of our state. Certainly, they are a major contributor to export earnings, and, given our current balance of trade figures, it is very important to facilitate and nurture our exports.

It is often not well understood by some in city areas that in many aspects the cost of living in country areas can be well in excess of costs for town dwellers. Distance can cause high costs for the basics of life such as food and housing. People often think that rural areas have cheap housing, but because of the distance factor housing is often quite expensive in country areas, particularly where there has been an influx of workers, as in the south-east of South Australia: housing is very difficult to find and very expensive for the workers, and this has a great impact on them. Education costs for families can also be very high because children have to be transported long distances or, indeed, need to board in cities to further their education.

Incomes tightening in drought situations can make it very difficult for families to get by. It can be the case that when a large sector of the community—the farmers in the areas—spend less because of the impacts of drought then small businesses in those country towns and those who provide services to the farmers are the first to feel the impacts of that. I am pleased to see that this bill goes some way to redressing that situation and I am pleased that the government has recognised that, in a prolonged drought such as this, small businesses need support as well as farming families.

I support the bill in that it deals with an immediate problem. Like Senator Siewert, I think that the government needs to look at longer term issues as well. The Australian Treasury submission to the Agriculture and Food Policy Reference Group said that the current sound basic framework of the primary industries sector is due to three factors: the floating of the exchange rate, industrial relations reforms and competition policies. The industrial relations reforms that they are talking about are the reforms that began under the Hawke government, not the recent Work Choices reforms. They were all reforms continued under the Keating Labor government. A lot of those basic factors were in place under a Labor government. While the current Liberal government has managed the economy adequately over the last 10 years, I wanted to recognise that a lot of the building blocks for that were put in place by the former Labor government.

The critical point is that the Australian Treasury submission pointed particularly to productivity growth being required to allow the agricultural sector to continue to have that sound underpinning, to grow in the future and to deal with the challenges that are thrown up to it—whether it be drought, market factors or whatever else. It is a cliche, but I think there is a lot of truth in this: rural industries in Australia lead the world in innovation and self-reliance. They do not get a lot of government support, and they will not under plans to free up trade and to reduce barriers to trade. But they need some assistance from the government—the tools to help themselves and to increase productivity in the sector.

Most people in the agricultural sector that I have talked to talk about adequate infrastructure as being absolutely essential. This is so-called hard infrastructure, like roads, rail and ports, and also a bit of infrastructure that the Labor opposition has been talking about quite a lot recently—that is, information technology and broadband infrastructure. It has been discussed in general terms, but it is as important for the rural sector as it is for anyone else to have access to good broadband infrastructure in order to advance. I am sure that many people all around the states—but certainly in South Australia, where I am getting around to visit some of the primary industries—have been very impressed by the ability of many farmers to take up new technologies and use them to improve their productivity and to deal directly with their clients and their markets.

Where broadband is available, farmers are able to access the latest technology in satellite imaging and in weather forecasting. They are also able to deal directly with their markets; they are able to access information about markets and market conditions; they are able to speak and deal directly with their clients. This is not only farmers; in a lot of the country towns where the local market is very small, many of the small manufacturing businesses we have been talking about, and indeed service businesses, survive only by having access to broadband so that they can sell their products and services to a wider market, whether it is in Australia or overseas, which often occurs. I have been very impressed by the entrepreneurship of many small businesses in regional areas that have a thriving business selling directly overseas in all kinds of niche markets.

Good broadband, as for business anywhere else, is obviously good for both the rural sector and interregional business. That is what the Labor Party is talking about—putting government money in conjunction with private industries to leverage up the amount of money available to ensure that broadband infrastructure is rolled around this nation comprehensively.

It is this kind of long-term thinking that we need to address along with the changes that are outlined in this bill, which go to the immediate solutions to the problem. I am sure that the government are hearing from various groups in the agricultural sector that are crying out for ways to address long-term issues, and productivity is certainly one of the essential elements here, and infrastructure is part of that. It is a bit disappointing that there has not been more of a national approach to infrastructure issues. While commending the government for providing some assistance both to farmers and to small business, I urge them to now turn their attention to some of these long-term issues that so dramatically affect the agricultural sector in Australia and in my state of South Australia in particular.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I thank the honourable senators who took part in this debate and I thank the Senate in anticipation of the support that the Farm Household Support Amendment Bill 2007 is about receive. As so many honourable senators have already said, this bill will help those small business operators who, due to the ongoing drought, are unable to meet the financial needs of their families. It is correct that this is not the first time this government has offered drought assistance to small business operators, but it should be noted that this program is very different to the one offered in 2002. During this debate it was mentioned that the assistance on offer in 2002 had low uptake rates and had a number of concerns raised about it by the small business community. However, based on that which we learned from the prior assistance measures and the expertise that has been gained from delivering exceptional circumstances assistance to farmers, this program is more in touch with the needs of agriculturally dependent small business operators. To put it simply, we have learnt from our past experience and are willing to tailor this program accordingly. This program will provide more value to small business operators.

The exceptional circumstances program for agriculturally dependent small business operators mirrors what is already in place for farmers. What we see in this bill is just one component—income support. There is also business support or interest rate subsidies on offer for eligible small business operators. In the 2002 small business program, only business support was available to small business operators suffering because of the drought. Interest rate relief was available only on loans of up to $100,000, meaning that a maximum of $10,000 over two years could be received. Small business operators can now get interest rate subsidies on all their commercial debts up to a maximum of $100,000 a year, just like farmers.

The 2006 assistance program also offers something new to small business operators—the income support outlined in this bill. On top of receiving funds to help meet the financial obligations of their business, agriculturally dependent small business operators may be able to receive up to $760 a fortnight for income support to help meet their household expenses. Those receiving income support can also access ancillary benefits such as a health care card and concessions under the youth allowance and Austudy means test. The program has been well received and it is already proving successful. It is expected that around 5,000 small business operators will be able to access this exceptional circumstances assistance. While I obviously cannot guarantee that exactly 5,000 people will walk through the door to get the assistance, as it is a demand driven program, I can say that we are well on the way towards achieving our target.

Since the program was announced in November 2006, approximately 1,500 applications for exceptional circumstances assistance from small business operators have been received. This figure is increasing at an amazing rate. On 13 February this year, the number of applications was around 800. In effect, in the last five weeks, application numbers have doubled. As more and more small business operators become aware of the assistance they can access, these figures will continue to grow. I expect that the number of applicants will increase following the recent advertising campaign and the continued good work of the drought bus.

Similarly, since November 2006, over $5 million has been provided to over 280 applicants at an approval rate of 69 per cent. In the last five weeks, the funds allocated to small business operators have almost trebled from $1.6 million. Based on these figures alone, the small business assistance program is performing better than the previous scheme, where we had 452 applications, 152 recipients and $1.1 million over the life of that program. You do not need to just take my word for it; the feedback we have received from the industry supports this initiative and confirms that the interest rate subsidies and relief payments are very valuable forms of assistance.

Questions have also being raised about whether this new program is getting to the right people. As I have already pointed out, the uptake rate of small business exceptional circumstances assistance has been very good. Of course, the approval rate will not be 100 percent as there are people out there who have not been able to access the assistance for a number of reasons. I can confirm that the two main reasons that small business operators are not able to get assistance are: they are not providing goods and services for the purposes of farming activities, or they are not in financial difficulty and are still trading profitably. Those small business operators who are unable to get assistance because they are not agriculturally dependent should be aware that they will indirectly benefit from the assistance provided. Providing assistance to both agriculturally dependent small business operators and farmers will have flow-on benefits for townships as they will continue to provide essential services and have some income to spend in other local businesses. We are already seeing a shortage of skilled workers in rural areas, and also young people from rural areas are being lured away to the city. By supporting small businesses in rural areas, we can reverse the current trend—because we all know that, once people leave regional Australia, it is very hard to get them back.

While farm businesses have been the first group to experience the effects of the worsening drought, agriculturally dependent small businesses in drought affected areas are definitely experiencing hardship as well. We as a government recognise that, without the assistance provided by this bill, the ability of some small businesses to service rural and regional communities may be at risk. Government and industry are working together to move the drought policy towards drought preparedness. All agriculture ministers—federal, state and territory—have focused their efforts on immediate assistance and will return to drought policy reform once the seasonal conditions allow their recovery processes to commence. I am sure that we are all hoping and praying that that may be as soon as possible. I thank honourable senators for their support and contributions on this bill.

Question agreed to.

Bill read a second time.