On 19 June 2018, Minister for Agriculture and Water Resources David Littleproud announced that the Government would extend the time-limit for receipt of the Farm Household Allowance (FHA) from three to four years. The FHA is an income support payment, paid at the same rate as Newstart Allowance (or Youth Allowance if the recipient is aged under 22 years), which supports eligible farmers and their partners who are experiencing financial hardship. A Bill to extend the limit, the Farm Household Support Amendment Bill 2018, was introduced to the Parliament on 20 June 2018.

Background

The FHA was introduced in 2014 via the Farm Household Support Act 2014 and replaced a number of financial supports offered to farmers during times of drought, in particular, the Exceptional Circumstances Relief Payment. The FHA was designed to support farmers in financial difficulty regardless of the specific cause or whether they were located within a specific drought declared area.

Further to the payment (paid at the relevant Newstart Allowance or Youth Allowance rate), recipients receive a Health Care Card (which enables access to discounted medicines under the Pharmaceutical Benefits Scheme and other concessions) and some supplementary benefits.

Department of Agriculture and Water Resources officials told a Senate Estimates hearing in May 2018 that around 7,900 people have been on the FHA since it was introduced, and there were around 2,060 current recipients. According to the department’s annual report, around $66 million was spent on the FHA in 2016–17.

Eligibility

To be eligible for the FHA, an individual must be a farmer or partner of a farmer and meet residency requirements, income and assets tests as well as mutual obligation requirements. The income and assets tests and mutual obligation requirements are different from those that apply to Newstart Allowance and are designed to allow farmers to remain on their farm (rather than being forced to sell off all of their farm assets in order to qualify for support). For example, there are two separate assets tests—one assessing farm assets and one assessing non-farm and liquid assets. The mutual obligation requirements for the FHA require a recipient to complete a Farm Financial Assessment, enter into a Financial Improvement Agreement and talk regularly with a Farm Household Case Officer.

As with other social security income support payments, a number of different waiting periods can apply to recipients of the FHA which mean that the payment is not immediately payable. These include a Newly Arrived Residents Waiting Period (for some migrants) or the Income Maintenance Period (for those who received termination or leave payments).

Time limit

Eligible farmers and their partners can currently receive the FHA for up to three years (1,095 days). This is a cumulative period—the periods spent in receipt of the FHA do not have to be consecutive and there is no limitation on the timeframe in which these periods can occur (until the limit is reached).

Those who have received the FHA for a cumulative period of three years may be eligible for other forms of government assistance, including mainstream social security payments such as Newstart Allowance, but they will be required to meet the more stringent means tests for these payments (compared to the FHA means test).

Proposed changes

The Bill proposes to extend the current time limit to four years (1,460 days). In his second reading speech, the Minister stated:

 … this government has seen firsthand and listened to the experiences of Australian farmers. We know that some farmers and their families have been, and continue to be, subject to pressures that extend beyond a cumulative three year period and need more time to recover from hardship and get back on their feet.

The extended time limit will apply to current and future recipients as well as those who have previously reached the three year limit. Department officials told the Senate Estimates hearing that 2,300 people had exhausted their three year limit (as at May 2018).

According to the Explanatory Memorandum to the Bill, the measure will cost $36.3 million over four years from 2018–19 (subject to demand for the payment).

Issues

The FHA was introduced as part of a broad range of changes to government programs to assist farmers during times of drought under the Intergovernmental Agreement on National Drought Program Reform, agreed to in May 2013. A review of the agreement, with representatives from the Australian and state and territory governments, was released in early 2018 ahead of the agreement’s expiry date in July 2018. The report did not raise the time limit on claiming the FHA as a significant issue and Secretary of the Department of Agriculture and Water Resources Daryl Quinlivan told a Senate Estimates hearing that the issue of the time limit ‘was not raised in any prominent way in the review and it has not been a major part of the conversations with Commonwealth and state ministers on the matter that I have been party to’.

Issues with the application process for the FHA and processing times were raised in the Review. Issues with processing times were also raised in a 2016 series of roundtables with Victorian dairy farmers. These roundtables led to 2017 legislation that removed some waiting periods for the FHA, and expanded the definition of ‘farm assets’ for the purposes of the assets test, but no specific measures to improve claim processing times.

Shadow Minister for Agriculture, Fisheries and Forestry, Joel Fitzgibbon, welcomed the announcement of the extension.