Explanatory Memorandum
(Circulated by the authority of the Minister for Agriculture, Fisheries and Forestry, the Hon Warren Truss MP)General outline and financial impact
General outline
1. The purpose of the Farm Household Support Amendment (Exceptional Circumstances Relief Payment) Bill 2005 (the Bill) is to bring into effect an element of the 2005 Drought Assistance Package (the Package) announced by the Prime Minister on 30 May 2005. The Bill seeks to provide changes to the income test for the Exceptional Circumstances Relief Payment (ECRP), to be implemented from 1 July 2005, subject to the passage of legislation. The Bill also seeks to implement changes to the procedure for farmers obtaining Exceptional Circumstances (EC) Certificates.
2. In order to implement the change to the ECRP as announced on 30 May 2005 and the EC Certificate procedures, amendments must be made to the Farm Household Support Act 1992.
3. The ECRP income test changes have emanated in recognition that the severity and extent of the drought is continuing to have an immense impact on rural Australia and is unquestionably one of the most severe in the last 100 years. As a result, in many drought affected regions, farmers and their partners are increasingly turning to employment opportunities off-farm to supplement their farm income. To take these circumstances into account, the Prime Minister announced on 30 May 2005, that from 1 July 2005 farm families will benefit from a $10,000 annual exemption of off-farm wages and salaries from their income test assessment for ECRP, in addition to existing exemptions.
4. The new test will be available to all current ECRP recipients and new applicants from 1 July 2005, (subject to the passage of legislation). The new test will be reviewed before June 2006 to determine if the prevailing drought conditions and outlook warrant any extension.
5. The Bill also brings into effect a change to the process by which farmers obtain an EC Certificate. A person applying to receive an EC certificate will no longer need to apply to their state Rural Adjustment Authority to do so. This change reflects the Australian Government's ongoing commitment to streamline the EC assistance arrangements to ensure they are more efficient and effective for farmers. The change will also address the concerns raised in the recent report by Australian National Audit Office (ANAO) 'The Auditor-General Audit Report No.50 2004-05 Performance Audit. Drought Assistance' regarding the accuracy of information contained in the EC Certificates issued by the relevant state Rural Adjustment Authority. The bill seeks to shift responsibility for EC certificates to the Secretary of Human Services, then it is anticipated that the Secretary will delegate these powers to Centrelink. The Bill seeks to simplify the EC Certificate process for farmers and address the ANAO concerns by using a consistent delivery mechanism - Centrelink. Subject to the passage of legislation, from 1 October 2005, EC certificates will be issued nationally by Centrelink to EC declared farmers. This will not require consequential amendment to other legislation which refers to EC certificates.
6. The Bill will give effect to the Government's decision to provide an exemption of up to $10,000 from off-farm wages and salaries to a person and their partner as of 1 July 2005. It will also give effect to the Government's decision to change the process for reviewing EC certificates.
- g)
- It repeals subsection 8A(2) and replaces it with a subsection giving the Secretary of the Department of Human Services the authority to issue an EC certificate.
- h)
- It inserts provisions at the end of section 24A which provide the basis for the calculation of a person's exemption limit per fortnight. This will lead to an increase in the amount of benefit that a person can receive under ECRP, while also supplementing their income through off-farm employment.
9. Consultation has been undertaken with Centrelink, the Treasury, and the Departments of Finance and Administration, Family and Community Services and Employment and Workplace Relations. Consultation has also been undertaken with the Australian Government Solicitor, the Attorney General's Department and the Office of Legislative Drafting and Publication.
Financial impact statement
10. This Bill will require an estimated additional $50 million under the Farm Household Support Act 1992 Special Appropriation Bill.