Australian Government response to the independent review and report of the Farm Household Allowance program

Rebuilding the FHA: a better way forward for supporting farmers in financial hardship 

The Government welcomes the Final Report into the Review of the Farm Household Allowance (FHA) and thanks the independent panel for its work.

The Liberals and Nationals Government continues to support farming families experiencing hardship. The FHA is an important part of the suite of programs the Government provides, alongside the Rural Financial Counselling Service (RFCS), concessional loans, farm management deposits, a range of taxation measures, and mental health support amongst others.

The FHA has been in place for five years. Since its introduction in 2014, over $350 million in FHA payments have been made to more than 12,500 farmers and their partners in financial hardship. Not only has it paid for household necessities, the package continues to pay hundreds of thousands each month for professional financial assessments of the farm business, and for activities and services that maximise the chance of recipients creating extra income.

With the current challenging climatic conditions, in late 2018 the Government decided it was important to assess whether the program is still fit for purpose, or whether it can be improved. The question of fitness took into account FHA’s two important aims: to provide basic income to calm difficult situations, thereby giving breathing space and practical support so that recipients can ask themselves, ‘What now, and where next?’.

The Independent Review Panel heard clearly from farmers that FHA is a useful hand-up in times of need. However, for it to really help, it needs to be quicker and easier to access, to better reflect the nature of farm businesses, and to acknowledge that farmers may experience more than one period of hardship in their lifetime.

The Government agrees with the intent of the Panel’s recommendations.

We have already made immediate changes to ensure the FHA best meets the needs of farmers and their partners in financial hardship, and today are announcing further changes.

A pressing issue affecting farmers in drought and flooded areas identified by the Panel was the treatment of the forced disposal of livestock. From 1 July 2019, we changed this treatment to ensure that farmers on FHA are not unfairly treated as a result of having dispose of their livestock due to extenuating circumstances.

In August 2019, we also passed legislation to address the Panel’s recommendation to maintain the net farm assets threshold at $5 million.

Today, in response to the Panel’s other recommendations, we are announcing a radical simplification of the FHA application process and key policy settings including:

  • removing the requirement for business income reconciliation
  • changing the time limit on payment from four years in total to four in ten years
  • a simplified assets test
  • a significant redesign of the application process and form, including allowing farming couples to apply using the same form
  • a strengthened case management approach to better support farmers in hardship through periods of financial difficulty.

The Review Panel had recommended completely decoupling FHA from the social security system. We are confident that with the changes announced today, there is no need to remove the payment from its links to social security. This means FHA recipients will continue to have access to ancillary assistance such as health care card and remote area allowances.

There are many reasons why farm businesses experience difficulty, however, to push the industry to the target of $100 billion in production by 2030 all parts of the industry will need to work together. Those who have continued to struggle will need to explore all their pathways to long-term financial security. They will need to be creative, flexible and agile. Some may decide it is time to take another path, and FHA will support them through that decision making and change.

We are establishing a farmer communications panel, comprised of industry representatives, to test and develop all FHA materials to ensure they will be of practical use to farming families.

The Government is committed to introducing legislation required to give effect to these changes.

In the meantime, farmers needing to apply for FHA will benefit from improvements to the application process that do not require changes to the law. To assist farmers currently experiencing financial difficulty, the Government has allocated additional contingency funding to the Rural Financial Counselling Service providers experiencing a peak in demand.