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Consistency, Votes and Squeaky Wheels !

The increase to the Farm Household Allowance (FHA) announced by the prime minister over the weekend is welcomed in rural and regional areas where farm incomes have been smashed by the ongoing drought.

At the present, the FHA allows families to access a payment equivalent to the unemployment benefit, worth about $16,000 a year. This will increase by $12,000 as an additional lump sum available to families (with $7,200 for single households).

Significantly, the government has also lifted the threshold for means testing of family farm assets – land, buildings, machinery, vehicles etc. – from $2.5million to $5million.

The FHA is, as the name implies, a living allowance, to put bread on the table, pay for electricity, school fees, insurance and other living expenses. It is not designed to cover on-farm operating expenses like freight and feed as these are separately covered by other programs as part of the overall government spending on drought measures totalling $576 million.

These measures are applauded as are the mental health and financial counselling services being offered by the government but it is worth raising a couple of points and inconsistencies in government thinking when it comes to entitlements.

Anybody on an age pension is aware of the constant push by some conservative politicians to include the family home in the asset means-test for the aged pension. The argument being that these folk are in some cases asset rich because of the value of their family home and thus they should forfeit their entitlement to an aged pension. If the same rationale were applied to farmers the argument becomes a nonsense as farmers need their assets to perform their business functions and why should they sell assets to obtain a government benefit – just as, it could be argued, why should a pensioner be forced to sell the family home to qualify for an aged-pension.

It’s also interesting to note that the Family Household Allowance has historically been linked to the national unemployment benefit yet, the government appears to be acknowledging that this benefit is insufficient to live on and thus, in rural and regional situations, needs to be supplemented by an additional annual payment of $12,000 ; but not so for those unemployed in the wider community, why is that ?

I don’t begrudge rural families getting access to government funding in times of dire need but I am concerned about those who are struggling to get by on the dole who will not get a leg-up or pensioners who are constantly targeted as rorters because they want to access their entitlement to an aged pension and live out their days in the family home.

It’s about consistency and equality and probably the ability to lobby ; the squeaky-wheel principle, some would say.

Let’s just hope that for some it rains soon and, for others, that the sun continues to shine !


16 comments

  1. Harry

    The hypocrisy and inconsistency is breathtaking Terence but apart from you I have not seen any criticisms in the MSM along those lines.

    I think the subtext is that farmers provide our food and so need to be well supported but the unemployed need to be incentivised by the stick to get them to get off their bum and find work. So Newstart is kept well below the poverty line.

    Pensioners? Same deal: they supposedly did not have the foresight or drive to provide for themselves so why should the taxpayer have to fork out more than a meagre living? I hear the latter all the time!

  2. Yvonne Robertson

    Great overview. I fully concur and also add the comments about how it would allow farmers to put ‘bread on the table for their families’ but that really, if they wanted to use it for something else they could. Far be it for Turnbull, McCormack and Littleproud to tell them how to spend their money – after all they trusted farmers to know best how to use it. I compared this to those forced to use the INDUE card where only 20% of the benefit is accessible in cash. And as Malcolm hugged the distraught and attractive young woman in a presser that went on forever, I wondered if his physical patronising would have extended to an Indigenous, Sudanese, Muslim, old or fat woman. No doubt they would be grateful if it didn’t.

    We are repeatedly told that farmers know the risks associated with their livelihood – goodness knows they should given that most of them grew up with and inherited the lifestyle. If they can’t put money away in the good times – no drought as bad as this one since the 50s? – then why should their case be different to anyone else? Surely it’s just poor business practice. If they own assets of up to $5,000,000 then sell some or take out a loan.

  3. Kaye Lee

    Three months ago…..

    Nationally, the median price of farmland grew by 7.1 per cent last financial year, according to a report by Rural Bank, a subsidiary of the Bendigo and Adelaide Bank.

    The value of farmland has been growing by an average of 6.6 per cent each year since 1998, according to the report.

    “Looking at the last five years, even the worst performing regions, only two of those five actually had negative price growth, so even the worst performing regions are on the whole achieving positive farmland value growth, which is a great thing for Australian agriculture.”

    “Where we are seeing productive land on urban fringes, there is tension between expansion of the housing footprint, and often intensive agriculture in really productive areas,” Ms Gartmann said.

    “It does drive questions around the national agricultural policy, and how each state and territory is approaching land use planning, to retain that really productive land rather than pushing it out to more marginal areas.”

    http://www.abc.net.au/news/rural/2018-05-02/farmland-values-report-shows-median-price-rise/9713822

    Six months ago….

    Strong demand for permanent cropping properties – notably avocado, citrus and nut orchards – fuelled an 11.3 per cent jump in land values monitored by the Australian Farmland Index in 2017.

    Near historic highs in horticulture, wool and sheep markets are underpinning buoyant land values in productive farming areas

    The barometer of leading farmland investment earnings showed total returns for the year to December 2017 grew 15.87pc.

    A healthy result, but not enough to match 18pc-plus gains posted in 2016.

    Income return for 2017 was 4.3pc, or about half that recorded the previous year (8.54pc).

    “On an annualised basis, the index experienced relatively lower, yet still-strong returns, because of weaker growing conditions influenced by a number of climatic factors.”

    Mr Delahunty said appreciating land values across the index, which charts a portfolio of properties worth almost $1.1 billion, was evident after strong demand for both developed assets and suitable greenfield planting sites in the horticultural sector.

    Mr Delahunty said higher than average rainfall in parts of eastern Australia in the final quarter of 2017 had favoured cotton earnings prospects after a challenging dry and frost-affected start to the season.

    https://www.theland.com.au/story/5280080/hort-property-demand-drives-top-farmland-investment-returns/

  4. New England Cocky

    Terence, what about the Parliamentary Allowances Scheme for politicians that in one six month period Barnyard was reported as “rorting” to the tune of about $1.1 MILLION, or a staggering about $6,000 PER DAY average. No wonder Australia cannot afford to pay the unemployed a living allowance or aged pensioners sufficient to heat their darkened homes during winter because LNP state misgovernments sold off the power generators for irrelevant ideological reasons.

  5. Miriam C

    Surely they could afford to pay back the debt if and when they made a substantial profit in the future years.

  6. Anon E Mouse

    Planning and employment schemes aimed at improving the drought tolerance of these affected properties.

    Things should be in place to aerial seed into receding flood waters when the rain comes.

    Work should continue to have havens for breeding stock.
    Otherwise the rains come and these things will be forgotten and the land wil continue to be flogged.

  7. susan

    The elephant in the room is Climate Change. With all the photos of dying cattle in drought country, why are there no trees, dead or alive, in sight?

  8. Ricardo29

    I saw the reports on ABC 7.30, including the farner’s wife crying because people who had no idea were stopping them from bulldozing brigalow to feed their stock and no-one questioned the contribution that deforestation is making to climate change, the damage to the Great Barrier Reef etc. As Susan says, no mention of Climate Change in the reporting about the drought. It’s as if the drought is happening in a vacuum, not as a direct result of the practices of so many of the farmers now wanting relief. Michael Pasco had an interesting take on it in the New Daily but I don’t know how to link to it.

  9. Kaye Lee

    Is this it Ricardo?

    The key question for governments giving farmers money: is it climate change or weather?

    Minister, is this drought the result of climate change? (If the answer is “no”, go to question 7.)
    If it’s climate change then, not just regular Australian weather, is this aid a waste of money? A mere Band-Aid when there’s a bigger problem?
    What exactly is your government’s climate change policy?
    Given that we are one of the world’s biggest carbon emitters on a per capita basis, do we need to move to a zero-emissions energy policy to have credibility in encouraging global change?
    Would the NSW government’s billion dollars in farm aid be better spent investing in renewable energy?
    Should the money at least be spent on increasing farmers’ drought resistance, rather than temporary assistance such as transport subsidies?
    If this drought is not related to climate change, it’s not a natural disaster, is it? It’s just our usual climate of insufficient water every decade or so?
    Viable farmers have been managing drought for the past couple of hundred years, and they now have farm management deposits to smooth out the financial impact of good and bad seasons – why throw another billion dollars at them?
    Is there a contradiction in the price of farm land continuing to rise when farms apparently aren’t viable?
    Are farms simply too expensive? Is there a bubble in the price of agricultural land that needs to pop to help farms become sustainable?
    Why are agricultural businesses given such special assistance when many other businesses in trouble are not?
    Should assistance be aimed at helping non-viable farms exit the industry, rather than propping them up, delaying the inevitable?

    https://thenewdaily.com.au/news/national/2018/08/04/why-governments-give-farmers-drought-assistance/

  10. stephengb2014

    Facts
    Australian Farmers export 77% of their production.

    Farming is a business.

    Approx 10,000 businesses go belly up every year.

    Do we bail them – NO, so why farms?

    Farms are not special, 77% EXPPRT PROVES IT.

    YES for heavens sake feed the animals.

    After that it’s tough titties.

  11. Möbius Ecko

    Kaye Lee at 11:40 am

    I caught half a report the other day and don’t have the facts at hand, about the amount of relatively wealthy urban dwellers who have purchased farms of the minimum size required to waive GST and to gain other government assistant and allowances. In other words they are using farms as a way of minimising their taxes whilst receiving a secondary income.

    It would be interesting to know what percentage they play in the growing agriculture sector.

  12. Miriam C

    I agree with Susan regarding Climate Change.Our gutless Prime Minister cannott utter the words Global Warming as the peer pressure is too great.

  13. Rhonda

    Thanks Terrence, I’m finding the whole woe begon narrative rather irksome too (re: relative welfare entitlements). I also agree with Yvonne regarding the profit yielding savings proposal for farmers- on that measure I heard Littleproud on the wireless highlighting that such a scheme is actually already in place – it allows for big dollars to be squirreled away TAX FREE for non-rainy days such as these. But at the end of the day, ummm, climate change! Agriculture politics is so way way behind the eight ball

  14. Rhonda

    We are feeding the biggest methane producers in the country. “Big Fpharma”

  15. Harry

    Professor Bill Mitchell’s take on this:

    “1. What is the difference between an urban/rural worker (say) who loses his/her income because their job (productive activity) vanishes and a farmer who loses his/her income because their job (productive activity) vanishes as a result of changing global or national economic circumstances?

    Why is one job loser able to access crisis relief (which is generous) and the other job loser is only able to access unemployment benefits which now provide below-poverty line income support in Australia?
    Why is an unemployed worker not able to access concessional loans on their property to help them through the crisis, when clearly their plight is beyond their control?

    Now take this thinking a step further.

    It was obvious that both climate change and the changing external environment (exchange rates and the mining sector) were going to undermine the viability of current farming practices.

    Why have we ignored all the developments in alternative farming (permaculture, natural sequence farming, organic and bio-farming) up unto now?”

    http://bilbo.economicoutlook.net/blog/?p=40015#more-40015

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