Changes to Farm Household Allowance

10/04/2024
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Introduction: 

Farm Household Allowance (FHA) is a crucial support system designed to assist farmers facing financial hardship. Unlike traditional welfare programs like JobSeeker, FHA is tailored specifically for farmers, recognizing the unique challenges they face. It provides essential financial aid to eligible farmers and their families. As of July 1, 2024, significant changes are set to take place, offering new opportunities for those in need.

What is FHA and Who Can Receive It? 

FHA is a government assistance program aimed at supporting farmers and their families during times of financial distress. It is intended to provide temporary relief, allowing farmers to restructure their operations, improve resilience, and ultimately regain financial stability. Unlike JobSeeker, FHA has an increased asset threshold, ensuring that assistance is available to those with significant agricultural assets.

Eligibility for FHA is based on various factors, including income, assets, and residency. To qualify, applicants must meet certain criteria, including:

  1. Be Australian residents or hold specific visas.
  2. Be actively involved in farming operations or be a partner in a farming partnership.
  3. Meet the income and asset tests outlined by the program.

One significant difference between FHA and JobSeeker is that if an individual qualifies for even $1 of FHA, they receive the maximum rate, equivalent to the top rate of JobSeeker. This ensures that eligible farmers receive adequate support to meet their basic needs.

More details about FHA and current eligibility criteria can be found in my previous blog.

Changes Coming on July 1, 2024: 

Starting from July 1, 2024, several changes to FHA are "proposed to take effect, offering new opportunities for farmers in need. These changes stem from a comprehensive review conducted in 2018, aimed at enhancing the effectiveness of the program and addressing emerging challenges faced by farmers across the country.

We wrote to the Minster and his department have confirmed these changes but advised as at the date of this blog that the changes have not yet been "considered by the Parliment.

Extension of Payment Period: 

One significant change is the extension of the payment period for FHA recipients. Previously, farmers could receive FHA for up to four years (1,460 days) between July 1, 2014, and June 30, 2024. However, with the new changes, farmers can now apply for a second tranche of four years, starting from July 1, 2024. This means that individuals who previously reached the maximum four-year limit can now reapply for assistance, providing them with additional support during challenging times.

Introduction of Minimum Turnover Test: 

Alongside the extension of the payment period, a new minimum turnover test is being introduced. New applicants will need a minimum average turnover of $60,000 to qualify for FHA. This is not an insignificant change, e.g. on current prices is means sheep farmers would now have to sell around 600-1,700 sheep on average annually (based on medium trade weight sales in SA as at 9 April 2024).

The government are deliberately reducing their support to farmers and estimate that the tightening of the commerciality guidance is likely to prevent around 3,000 former recipients from having a further four years of assistance.

The tightening of the commerciality guidance is likely to prevent around 3,000 former recipients from having a further four years of assistance” (page 4 - https://oia.pmc.gov.au/sites/default/files/posts/2023/12/Impact%20Analysis_2.pdf)

The effect is reducing the support to farmers by around $60,000,000 per year (3,000 people impacted x approx $20,000 annual allowance, less any payment the farmer may otherwise be entitled to e.g. jobseeker).

Current recipients of the Farm Household Allowance who remain eligible for payment on 30 June 2024 will transition from one 10 year period to the next without a break in their payment (and using the rules that applied when they were granted FHA). 

If your farm (hobby or otherwise) has a prospect of $1 profit then you might want to consider applying for FHA before the new rules start (where you have to have a minimum $60k annual turnover). The criteria is to Job Seeker but you can offset farm losses against off farm income for the income test and assets test is $5.5m.

Summary: 

By extending the payment period and introducing new eligibility criteria, the program aims to provide farmers with the time and resources needed to improve their circumstances, enhance resilience, and build a sustainable future for themselves and their families. However small farmers have been targeted resulting for an annual reduction of around $60m in support.

It's important for farmers to stay informed about these changes and take advantage of the opportunities provided by FHA. Seeking assistance when needed can make a significant difference in navigating challenging times and ultimately achieving long-term success in agriculture.

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