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RURAL ADJUSTMENT AMENDMENT BILL 1998

1998

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

RURAL ADJUSTMENT AMENDMENT BILL 1998

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Agriculture, Fisheries and Forestry,
the Hon Mark Vaile MP)

ISBN: 0642 378886
RURAL ADJUSTMENT AMENDMENT BILL 1998

GENERAL OUTLINE

These amendments amend the Rural Adjustment Act 1992 to give effect to the Government’s decision, announced in the Agriculture – Advancing Australia package, to introduce the Farm Business Improvement Program (FarmBis).

FINANCIAL IMPACT STATEMENT

$50 million has been allocated over three years by the Commonwealth to fund FarmBis. In addition, matched funds from the States will increase the capacity of the FarmBis program.

REGULATION IMPACT STATEMENT

Background

The Rural Adjustment Scheme (RAS92) commenced on 1 January 1993. The broad objective of the scheme was ‘to foster the development of a more profitable and competitive farm sector that is able to operate competitively in a deregulated financial and market environment and to improve the competitiveness of the farm sector’.

The scheme contained several elements including interest rate subsidies for either productivity improvements or exceptional circumstances, assistance for re-establishment and land trading and skills enhancement.

From 1 January 1993 to 30 June 1996, a total of $604.5 million of Commonwealth and State funds was spent on the RAS program. Under RAS the Commonwealth provided 90% funding and states governments 10% for skills training. On 10 September 1996, the Minister for Primary Industries and Energy announced a review of the scheme (the McColl Review).

1. Problem
The review found that :

• Funds under the normal RAS 92 elements have reached a relatively small proportion of Australian farmers. With the exception of education and training support, the effectiveness of the RAS 92 elements is questionable.

• While short-term benefit has been delivered to businesses that received RAS interest rate subsidies for productivity improvement, no evidence was received to support claims that these subsidies have accelerated the implementation of profitable productivity measures. It is likely that most of the productivity measures would have been undertaken without RAS support.

• Overall, the scheme has not had a significant positive impact on the adjustment process and has not met the goal of fostering the development of a profitable and competitive farm sector. RAS 92 is not appropriate to the adjustment needs of Australian agriculture in either today’s business environment or that expected in the next century. The RAS scheme officially ceased on 30 June 1998.

The Review also identified that while there is an increasing volume of information available for farmers, there are deficiencies in the extent to which farmers are able to acquire this information in a useable form and translate it into an effective framework of management decision making.

Also identified were several impediments to farmers accessing education and training to improve their management skills.

1. The role of Government in providing assistance for training and skills development.
Individual farmers have a compelling incentive to obtain skills and information to allow them to run their farming enterprise in the most profitable way.

Recent research (Kilpatrick, 1996) suggests a clear link between farm profitability and the upgrading of skills. On the basis of an analysis of Australian Bureau of Statistics (ABS) farm survey data, Kilpatrick concluded that farm businesses with agricultural qualifications in the management team or which engage in training are more profitable than other farm businesses. The study also found that farm businesses that engage in training are more likely to make changes to their practices, which improve, or are expected to improve, long-term profitability and viability. Those farms that do make these changes are more likely to be profitable than those that do not make them. (Kilpatrick, S. 1996, Change, Training and Farm Profitability, National Farmers’ Federation Research Paper, vol.10. November, Canberra).

Despite this incentive it seems that farmers ‘under participate’ in training and skills development. The role of training and skills development is of particular importance to Australian farmers who face unpredictable changes in climatic conditions, markets and volatile commodity prices.

Global climate change, driven by increases in greenhouse gas concentrations and global warming, is likely to be a major issue for the future. Climate variability has a major influence on Australian agriculture and any change in this has great potential to influence its future. The behaviour of the El Nino Southern Oscillation (ENSO) has a dominant influence on Australia’s climate.

Under the influence of ENSO, Australia’s rainfall is generally more variable than would be expected in any other world location with similar rainfall. Rainfall over most of eastern Australia, covering about half the continent, is strongly correlated with ENSO events. While ENSO is a major influence on the Australian climate, Indian Ocean dipole events are also associated with Australia’s climatic conditions although their influence appears to be chiefly in southern Australia.

A challenge to farmers may come from a potential long-term change in the ENSO patterns. Recent research has shown the pattern of ENSO events has been unusual since the early 1970s. Between then and now, a period long enough to establish a statistically valid trend, dry El Nino events have been relatively more frequent and persistent than the opposite, wet La Nina episodes.

This change in the pattern of ENSO events may indicate a change in the system influencing the Australian climate. If the trend for more frequent and persistent El Nino events proves to be a long-term trend, then more frequent and persistent dry periods in Australia (principally in the northeast of Australia) can be expected. This in turn has significant implications for the long-term business viability of the farming systems employed in the affected areas. If these systems do not change to accommodate more frequent dry periods, escalating financial losses are likely to cause continuing demand for government assistance by farm businesses and farm families.

Farm practices, technologies and general levels of knowledge in the community are continually changing and becoming more complex and sophisticated. However, many farmers have traditionally concentrated on improving their technical and production practices to meet these challenges. To meet the challenges of the future, farmers will need a broad spectrum of skills including those for technical, financial marketing and human resource management.

Factors impacting on the ability and desire of farmers to participate in training and skills development include:

• undervaluing by farmers of training, as the benefits of training may not be immediately apparent.
• low self-confidence resulting in non-participation in training activities, sometimes stemming from limited formal education and poor literacy skills.
• inflexible delivery mechanisms, eg activities run at unsuitable times such as peak seasonal periods or in distant major centres.
• lack of time to attend training/development activities.
• absence of a structured approach by many farmers to determining their individual training needs; and
• difficulty in researching a sometimes confusing and daunting training market and identifying suitable activities and/or providers.

3. Objectives
The general objectives of government action are to drive cultural change towards the benefits on continuous learning. It will enhance the capacity of farmers to identify, acquire and apply the management skills, information and practices they need. In particular to:

1. increase farmer participation in learning activities which will enhance the profitability, sustainability and competitiveness of their business;

2. develop greater acceptance of the benefit of continuous learning and skills development, and its relevance to the changing management needs of a competitive farm sector, and

3. enhance farmer’s capacity to identify and access appropriate learning activities, and over time, influence more flexible delivery of such activities.

4. Pre-existing policy authority

In September 1997 the Government launched the Agriculture – Advancing Australia (AAA) package for reform of the rural industry. The AAA package has four major elements.

1) To help individual farm businesses profit from change
• by helping farmers build on their business management knowledge and experience (Farm Business Improvement Program – FarmBis);
• with improved financial tools, such as the new Farm Management Deposits Scheme, to enhance farmer’s capacity to manage the significant climatic and price risks in farming.
2) To ensure the farm sector has access to an adequate welfare safety net
• through a new income support payment for farm families experiencing severe financial hardship (Farm Family Restart Scheme); and
• by extending welfare arrangements available to farmers in severe drought to other equally exceptional circumstances (Exceptional Circumstances)
3) To provide incentives for ongoing farm adjustment
• by encouraging farmers without a future in the industry to leave it (Farm Family Restart Scheme); and
• by encouraging farmers of retirement age to transfer ownership of the business to a younger generation of their family (Retirement Assistance for Farmers Scheme)
4) To encourage social and economic development in rural areas
• with funding to assist communities develop strategic regional plans (Regional Plan); and
• by introducing a flexible grants program to assist communities to use their assets and talents to meet their challenges and build better futures (Rural Communities Program).

Total funding for the AAA package over the implementation period of three years totals $500 million, allocated as follows:

- $200m (May 1997 budget) for an integrated rural policy package (the AAA initiative)
- $190m (September 1997) additional to the above for the AAA policy
- $ 70m (May 1998) for rural adjustment
- $ 40m (post-Budget) for extension of the Drought Relief Payment.

5. Options

Three broad delivery options were considered by the McColl Review for the FarmBis program

1. management by the States
2. competitive delivery through the States
3. direct administration by the Commonwealth with separation of purchaser and provider, and competitive tendering.

With option one, the States could manage the schemes under either partnership agreements or contracts between the Commonwealth and each State, which would be similar to RAS 92 management arrangements. This approach would have the benefit of using existing delivery infrastructures, working through State-based agencies that are closer to the workface and related State-based programs. It could also be possible to add State funds to Commonwealth resources.

The disadvantages of this option are:

. the model is not consistent with the principle of separating funding from service provision
. it does not provide for competition in service provision
. it provides little choice to beneficiaries
. it has the potential to produce diverging national outcomes if State objectives differ from those of the Commonwealth, noting that some State agencies have shown a propensity to subsume Commonwealth programs into State programs with somewhat different objectives.

Option two, competitive delivery through the States, would involve operating the schemes through either agreements or contracts between the Commonwealth and each State, management by the States, but with a requirement for competitive delivery arrangements or tendering for service delivery. The benefits of such an approach would include -

. the separation of funding from service delivery
. involving the States and drawing on the benefit of their proximity to the client group
. the possibility of the States contributing additional funds to the programs

The disadvantages of such an approach include –

. the potential for divergent Commonwealth and State objectives
. the lack of critical mass in smaller States for competitive service provision.

The third option is that of direct administration by the Commonwealth with separation of purchaser and provider and competitive tenders. The features of this option are –

. a Commonwealth agency such as the Department of Agriculture, Fisheries and Forestry would be the service purchaser
. the provision of services to achieve the specified objectives and outcomes of the programs would be determined by competitive tender
. delivery of the tendered services could be by State agencies (including RAS Agencies/TAFE etc), private organisations, rural community groups and farmer organisations. Where elements are to be delivered to individual farmers, tenders would be called for the delivery of the whole element
. decisions on objectives, strategies, outcomes and tenders for the program would rest formally with the Minister for Agriculture, Fisheries and Forestry
. service delivery would be subject to reporting and accountability arrangements administered by the Commonwealth.

This approach is –

. more consistent with the program management principles (for details refer No.9, page 9)
. provides a basis for
- greater flexibility in service delivery
- a more effective basis for creating links with other national rural programs. Lack of such links is an issue upon which the Commonwealth has received considerable criticism in the past.

The disadvantages of such an approach are that –
. linkages with State programs may be more difficult to establish
. significant State funding contributions maybe more difficult to obtain.

All of the options above were discussed when the service delivery arrangements for the FarmBis program were being considered. In the final decision a fourth option was developed that encompassed all of the advantages and disadvantages of the approaches outlined in the McColl Review. That option is -

. a modified service provider model where the States/Territory administer the program under contract to the Commonwealth.

This option allows the Minister to ensure money is effectively matched on a 50:50 basis with the States, requiring State governments to fund their portion under a signed agreement with the Commonwealth. It also allows for service providers to consult with the client groups to allow for flexibility in delivery owing to seasonal demands on farmers’ time, distance travelled, mode of learning etc.

One of the considerations when agreeing on this option was to minimise the administrative costs, which were high under the previous RAS Scheme. By using the modified service provider model, States are committed to putting in 50% of the costs of program funds, but administration costs are capped to 10% of overall State allocation, under each agreement.

If a tendering process was used, the successful tenderer may have reduced administrative costs, but additional funds for program delivery would not have been available.

6. Impact analysis section
Impacts common to all four delivery options are as follows:

Business – (farmers)
The target group for FarmBis support is principally the farm management team, comprising principal operator, spouse, family members, partners, staff employed in a management capacity and farm contractors whose operational support is integral to improving business management on the farm. In addition, there is scope for grants to bodies for the development of pilot initiatives and other activities, which relate to the farm.

Eligible participants are defined as:

‘farmer’ – a person who contributes a majority part of their labour to the farm business enterprise and derives a majority part of their income from farming; and
‘participant’ – a farmer or a spouse or member of the family of a farmer, or staff employed in a management capacity in the farm business enterprise, or a contractor whose operational support is integral to improving business management on the farm.

All members of the target group will be eligible to apply for support, regardless of income, farm size, profitability etc.

The program participants will be required to contribute to the cost of the training and development opportunities in which they participate: 20% for initial and basic training, 50% of the cost of more advanced courses, institution based training and advanced business planning and analysis activities. The contribution ratio may vary depending on the activity in each State. Grants, which are provided to other groups for the development of pilot initiatives and/or facilitation, may cover up to 100% of the cost of the approved activity.

The exact cost to farm businesses will depend on the nature, type and amount of training and development activities, which the members undertake.

Given that some form of education and training will generate benefits that will largely be captured by the recipient, some grants may be paid to farmers (or other eligible participants) who otherwise would have undertaken the course or sought the advice at their own expense.
Training Providers
Small business enterprises would be a significant beneficiary from FarmBis funding. At the State level, where the educational and training programs are to be developed, many independent training and education businesses, in regional areas, would be directly involved in designing, delivering and implementing the various programs.

7. Government
The FarmBis component of the AAA funding is $41.848m. From 1992 to 1996 RAS amounts spent on skills enhancement and training totalled $21.653m. Unlike RAS funding, FarmBis funding includes all administrative costs.

The Commonwealth administrative contribution has been capped at 10% of the allocated funding to States. The States have also capped their contribution to FarmBis with 10% for administrative costs. With the National component, federal administration is 10% of the allocation, which amounts to $5.1m over three years

For its part the Commonwealth is proposing to fund 100%:

• the establishment and maintenance of the Commonwealth database;
• a yearly follow up survey of program participants and major stakeholders which will be conducted by an independent consultant. The questions to be asked in the annual follow up survey will be developed in consultation with the major stakeholders;
• a AAA survey in July 98 and 99/2000.
• 50% of the remainder of the evaluation strategy (would be funded by the Commonwealth as part of administrative costs).

8. Consumers
The FarmBis program will not directly impact on business. It is anticipated that farmers who benefit from improving business and marketing skills will be more customers focussed and produce what the market demands at competitive prices and contribute to higher national income. A more competitive and self reliant farm sector will benefit the country as a whole through higher performance and ultimately higher national income.

9. Impact analysis of delivery options
The four delivery options were assessed against the following key program management principles, based on the best practice methods of delivering programs proposed by the National Committee of Audit (1996).

Key program management principles

• Objectives should be clearly specified, focused on outcomes and amenable to monitoring
• Conflicts between objectives of different programs should be minimised
• Programs should be designed with clear lines of management accountability
• Programs should avoid adverse effects on incentives for self help.
• Roles and responsibilities of all parties should be clearly specified
• Cost sharing arrangements commensurate with benefits and responsibilities should be established
• Program funding should be separate from the actual delivery of the services involved and responsibility for setting the rules and desired outcomes, where possible, should be separate from service provision
• Service delivery should be as competitive as possible and service suppliers whether public or private, should be required to tender or compete for the right to deliver government services
• Where possible, program beneficiaries should be given choice
• Delivery and implementation mechanisms should be efficient and effective
• Sound performance monitoring frameworks against desired outcomes should be established with provision for regular evaluation.

10. State management of the program
The States will manage the program under Commonwealth/State bilateral agreements. The agreement specifies objectives, outcomes, performance indicators and the mechanisms through which the objectives are to be achieved. The State could choose whether it would deliver the program through either a single agency or through existing infrastructure (eg. PMP).

- Under FarmBis the utilisation by participants of existing State, industry and Property Management Planning (PMP) campaign programs to improve their whole farm planning skills will be promoted but existing PMP activities, including the introductory core series modules, will not be funded under FarmBis.

- Where participants have undertaken the core PMP modules, FarmBis will recognise that they have established their learning needs so that they may under FarmBis, either as a group or individually, undertake additional or advanced learning activities to meet their needs.

This approach will have the benefit of:

. using existing delivery infrastructures
. the advantage of working through State-based agencies who are closer to the work face and related State-based programs; and
. State funds generally adding to Commonwealth resources under the 50:50 partnership agreements.

Disadvantages are that:

. the model is not consistent with the principle of separating funding from service provision, although several of the States have structures on the Purchaser Provider model
. it may not provide for competition in service provision
. diverging national outcomes if State objectives differ from those of the Commonwealth, noting that some State agencies have shown a propensity to subsume Commonwealth programs into State programs with somewhat different objectives

- However, monitoring and design of the programs will attempt to minimise this.

Competitive delivery through the States

This option involves operating the schemes through agreements between the Commonwealth and each State, management by the States, but with a requirement for competitive delivery arrangements for service delivery.

While primarily providing for State administration of the schemes, this option would involve a greater Commonwealth role in not only specifying the objectives, outcomes, performance indicators and mechanisms to achieve the objectives, but also in service delivery arrangements. Delivery principles within the State/Commonwealth agreements are itemised below.

Delivery Principles

The Commonwealth and the State recognise that the following principles are important and appropriate and will be applied when providing education and training support under FarmBis:

(a) the education and training must be flexible and innovative and meet participants’ needs;

(b) the use of adult learning principles is encouraged;

(c) education and training must be delivered on a competitive basis, seeking the best value for money and best available provider (whether public or private) and promoting, over time, best practice;

(d) development of a planned approach to learning needs is encouraged so that FarmBis may employ a strategy of funding identified activities;

(e) participants in learning activities under FarmBis are expected to contribute towards the cost of providing those activities and so demonstrate their commitment to them/

(f) in general, FarmBis will make short and medium term contributions to farm sector training and development activities but will not provide support for ongoing secondary and tertiary education unless the Minister otherwise agrees;

(g) over time, some activities may be linked to industry competency standards to permit recognition of achievement;

(h) the development of new courses and materials will not be funded under FarmBis unless there is a clear failure of the relevant market to provide them; and

(i) under FarmBis links to the range of state and industry programs and other existing education and training activities will be established, using existing infrastructure wherever possible and not duplicating the programs or activities or their delivery mechanisms.

The State must at all times be able to demonstrate that FarmBis funds are not simply replacing existing State funding under other programs.

11. Modified service provider model
The principles of contestability of service provision and choice by beneficiaries are critical to effective service provision. Consideration needs to be given to the major State responsibility in the area of rural adjustment and the existence of related State programs.

After extensive consultation (see Attachments A and B) the option of direct administration by the Commonwealth with separation of purchaser and provider and competitive tenders, was not adopted. As the Commonwealth was seeking matching State funds, with the leverage of 50:50 funding, and the requirement for the States to administer the program to obtain their objectives, the following structure was agreed to by the (then) Minister.

The FarmBis program is designed to clearly differentiate between the roles and functions of Funder, Purchaser and Provider in a transparent and accountable way. (See example for South Australia at Attachment C). The funding of the program itself is a partnership by the State and Commonwealth Governments, acknowledging that the farming community will also be contributing to the cost of the training activities.

The responsibility for policy and strategic direction will be the State Steering Committee, made up predominantly of community/industry representatives.

12. The Program Structure would consist of two components: a National component and a State based component.

• National Component to fund:
- strategic national initiatives and priorities, eg. Rural leadership
- industry partnership projects; and
- action research on innovative programs (pilot activities) and delivery mechanisms.

The National Component would focus on national priorities, promotion of best practise in business management and strategic planning, and the encouragement of a learning culture. It would incorporate projects that extend beyond state borders, and therefore be unwieldy to administer on an individual basis through the States; eg benchmarking of producers regionally and national in a rural industry (and against world best practice).
• State Based Component to focus on :

- support for farmers to identify and prioritise their training needs; and
- support to undertake targeted learning activities such as individual /group activities and professional advice.

The State component would also focus on direct support to farmers to identify, access and participate in learning activities to meet their needs. It would also meet the costs of State FarmBis coordinators.

13. Consultation Process
During October, November and December of 1997, meetings were held in all States and Territories with stakeholders. Individual meetings throughout Australia were held with individual farmers, farmer organisations and advisory bodies, training and education providers, industry organisations, and special interest groups such as the Indigenous Land Council and women’s groups.

The FarmBis framework agreement was endorsed by State agriculture Ministers at the February 1998 meeting of the Agriculture Resource Management Council of Australia and New Zealand (ARMCANZ).

With the review of RAS, the McColl committee consulted widely through advertisements in major capital city and key rural newspapers calling for written submissions. A total of 144 submissions were received. In addition, the Committee Chair wrote to a range of organisations in the farm, government, banking, research, marketing and education sectors inviting submissions. Because the Committee believed it important to provide people with the opportunity to discuss issues relation to the review, informal public hearings were held in State and Territory capitals and a range of key regional centres in each of the States.

For a summary of views and comments elicited from the main affected parties, that is the States and stakeholder groups, refer to Attachments A and B.

14. Conclusion and recommended option
The consultation process concluded that the concept of partnerships was regarded as important to the rural sector in general, but more specifically to the FarmBis program. Partnerships were identified with industry organisations, local farmer groups, community groups, State agencies and providers.

Flexibility in the program was also considered important. Most participants identified a need for the program to be farmer or customer driven, just allow various entry points and must be flexible in terms of accreditation versus non-accreditation for courses. There was also a recognised need for innovation in relation to the delivery of programs (language, remote locations, age and gender issues were all raised as points to consider).

The option adopted (refer 5. Options) – a modified service provider model where the States/Territory administer the program under contract to the Commonwealth - was the result of community opinion. It also suited the need for the Commonwealth to get maximum leverage of dollars from the States. The (then) Minister for Primary Industries and Energy, made the choice of 50:50 funds.

15. Implementation and Review
The initiative shall be in force from the date States sign their individual Agreement with the Federal Government until 30 June 2001.

By agreement with the States, transitory arrangements have been operating, whereby applications to undertake training were accepted from 1 July to 31 August under the RAS Guidelines for eligibility. Funding however was under the FarmBis guidelines, which require the States to provide 50/50 funding, unlike RAS where the formula was 90/10. Since early August all training nominations have been on hold until the legislation has the approval of Parliament.

FarmBis will contribute a more integrated rural training delivery framework through the development of partnerships with key stakeholders and the use of existing networks in rural communities.

FarmBis would be delivered largely through these partnerships, both formal and informal, with local farmer groups, industry organisations, community groups, State agencies and providers utilising existing networks to facilitate participation in learning activities driven by farmer and industry needs. Delivery of FarmBis would utilise these existing structures and programs wherever possible. This could include establishing learning priorities where appropriate, further industry specific initiatives and support innovative delivery activities.

16. Notification
The availability of the training and development opportunities provided by the new program will be publicised through a range of avenues, including the States, other Commonwealth and DAFF programs (ie. the Property Management Planning program, rural community programs), and the media.

17. Evaluation
The evaluation strategy will be used to monitor and evaluate the effectiveness, efficiency, and appropriateness of the FarmBis program and its implementation strategies and outputs. The outcomes and performance indicators have been designed to assess whether the program objectives have been achieved.

At the end of the program, examining the relevance of the program objectives against future political, economic, or social circumstances, including any policy changes will assess the appropriateness of the program. The data collected in analysing the effectiveness and efficiency of the program would also serve in assessing its appropriateness.

Method of Data Collection

To assist with the collection of performance information it is proposed that a Commonwealth database be developed. Information would be collected on individual participants via questions on an application form and course review sheet. The questions will be subjected to focus group testing prior to use in all States.

The information would be collated by the State on a quarterly or annual basis, and sent in a spreadsheet format to the Commonwealth to be entered into the database. The Commonwealth would then provide quarterly reports to the States with an analysis of the results.

Additional reports will be obtained on an annual basis from the State Planning Group, Program Administrators, State Coordinators, and Industry Groups, seeking their opinion as to whether the specified outcomes have been achieved.

A review and evaluation of the State’s performance will be conducted by the Commonwealth in conjunction with the State and in consultation with the State Planning Group at the end of each financial year. As part of the review, States will develop performance targets for the following year/s based on the previous year’s results. Agreement on the performance targets will be generally subject to the approval of Minister/s and in consultation with the State Planning Groups.

The Commonwealth contribution in funding the database and various surveys acknowledges that the evaluation may be of more relevance to the Commonwealth than some of the other Stakeholders. The Commonwealth has an interest in assessing the program outcomes and processes in meeting its own evaluation regimes and for the evaluation of the overall AAA package.

NOTES ON CLAUSES

Clause 1 – Short title

This Clause gives a short title by which the Act may be cited.

Clause 2 – Commencement

This Clause indicates when the Act will commence. The Act will commence on receiving Royal Assent, except in the instances of Items 11 and 12, which have effect subject to the commencement of the Public Service Act 1998.

Clause 3 – Schedules

This Clause provides that the Acts referred to in the Schedules are amended as set out in the Schedules and the other items in the Schedules have effect according to their terms.

Schedule 1: Amendment of the Rural Adjustment Act 1992

Item 1: Title

This item alters the title of the Act to be an Act relating to rural adjustment.

Item 2: Section 4

This item inserts a definition of the Farm Business Improvement Program

Item 3: Section 4

This item clarifies that the State component of the Rural Adjustment Scheme operates under Part 3 of the Act.

Item 4: Part 3 (heading)

This item repeals the heading of Part 3 and substitutes a new heading.

Item 5: Subsections 20A(1) and (2)

This item exempts the Farm Business Improvement Program from S.20A(1) and 20A(2), which subsections are relevant to the Rural Adjustment Scheme.

Item 6: Section 20E

This item replaces words in S21(1) to indicate this Division relates to rural adjustment other than the Farm Business Improvement Program.

Item 7: Subsection 21(1)

This item replaces words in S.21(1) to indicate this Division relates to rural adjustment other than the Farm Business Improvement Program.

Item 8: Part 4 (heading)

This item repeals the heading and substitutes a new heading.

Item 9: Part 4 – The Farm Business Improvement Program

This item inserts Part 4 concerning the Farm Business Improvement Program.

Division 1 – Agreements with persons other than States

Subsection 22AA(1)

This subsection provides that the Minister for Agriculture, Fisheries and Forestry may enter into a written agreement with a person other than a State for the purpose of making grants for purposes relating to the Farm Business Improvement Program.

Subsection 22AA(2)

This subsection provides that an agreement under this section must include certain provisions as listed in this section relevant to monitoring and evaluation.

Subsection 22AA(3)

This subsection provides that payments under this section are to be paid from money appropriated by Parliament for the purpose.

Section 22AB

This section provides that the Minister for Agriculture, Fisheries and Forestry may delegate all or any of his/her powers under Section 22AA.

Section 22AC

This section provides that monies payable or repayable to the Commonwealth under S.22AA are a debt due by the person to the Commonwealth. Recovery mechanisms will be included in the agreements.

Division 2 – Agreements with the States

Section 22AD

This section provides that the Minister for Agriculture, Fisheries and Forestry may enter into a written agreement with a State for the purpose of making grants for purposes relating to the Farm Business Improvement Program.

Subsection 22AE(1)

This subsection provides that the Commonwealth may provide financial assistance to a State on the terms and conditions contained in the agreement and this Division.

Subsection 22AE(2)

This subsection provides that financial assistance under the Farm Business Improvement Program is to be provided on the basis that the Commonwealth contributes 50 per cent and the State contributes 50 per cent, subject to subsection (3).

Subsection 22AE(3)

This subsection provides that the Commonwealth and the State may jointly decide that subsection (2) does not apply.

Subsection 22AE(4)

This subsection provides that payments under this section are to be paid from money appropriated by Parliament for the purpose.

Subsection 22AF(1)

This subsection provides that an agreement under this Part must include certain provisions as listed in this section relevant to monitoring and evaluation.

Subsection 22AF(2)

This subsection provides that the Minister for Agriculture, Fisheries and Forestry may delegate all or any of his/her powers under Subsection 22AF(1).

Subsection 22AF(3)

This subsection provides that the generality of section 22AD or 22AE is not limited.

Section 22AG

This section provides that an amount repayable by a State to the Commonwealth under an agreement under this Division is a debt due by the State to the Commonwealth.

Item 10: Transitional – certain agreements between the Commonwealth and the States

This item provides that after the commencement of this item any agreements entered into by the Commonwealth and a State before the commencement of this item are to be taken to have been made under Section 22AD.

Item 11: Section 22AB

This item provides that after the commencement of the Public Service Act 1998 amendments in this item will apply to Section 22AB.

Item 12: Subsection 22AF(2)

This item provides that after the commencement of the Public Service Act 1998 amendments in this item will apply to Section 22AF(2).

Summary of Consultations with States on Proposed FarmBis Proposal
held 27 January to 3 February 1998

FARMBIS
SUMMARY OF COMMENTS FROM STAKEHOLDERS

INTRODUCTION

The overall objective of the FarmBis program has been established by the Minister for Primary Industries and Energy, in the ‘Agriculture - Advancing Australia’ policy package. The overarching objective stated “FarmBis will provide a framework for promoting a positive approach to change and build on the farm sector’s culture of continuous improvement to help farmers improve productivity, profitability and sustainability of their business” with the aim of the program to provide “ help for individual farm businesses to profit from change by building on their business management skills”.

During October and November the FarmBis Policy and Support Unit met with a number of individuals and groups to discuss the operation of the FarmBis program. A full list of participants at these meetings is attached (see Attachment 1).

Comments were invited on administration, delivery and funding of the program. The FarmBis Policy and Support Unit also invited comment on programs currently in operation within each State and the role FarmBis could play in providing training and education within the rural sector. Below is a summary of these comments.

Programs currently on offer within the rural sector

. A vast majority of stakeholders considered the range of courses on offer currently within the rural sector was sufficient and provided a good coverage of the information required by farmers. Federal funds should not be allocated to the development of new course material, unless there was a strong case presented that identified a gap in training market.

. Group training activities and courses which used adult learning principles were considered to be most effective method of course delivery for the rural sector.

. Mixed views were received on the effectiveness of Property Management Planning programs. The original PMP programs operated differently in each State. Penetration of the course and acceptance by the rural sector varied between all States with good coverage in SA and Tas, mixed messages in NSW, QLD, ACT and Vic and lower uptakes in WA and NT. A more coordinated focus was now being placed on PMP and was resulting in higher levels of acceptance and a greater level of participation and satisfaction with the course.

. Industry associated and other training programs such as Top Crop, CROP, Cattle Care, etc were generally regarded as being of benefit to the sector.

Potential priorities for FarmBis

. There was general agreement to the principle of using “a local to help farmers know what’s out there for them” in relation to training programs on offer ie coordinate the activities of the program on a local or regional level. It was suggested that coordinators be drawn from existing local networks or other established mechanisms ie industry organisations. There was, in general, a concern about duplication and wastage of resources balanced against a need to have a credible and accepted point of first contact for the program.

. To make the best use of the funds a number of stakeholders suggested different methods of restricting the use of funds by individuals / groups. The idea of “giving money to everyone for any training they wanted to do” was not considered to be the best use of the funds available. One view presented in a number of ways involved the allocations of funds to those farmers / groups “who knew what they needed which is sometimes different to what they wanted” in relation to training. The concept of strategically planned training activities developed by individuals or groups was suggested as a way to overcome wasting money.

. An alternative way to see that funds were used appropriately was to target specific groups within the rural sector. Suggested target groups included the youth and women. Conflicting views were received in regard to allowing the program to target specific groups as it was considered that as soon as target groups were established, this would by default lead to placing a barrier to those outside that group.

. A large number of comments were received on the types of courses that FarmBis should fund. The overall objective for the program was aimed at business management skills however a vast majority of stakeholders commented on the lack of attraction to management courses. It was considered that farmers were more comfortable attending courses in which they could “get their hands dirty” - technical and operational courses and that these activities often provide the “hook” to get farmers interested in further training. A number of stakeholders expressed a view that management courses should cover the broadest sense of management for the property, including financial, human resource, the enterprise and sustainable resource management. This is in recognition of the farm as a whole enterprise and issues affecting any aspect of the farm will impact on the business of that farm.




Delivery
Flexible and responsive delivery of courses

. A vast majority of stakeholders commented upon the need for FarmBis to support “flexible” and “responsive” delivery of courses. Courses should be demand-driven ie from the farmers and not controlled by the provider.

Accreditation - courses and providers

. Attitudes varied greatly on the need for accreditation of courses and providers.

. Accreditation was viewed as particularly relevant to employees and those potentially exiting or transferring within the rural sector. Specialist and industry specific accredited courses would also be of particular benefit within some industry organisations.

. The TAFE system is seen to have extensive coverage in regional centres and is recognised as a provider of quality courses, although in the past it has been less responsive to the needs of the clients. It is now becoming more responsive and adaptable in terms of delivery options, running courses “where and when they are needed” rather than simply relying on in-class lessons. Some concerns were expressed in terms of the time is takes for TAFE to approve courses, commitment (time primarily but also financial) required by individuals to complete longer courses, costs associated with the establishment of accredited courses and the TAFE assessments and exams.

. The concept of competency standards was discussed by a number of stakeholders. The work being done by the Rural Training Council of Australia in relation to the development of industry agreed competency standards relating to skills required to be competent at particular levels (using the Australian Qualification Framework) was discussed as an example of this concept. Not all levels have been developed or agreed within all industry sectors. A number of courses currently on offer within TAFEs and the informal education systems do not link into the AQF and industry agreed competency standards. There seems to be some confusion within the rural sector as to what competency standards and accredited courses achieve for the individual and where the more traditional formal education system, other recognised programs and competency standards link together.

. Views were noted for non-accredited courses which were cited as being less threatening because of the non-examinable nature of courses. Such courses may be more responsive to the immediate identified needs of farmers especially in terms of delivery of courses to remote locations. There were considerable comments from individuals and groups expressing views that non-accredited courses were preferred as they were often short sharp courses and there was no need or desire to gain “a piece of paper” to show they’ve attended a course.

. Accreditation of providers enabled the delivery of courses to specified standards consistently so the quality of delivery of information is reasonably good. This is seen as of particular importance when dealing with delivery of course material using adult learning principles and the need for facilitators rather than technical experts or teachers. However there is a reliance on an additional infrastructure to ensure providers are accredited either through the education system (State or Commonwealth) or other mechanisms.

. In some State agencies current extension officers may not be accredited providers yet provide information to farmers in a format that farmers feel comfortable with. They are recognised and accepted within the farming community, a number hold higher education or tertiary qualifications relevant to the agricultural sector and are able to access farmers in remote locations.


Administration

Attitudes varied as to the agency best suited to administer the program at a State level. Currently the Rural Adjustment Authorities administer the RAS training provisions. Options for administration that were explored included :

State departments associated with primary industries

. Such departments are recognised within the rural sector and there is an existing network of officers currently providing services throughout all regions of each State / Territory.

. It was recognised that there could be a possible conflict of interest with a provider of training services being able to administer the program.

. Rural Adjustment Authorities - in some States these authorities are closely associated with State department responsible for primary industries whilst in other States, they are more closely associated with other departments (eg Treasury). Currently RAA administer RAS training grants so have established mechanisms, infrastructure and procedures for administration of funds to individuals and groups in relation to training.

. Some individuals and groups in some States expressed concerns as to the appropriateness of the RAA administering FarmBis. The RAAs involvement in rural sector training and education was not considered appropriate as they did not have the required skills or knowledge within their organisation to consider the training needs of the farming community. Concerns were also expressed in relation to difficulty in completing complex application forms, the detailed level of financial information required prior to accessing funds, inconsistent interpretation of Commonwealth guidelines and the variances between States in their interpretations, the non-transparent manner in which the application process was driven, the level of control exerted by the RAAs in determining the appropriateness of training undertaken by individuals or groups and the negative image of rural adjustment and welfare mentality associated with RAS and the RAAs compared to the more positive image of education and self reliance.


Administration Open to Tender Option

. Some industry and formal education providers have suggested a viable option for the administration of the program would be to open the process to tender. Some groups expressed an interest in undertaking this role.

. It was recognised that there could be a possible conflict of interest with a provider of training services being able to administer the program.

. There would be possible negative perceptions within the rural sector of a recognised group (industry or provider) administering such a program that eligibility to program funds would be restricted or conditional upon some additional requirements (membership, industry affiliation, etc).


Eligibility to access the FarmBis program

. A majority of stakeholders considered the program should be open to all members within the farm management team.

. There were a number of comments made by stakeholders in relation to extending eligibility to include employees and contractors on the farm. This was seen as important in relation to aiming for a higher educational level within the rural sector and aiming to encourage possible leaders or managers of the future. Others considered employees and contractors were not ideal candidates as, in most cases, they have little opportunity to influence the decisions of management or the operation of the enterprise .


Funds

. A vast majority of stakeholders indicated contributions should be sought from individual participants, industry organisations, States and the Commonwealth. By involving individuals and industry in the funding loop, this would allowed individuals to value the training they undertook more and allow industry and groups to have ownership and control over the future direction of their training needs.

. It was suggested that contributions from individuals should be limited, with suggestions ranging from a set percentage of the course fees though to amounts being dependent upon the private value / public good of the course. Some stakeholders held the view that in some specific circumstances (ie economic hardship) individuals may find it difficult to pay up-front course fees.

. It was suggested that contributions from individuals in remote locations should be considered in terms of total costs incurred including travel, accommodation and course fees.

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