Farm Management Deposits changes will give farmers chance to help themselves, once they have cash to spareAnna Vidot, Thursday February 11, 2016 - 07:44 EDT
The Federal Government has introduced legislation to overhaul the Farm Management Deposits scheme, which it says will help farmers to help themselves.
The Agriculture White Paper proposed three significant changes to the scheme, including doubling the cap on deposits from $400,000 to $800,000, and allowing farmers to access their funds early in times of drought or natural disaster, without losing their tax concessions.
The changes would also mean that, for the first time, farmers could use Farm Management Deposits to offset their interest on other loans.
However, the banks will have to offer that option before farmers can take advantage of it, and Agriculture Minister Barnaby Joyce has urged lenders to get on board as soon as possible.
"This is building resilience into the farming community so they put money aside for themselves for when droughts come, for when things get tough," Mr Joyce said.
"I know, as an accountant, that one of the major things that you must do to survive on the land is to get better equity.
"I call on the banks to make sure that they move very quickly to set up this offset capacity.
"We have made the approval possible at a federal level and this legislation is coming in, and we want the banks to walk up to the mark so that they can be working with us in building resilience in the farming sector."
Brett Smith, chief executive of Rural Business Support, which runs the rural financial counselling service in South Australia and the Northern Territory, said the changes had the potential to make a huge difference for farmers in the long term.
"We've seen this scheme used here in South Australia in some of the areas that have been drought-affected and their incomes have been nil," Mr Smith said.
"This will be welcomed. Any initiative in this space is going to help because [farming] is a risky business."
But Mr Smith warned that for farmers already in drought across many parts of Australia who did not have a spare $800,000 to set aside, the change would not make much difference.
The changes are due to come into effect on July 1.
© ABC 2016
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