I am pleased to announce up to $444.4 million for a comprehensive range of measures to help secure a sustainable future for the nation's sugar industry.
The Australian Government's Sugar Industry Reform Programme 2004 is a package of measures aimed at helping the industry through transition to restructure, diversify and create a long term certainty for the Australian sugar industry and the regional communities which depend on it.
The programme recognises that industry and government must work in partnership to achieve real reform and to ensure the future for the Australian sugar industry.
The measures included in the Sugar Industry Reform Programme 2004 for the sugar industries in Queensland, New South Wales and Western Australia are a direct result of extensive consultation with industry representatives.
The Prime Minister and other senior ministers travelled to sugar regions in March to meet cane farmers and their families, millers and harvesters to hear first hand of the hardship facing hardworking Australians in the sugar industry and their communities and regions.
The Sugar Industry Reform Programme 2004 is a package of measures that recognises the immediate difficulties caused by a corrupt world market and provides assistance to help the industry through a period of transition, rationalisation and diversification.
The Australian Government recognises that the industry needs a transition period to consider the most appropriate way forward for orderly reform. The Australian Government's $444.4 million Sugar Industry Reform Programme 2004 includes Sustainability Grants to millers and growers of up to $146 million to help them through the current financial crisis so that they can take the necessary steps to reform and adjust.
The Australian Government will pay the sustainability grant in two instalments to all operating growers and mills, with the first instalment planned for June 2004. Industry groups will be asked to sign up to a Statement of Intent on behalf of the industry committing to achieving real reform and restructuring before receiving the first Sustainability Grant payments.
The Sugar Industry Reform Programme 2004 will provide generous re-establishment grants for those farmers who chose to leave the industry and re-establish a life outside sugar. For those farmers who chose to leave the industry in 2004-05 a re-establishment grant of up to $100,000 for growers and $50,000 for harvesters will be provided. Lesser amounts for growers will be provided in the following 2 years reflecting the commitment to early reform and adjustment.
In the Sugar Industry Reform Programme 2004 the Howard Government has responded to the calls from young and older farmers alike seeking assistance with inter-generational transfer of the family farm. The Howard Government will legislate to give eligible growers a three year window of opportunity to gift their sugarcane property to their children and apply for the age pension without the normal gifting rules being applied.
The programme also includes $75 million for competitive regional and community projects to assist the industry to restructure, revitalise and diversify - including assistance for rationalisation of transport and harvesting systems; investment into alternative uses for sugarcane; diversification into alternative crops and other income streams such as cogeneration, ethanol and other new products; and cane farm aggregation.
A further $40 million will be provided for growers to restructure and improve on-farm operations and efficiency, and $27 million for business planning, counselling and re-training assistance.
These measures are in addition to the $21 million I announced in March for income support and business planning for families in need.
They are also based on the understanding that industry is genuinely committed to timely reform in response to national and regional challenges, opportunities and priorities. Industry's unity and leadership has been welcomed in the consultation phase and its continuation will be critical to the industry's successful transition.
In this regard, and to help lead the reform process, the Australian Government will appoint a high level Industry Oversight Group to help guide reform priorities, develop a strategic industry vision and align regional plans with the vision. The Industry Oversight Group will be assisted by the work of regional advisory groups who will develop regional plans to help achieve needed changes and ensure the industry's long-term sustainability.
The Australian Government's comprehensive package aims to secure a strong future for the industry, its communities and regional economies.
Details on the Sugar Industry Reform Program 2004 are attached.
29 April 2004
Measures in the Sugar Industry Reform Programme 2004
Overview
The Australian Government's Sugar Industry Reform Programme 2004 recognises the continuing importance of the sugar industry to rural and regional Australia.
The Government has agreed to provide a comprehensive range of measures of up to $444 million to help the industry reform and assist individual cane farmers and their families in need.
The package recognises that there has to be a strong commitment by industry to reform and restructuring.
The industry has undertaken to develop and implement genuine, realistic and regionally based reforms that strongly reflect local priorities, to help achieve the needed changes and ensure the industry's long-term sustainability.
Sustainability Grant
The Australian Government will provide a one-off Sustainability Grant of up to $146 million, in recognition of the industry's immediate difficulties and to sustain growers and millers through a transition phase.
Paid in two instalments, peak industry groups will be required to sign up to a 'statement of intent' on behalf of the industry to undertake reform before receiving the first Sustainability Grant payment.
Payment of the second instalment will be dependent upon satisfactory progress with industry reform.
Income Support
In order to help farming families most in need, the Australian Government announced in March this year that it is providing up to 12 months income support (to 1 March 2005), equivalent to the Newstart allowance (which excludes means testing of on-farm assets), to those growers and harvesters in financial hardship.
Cost, including Centrelink administration, is up to $21 million over two financial years.
Business Planning (growers and harvesters)
Up to $2,500 is already available for growers and harvesters receiving income support to develop and implement business plans, to ensure they fully assess their situation and can better position their operation for the future or consider alternatives outside the industry.
Business planning assistance has also been extended to growers and harvesters not receiving income support, who will now be eligible to obtain up to $1,500 to develop and implement business plans.
Cost, including administration, is up to $14 million over three years.
Business Planning (mills)
The Australian Government will provide up to $100,000 to eligible cooperative and single site mills for a business situation analysis and to identify an appropriate strategy to improve their financial position.
Cost is up to $1.2 million over twelve months.
Re-establishment Grants
Generous one off grants are available to growers and harvesters choosing to leave the sugar industry (whether to engage in other agricultural activities or leave agriculture altogether).
A sliding scale of assistance will be offered to growers with $100,000 available in the first year (until 30 June 2005), $75,000 if taken in 2005-06 and $50,000 if taken in 2006-07.
For "sole" harvesters (not also involved in sugar cane production), one-off grants of up to $50,000 will be available for three years.
Cost, including Centrelink administration, is up to $96 million over three years.
Retraining
The Australian Government will provide retraining support to those whose employment is affected by reform of the sugar industry which may displace some growers, harvesters, mill workers and other participants from the industry.
This assistance will be delivered through a range of programmes administered by the Departments of Employment and Workplace Relations, Education, Science and Training, and Agriculture, Fisheries and Forestry.
Existing programmes in sugar regions will receive extra funding over three years.
Cost, including administration, is up to $7 million.
Grower Restructuring Grants
The Australian Government will provide up to $39 million in Grower Restructuring Grants at the individual farm level to those growers remaining in the industry to improve on-farm efficiencies, including:
- improving farm management practices - enhancing productivity and reducing cost of production - engaging in alternative business structures - assisting in diversifying the enterprise base
The Grants will be paid over two years at a rate of $75 per hectare under cane (capped at $15,000, or $7,500 an instalment).
Before accessing restructuring grants, growers will be required to undertake Business Planning.
Cost, including Centrelink administration, is up to $40 million.
Crisis Counselling
The Australian Government will provide additional funding over four years for crisis counselling services in sugar growing regions to ameliorate the effect of the sugar industry's downturn and its effect on farming families.
The services will be delivered through the established Commonwealth Financial Counselling and Family Relationships Services programs.
Cost is up to $5 million over four years.
Intergenerational Transfer
To ensure that cane farms can be more readily handed from one generation to the next, the Australian Government will introduce a Intergenerational Transfer scheme giving growers a three year window of opportunity from normal gifting provisions that apply under the age pension.
This will enable eligible growers to seek access to the age pension without the gifted farm being included in the normal asset test.
Cost over the forward estimates period is up to $23 million, including administration.
Industry Oversight Group
The Minister for Agriculture, Fisheries and Forestry will appoint an Industry Oversight Group to oversee progress on the implementation of sugar industry reform, including refining reform priorities, developing a strategic industry vision and aligning regional plans with the industry vision.
The Industry Oversight Group will comprise five members, an independent chair, nominees from the growing and milling sectors, and two independent nominees with sound commercial sector experience most likely at Board level.
Cost of the Industry Oversight Group and the Regional Advisory Groups is up to $8 million over four years.
Regional Advisory Groups
In order to further drive local reforms, the Australian Government will appoint Regional Advisory Groups consisting of local sugar industry and community representatives.
These groups will be responsible for identifying the local industry's key challenges and the most appropriate solutions.
Regional and Community Projects
The Australian Government will provide up to $75 million over three years for Regional and Community Project initiatives to assist in implementing the reform plans by the Oversight and Regional groups.
The assistance will help provide regionally based, targeted projects, with projects being determined on a competitive basis consistent with improving the efficiency and viability of the industry and its regions.
For example, funding will be available for projects to pursue options for diversification and alternative uses for cane, such as ethanol and biofuels, co-generation and bio-plastics.
SUGAR INDUSTRY REFORM PROGRAM 2004 - Costings
Measure Name and duration Approx cost (up to $million) Sustainability Grant (12 months) 146 Income Support (12 months) (a) 21 Business Planning - Growers and Harvesters (3 years) (a) 14 Business Planning - Mills (12 months) 1 Re-establishment grants (3 years) (a) 96 Retraining (3 years) 7 Grower Restructuring Grants (3 years) (a) 40 Crisis Counselling (4 years) 5 Intergenerational Transfer (a) 23 Industry Oversight Group, Regional Advisory Groups (4 years) 8 Regional and Community Projects (3 years) 75 Departmental Expenses (4 years) 8 TOTAL 444 (a) includes Centrelink Administration