Australian Fairpay Commission

The Australian Fair Pay Commission (Commission) has granted a deferral of Wage-Setting Decision 3/2007 for farm businesses most severely affected by drought.

The Commission has determined that farm businesses in receipt of an Exceptional Circumstances Interest Rate Subsidy (ECIRS) are most likely to suffer detriment from increases in labour costs at this time, resulting in job losses.
The deferral of Wage-Setting Decision 3/2007 applies for a maximum of 12 months or until a farm business ceases to qualify for ECIRS, whichever comes first.

Farm businesses that qualify for this deferral will be required to pay the 2007 increase within 12 months, in addition to any minimum wage increases subsequently awarded by the Commission.[1]

The granting of this deferral does not preclude these farm businesses from paying the 2007 minimum wage increase.

This deferral applies only to classification minimum wages above the standard Federal Minimum Wage. It does not apply to the standard Federal Minimum Wage itself.

Where a farm employee’s wage would fall below the standard Federal Minimum Wage as a result of the deferral, then the deferral does not apply.

Impact of the drought

In seasonally adjusted terms, real agricultural income fell in the December quarter 2006 and the March quarter 2007, to levels not seen for more than 11 years.

The Australian Bureau of Agricultural and Resource Economics (ABARE) predicts the average cash income per farm for all broadacre industries will fall to its lowest level since the commencement of the surveys 29 years ago.

In 2006-07, the average loss per farm for all broadacre industries is expected to be $59 800. This is the largest average loss in the history of the ABARE surveys.

The Commission’s view is that the financial viability of farm businesses is critical to sustaining jobs in the rural sector into the future. The Commission recognises that even minor cost increases for farm businesses in Exceptional Circumstances areas currently in receipt of drought assistance may increase financial strain on these businesses resulting in job losses.

Which farm businesses qualify for a deferral of Wage-Setting Decision 3/2007?

Farm businesses eligible to defer Wage-Setting Decision 3/2007 must:

• be in receipt of ECIRS;

• employ workers in an Exceptional Circumstances declared area, as declared by the Federal Minister for Agriculture, Fisheries and Forestry; and
• employ workers covered by the Pay Scales specified at the end of this fact sheet [2]

            - this deferral does not apply to employers and employees covered by transitional awards.

What is an Exceptional Circumstances declared area?

An Exceptional Circumstances declared area is an area determined by the National Rural Advisory Council to be severely affected by circumstances that:

• are rare, that is must not have occurred more than once on average in every 20 to 25 years;
• have resulted in a rare and severe downturn in farm income over a prolonged period of time (for example, greater than 12 months);
• are not able to be planned for or managed as part of farmers' normal risk management strategies; and
• are a discrete event that is not part of long-term structural adjustment processes or of normal fluctuations in commodity prices.

Currently large areas of rural Australia have been declared Exceptional Circumstances areas due to severe drought conditions. For further information as to whether your area has been declared an Exceptional Circumstances area, visit the Department of Agriculture, Fisheries and Forestry website at www.daff.gov.au.

What is an Exceptional Circumstances Interest Rate Subsidy (ECIRS)?

When an area is declared an Exceptional Circumstances area, farm businesses and farm families within that area can apply for a range of economic support. One such benefit is an ECIRS. Not all farm businesses and farm families within an Exceptional Circumstances declared area are eligible for these benefits. Eligibility for this benefit varies from state to state, however in all cases financial hardship must be demonstrated through the provision of financial records to the state assessment authority.

What if an area ceases to an Exceptional Circumstances area?

Once the area the farm business operates in ceases to be an Exceptional Circumstances declared area, employees of the farm business will become entitled to the wage rate increases awarded by Wage-Setting Decision 3/2007.

What if an employer ceases to be eligible for the Exceptional Circumstances Interest Rate Subsidy (ECIRS)?

If a farm business ceases to be eligible for the ECIRS, employees of the farm business will become entitled to the wage rate increases awarded by Wage-Setting Decision 3/2007.

When will employers eligible for the deferral be required to pass on the wage rate increase?

The deferral of the general wage increase will be for a maximum period of 12 months from 1 October 2007 or until the farm business ceases to qualify for the ECIRS, whichever comes first. If a farm business ceases to be in receipt of the ECIRS it will no longer be exempt from paying the 2007 general wage increase and the business will be required to pass the increase on to its eligible employees from that point in time only.

This deferral applies only to classification minimum wages above the standard Federal Minimum Wage. It does not apply to the standard Federal Minimum Wage itself. The granting of this deferral does not preclude these individual farm businesses from paying the 2007 minimum wage increase.

Need further information?

If you would like more information on wage rates, call the Workplace Infoline on

1300 363 264.

If you would like to view the Commission’s decision in full, or check other fact sheets in this series, you can visit the Australian Fair Pay Commission website at www.fairpay.gov.au.

AUSTRALIAN PAY AND CLASSIFICATION SCALES ELIGIBLE FOR DEFERRAL