Part 1Introduction

Part 1—Introduction   1  Simplified outline   The following is a simplified outline of this Schedule and Part 9C of the Farm Household Support Act 1992: • This Schedule and Part 9C of the Farm Household Support Act 1992 provide a framework for the implementation of the Dairy Industry Adjustment Program. • The main object of the Dairy Industry Adjustment Program is to help the dairy industry adjust to deregulation by providing for 2 types of grants, as follows:  (a) DSAP payments (made under this Schedule);  (b) dairy exit payments (made under Part 9C of the Farm Household Support Act 1992). • Generally, DSAP payments are calculated by reference to 1998‑1999 milk deliveries at a rate of 46.23 cents per litre for market milk and a national average rate of 8.96 cents per litre for manufacturing milk. • Dairy exit payments are available for farmers who choose to leave agriculture. • The Dairy Adjustment Authority will administer DSAP payment rights. • The Dairy Industry Adjustment Program will be funded by a dairy adjustment levy on milk products. • The levy will be paid into a Dairy Structural Adjustment Fund, and DSAP payments and dairy exit payments will be paid out of that Fund. 2  Definitions   In this Schedule, unless the contrary intention appears: annual means per financial year. business day means a day that is not a Saturday, a Sunday, or a public holiday in the Australian Capital Territory. claim means a claim for a payment right. DAA means the Dairy Adjustment Authority established by this Schedule. DAA Chair means the Chair of the DAA. Note: Section 18B of the Acts Interpretation Act 1901 deals with how chairs may be referred to. DAA member means a member of the DAA. dairy cattle means cattle held for use for the production of milk, or for purposes incidental to the production of milk, and includes:  (a) dairy cows; and  (b) dairy heifers; and  (c) calves that are the progeny of dairy cows; and  (d) bulls used, or held for use, for the purpose of fertilising dairy cows or dairy heifers. dairy exit payment has the same meaning as in the Farm Household Support Act 1992. dairy farm enterprise has the meaning given by clause 6. deliver means:  (a) in relation to market milk—supply as mentioned in whichever of the following is applicable:  (i) paragraph 5(1)(a) of the repealed Dairy Produce Levy (No. 1) Act 1986;  (ii) paragraph 6(1)(a) of Schedule 6 to the Primary Industries (Excise) Levies Act 1999; and  (b) in relation to manufacturing milk covered by paragraph (a) of the definition of manufacturing milk in section 103—deliver as mentioned in that paragraph; and  (c) in relation to manufacturing milk covered by paragraph (b) of the definition of manufacturing milk in section 103—use as mentioned in that paragraph. DEP scheme has the same meaning as in the Farm Household Support Act 1992. DSAP claim period has the meaning given by clause 4. DSAP payment means a payment under the DSAP payment scheme. DSAP payment start day has the meaning given by clause 3. DSAP scheme means the scheme referred to in clause 10. eligible interest in a dairy farm enterprise has the meaning given by clause 7. engage in conduct means:  (a) do an act; or  (b) omit to perform an act. entity has the meaning given by clause 5. manufacturing milk means manufacturing milk (within the meaning of section 103) in respect of which a domestic market support payment has been paid under section 108A. market milk means milk on which levy was imposed by whichever of the following is applicable:  (a) paragraph 5(1)(a) of the repealed Dairy Produce Levy (No. 1) Act 1986;  (b) paragraph 6(1)(a) of Schedule 6 to the Primary Industries (Excise) Levies Act 1999. non‑premium component, in relation to the overall enterprise amount of a dairy farm enterprise, means so much of the overall enterprise amount as does not consist of the premium component of the overall enterprise amount. ordinary DAA member means a DAA member other than the Secretary. overall enterprise amount, in relation to a dairy farm enterprise, means the sum of:  (a) the amount calculated at the rate of 46.23 cents per litre of market milk delivered by the enterprise in the 1998‑1999 financial year; and  (b) the amount calculated at the rate of 76.03 cents per kilogram of the milk fat content of manufacturing milk delivered by the enterprise in the 1998‑1999 financial year; and  (c) the amount calculated at the rate of 178.77 cents per kilogram of the protein content of manufacturing milk delivered by the enterprise in the 1998‑1999 financial year. Note 1: It is expected that the result of applying the rates mentioned in paragraphs (b) and (c) will be a national average rate of 8.96 cents per litre of manufacturing milk. Note 2: See also clause 30 (which deals with the transfer of the whole or part of market milk delivery rights). Note 3: See also clause 31 (which deals with abnormal market milk pool distributions). payment right means a payment right under the DSAP scheme. premium component, in relation to the overall enterprise amount of a dairy farm enterprise, means so much of the overall enterprise amount as is attributable to 37.27 cents per litre of market milk delivered by the enterprise in the 1998‑1999 financial year. Note 1: See also clause 30 (which deals with the transfer of the whole or part of market milk delivery rights). Note 2: See also clause 31 (which deals with abnormal market milk pool distributions). quarter means a period of 3 months beginning on 1 January, 1 April, 1 July or 1 October of any year. Secretary means the Secretary of the Department. trustee includes an executor and an administrator. unit means a unit in a payment right. 3  DSAP payment start day  (1) For the purposes of this Schedule, the DSAP payment start day means a day to be fixed by Proclamation for the purposes of this subclause.  (2) The DSAP payment start day must not be earlier than 1 July 2000.  (3) If the DSAP payment start day is not fixed by a Proclamation published in the Gazette within the period of 6 months beginning on the day on which the Dairy Industry Adjustment Act 2000 receives the Royal Assent, Part 2 of this Schedule is repealed on the first day after the end of that period.  (4) To avoid doubt, if:  (a) Part 2 of this Schedule is repealed as a result of the operation of subclause (3); and  (b) an entity was granted a payment right before the repeal; that payment right is taken never to have come into existence. 4  DSAP claim period  (1) The Minister may, by notice published in the Gazette, declare that a 3‑month period specified in the notice is the DSAP claim period for the purposes of this Schedule. 5  Entity  (1) For the purposes of this Schedule, each of the following is an entity:  (a) an individual;  (b) a body corporate;  (c) a body politic;  (d) a trustee of a particular trust estate.  (2) A person can have a number of different capacities in which the person does things. In each of those capacities, the person is taken to be a different entity. Note: For example, take the case of a person who, in addition to his or her personal capacity, is a trustee of 2 trusts. In his or her personal capacity, he or she is one entity. As a trustee of each trust, he or she is a different entity. 6  Dairy farm enterprise  (1) For the purposes of this Schedule, a dairy farm enterprise is a business in Australia that delivers market milk and/or manufacturing milk. Eligible dairy sharefarming arrangements  (2) For the purposes of this clause, if:  (a) under the DSAP scheme, an arrangement is taken to be an eligible dairy sharefarming arrangement; and  (b) apart from this subclause, that arrangement involves 2 or more businesses; those businesses are to be treated as a single business. Eligible dairy leasing arrangements  (3) For the purposes of this clause, if:  (a) under the DSAP scheme, an arrangement is taken to be an eligible dairy leasing arrangement; and  (b) apart from this subclause, that arrangement involves 2 or more businesses; those businesses are to be treated as a single business. Continuity of a business or dairy farm enterprise  (4) For the purposes of this Schedule, the continuity of a business or a dairy farm enterprise is not affected by:  (a) any change in the identity of the entity or entities who carry on the business or enterprise; or  (b) any change in the ownership of the business or enterprise. 7  Eligible interest in a dairy farm enterprise  (1) For the purposes of this Schedule, an entity has an eligible interest in a dairy farm enterprise if:  (a) both:  (i) under the DSAP scheme, the enterprise is not taken to be subject to an eligible dairy sharefarming arrangement or an eligible leasing arrangement; and  (ii) the entity carries on the enterprise (whether alone or together with one or more other entities); or  (b) both:  (i) under the DSAP scheme, the enterprise is taken to be subject to an eligible dairy sharefarming arrangement; and  (ii) under the DSAP scheme, the entity is taken to be a party to that arrangement; or  (c) both:  (i) under the DSAP scheme, the enterprise is taken to be subject to an eligible dairy leasing arrangement; and  (ii) under the DSAP scheme, the entity is taken to be a party to that arrangement.  (2) For the purposes of this Schedule, if:  (a) an individual had an eligible interest in a dairy farm enterprise at 6.30 pm on 28 September 1999; and  (b) the individual dies after that time, but before making a claim for a payment right; this Schedule has effect as if the trustee of the deceased individual’s estate had held that interest at that time. 8  Application to things happening before commencement   The use of the present tense in a provision of this Part does not imply that the provision does not apply to things happening before the commencement of this Schedule. Part 2—DSAP payments Division 1—DSAP scheme 9  Simplified outline   The following is a simplified outline of this Division: • This Division provides a framework for the making of DSAP payments. • The Minister is required to formulate a scheme (the DSAP scheme) for the grant of payment rights to entities who held an eligible interest in a dairy farm enterprise on 28 September 1999. • The DSAP scheme will provide for 3 types of payment rights, as follows:  (a) standard payment rights;  (b) exceptional events supplementary payment rights.  (c) anomalous circumstances payment rights. • Standard payment rights will be based on milk deliveries in 1998‑1999, and will be worked out by reference to a rate of 46.23 cents per litre for market milk and a national average rate of 8.96 cents per litre for manufacturing milk. • Exceptional events supplementary payment rights may be granted in cases where, because of exceptional events, the volume of milk deliveries in 1998‑1999 is less than 70% of the average milk deliveries in the 3 previous financial years. • Anomalous circumstances payment rights may be granted to entities who have been affected by anomalous circumstances. • Entities who wish to obtain a payment right under the DSAP scheme must undertake a farm business assessment. • The total value of the payment rights granted to an entity must not exceed $350,000 unless more than 70% of the entity’s total gross income consists of dairy income. • Payment rights will be divided into units, where each unit has a face value of $32. • A registered owner of a unit will be entitled to a quarterly payment of $1 for each of the 32 quarters in the 8‑year period beginning on 1 July 2000. 10  DSAP scheme   Within 14 days after the commencement of this Schedule, the Minister must, by writing, formulate a scheme (the DSAP scheme) for:  (a) the grant of payment rights to entities who:  (i) held an eligible interest in a dairy farm enterprise at 6.30 pm on 28 September 1999; and  (ii) satisfy such other conditions as are set out in the scheme; and  (b) the division of payment rights into units; and  (c) the registration of units; and  (d) the making of payments by the Corporation to registered owners of units. 11  General policy objectives for the DSAP scheme   The DSAP scheme must be directed towards ensuring the achievement of the policy objectives set out in clauses 12 to 23. 12  Types of payment rights  (2) The objective is that there are to be 3 types of payment rights, as follows:  (a) the first type of payment rights are to be known as standard payment rights;  (b) the second type of payment rights are to be known as exceptional events supplementary payment rights;  (c) the third type of payment rights are to be known as anomalous circumstances payment rights. 13  Standard payment right  (2) The first objective is that an entity is not eligible to be granted a standard payment right unless:  (a) the entity held an eligible interest in a dairy farm enterprise at 6.30 pm on 28 September 1999; and  (b) either or both of the following conditions are satisfied:  (i) during the 1998‑1999 financial year, the dairy farm enterprise delivered market milk;  (ii) during the 1998‑1999 financial year, the dairy farm enterprise delivered manufacturing milk. Calculation of face value  (3) The second objective is that the calculation of the face value of an entity’s standard payment right must be consistent with the following examples:  (a) if the entity is the only entity who had an eligible interest in the dairy farm enterprise at 6.30 pm on 28 September 1999—the face value of the entity’s standard payment right equals the overall enterprise amount;  (b) if:  (i) there are 2 or more entities who had an eligible interest in the dairy farm enterprise at 6.30 pm on 28 September 1999; and  (ii) under the scheme, the enterprise is not taken to be subject to an eligible dairy sharefarming arrangement or an eligible dairy leasing arrangement;   the face value of the first‑mentioned entity’s standard payment right is that entity’s share of the overall enterprise amount, worked out on a basis that corresponds to the basis on which milk revenues were shared between the entities as at 6.30 pm on 28 September 1999;  (c) if:  (ii) under the scheme, the enterprise is taken to be subject to an eligible dairy sharefarming arrangement and those entities are taken to be parties to that arrangement; and  (iii) the first‑mentioned entity is an entity who, under the scheme, is taken to have provided the essential capital contribution required to achieve access to the market milk premium;   the face value of the first‑mentioned entity’s standard payment right is the sum of:  (iv) the premium component of the overall enterprise amount; and  (v) that entity’s share of the non‑premium component of the overall enterprise amount, worked out on a basis that corresponds to the basis on which milk revenues were shared between the entities as at 6.30 pm on 28 September 1999;  (d) if:  (ii) under the scheme, the enterprise is taken to be subject to an eligible dairy sharefarming arrangement and those entities are taken to be parties to that arrangement; and  (iii) the first‑mentioned entity is not an entity who, under the scheme, is taken to have provided the essential capital contribution required to achieve access to the market milk premium;   the face value of the first‑mentioned entity’s standard payment right is that entity’s share of the non‑premium component of the overall enterprise amount, worked out on a basis that corresponds to the basis on which milk revenues were shared between the entities as at 6.30 pm on 28 September 1999;  (e) if:  (ii) under the scheme, the enterprise is taken to be subject to an eligible dairy leasing arrangement and those entities are taken to be parties to that arrangement; and  (iii) the first‑mentioned entity is an entity who, under the scheme, is taken to have provided the essential capital contribution required to achieve access to the market milk premium;   the face value of the first‑mentioned entity’s standard payment right is the premium component of the overall enterprise amount;  (f) if:  (ii) under the scheme, the enterprise is taken to be subject to an eligible dairy leasing arrangement and those entities are taken to be parties to that arrangement; and  (iii) the first‑mentioned entity is not an entity who, under the scheme, is taken to have provided the essential capital contribution required to achieve access to the market milk premium;   the face value of the first‑mentioned entity’s standard payment right is the non‑premium component of the overall enterprise amount.  (4) Paragraphs (3)(c), (d), (e) and (f) deal with common types of arrangements that involve 2 parties. Those paragraphs do not, by implication, limit the capacity of the DSAP scheme to deal with less common types of arrangements that involve 3 or more parties—see clause 34. Essential capital contribution  (5) In formulating a provision of the DSAP scheme under which an entity is taken to have provided the essential capital contribution required to achieve access to the market milk premium, the Minister must not have regard to any matters other than the following:  (a) whether the entity is the owner of a quota relating to the delivery of market milk;  (b) whether the entity is the owner of the land on which the eligible dairy farm enterprise is carried on;  (c) whether the entity is the owner of a significant proportion of the livestock used in, or for purposes incidental to, the carrying on of the eligible dairy farm enterprise.  (6) For the purposes of paragraph (5)(c), the proportion of livestock owned by a partner in a partnership is taken to be the same as the proportion of the livestock owned by the partnership.  (7) For the purposes of paragraph (5)(c), a proportion of less than 25% is taken not to be a significant proportion. 14  Exceptional events supplementary payment right  (2) The first objective is that an exceptional events supplementary payment right must not be granted to an entity in respect of a particular dairy farm enterprise unless:  (a) the entity has already been granted a standard payment right in respect of the enterprise; and  (b) the entity satisfies the DAA that, as a result of one or more events that, under the scheme, are taken to be recognised exceptional events, the volume of market milk and manufacturing milk delivered by the enterprise during the 1998‑1999 financial year is less than 70% of the average annual volume of market milk and manufacturing milk delivered by the enterprise in the following 3 financial years:  (iii) the 1995‑1996 financial year. Total face value of payment rights  (3) The second objective is that the sum of:  (a) the face value of a standard payment right granted to an entity in respect of a particular dairy farm enterprise; and  (b) the total face value of the exceptional events supplementary payment rights granted to the entity in respect of the enterprise; must not exceed the amount that would have been the total face value of the standard payment right if:  (c) the volume of market milk delivered by the dairy farm enterprise during the 1998‑1999 financial year had equalled the average annual volume of market milk delivered by the enterprise in the following 3 financial years:  (iii) the 1995‑1996 financial year; and  (d) the volume of manufacturing milk delivered by the dairy farm enterprise during the 1998‑1999 financial year had equalled the average annual volume of manufacturing milk delivered by the enterprise in the following 3 financial years:  (iii) the 1995‑1996 financial year. Discretionary grant  (4) The third objective is that the grant of an exceptional events payment right is to be at the discretion of the DAA.