The big dry: How accountants are helping drought-stricken clients

Droughts in Australia have plunged numerous farming families into financial crisis, prompting their accountants to help them navigate myriad drought assistance packages.

The long-running drought in Australia is crippling farming families, with many in financial crisis. Here’s what it’s been like for accountants working with afflicted clients.

By Nina Hendy

Droughts in Australia are causing significant financial hardship for many farmers and businesses reliant on those farmers. The most recent drought has hit much of eastern Australia, with extraordinary dry conditions and unusually high temperatures, even in winter.

For farmers, the most obvious impact has been substantial decreases in agricultural production, particularly crops and livestock products such as meat and wool.

It has plunged numerous farming families into financial crisis, prompting their accountants to help them navigate myriad drought assistance packages.

Australian Government figures reveal only a tiny fraction of farmers eligible for federal drought relief payments are currently receiving them. The Farm Household Allowance (FHA) payment is equivalent to the unemployment benefit to help struggling producers pay for food and household bills. Those receiving it can access an additional lump sum up to A$12,000.

However, according to Department of Agriculture and Water Resources statistics, 26,500 farmers who are potentially eligible have not applied, with just 2000 farmers and their families currently receiving the FHA.

A complicated and longwinded application process has been identified as one of the key reasons farmers have not pursued the funds.

The federal government has poured millions into funding rural financial counsellors to help applicants fill out paperwork. Toowoomba-based Amanda Kenafake CPA, CEO of financial firm Power Tynan, has seen a significant number of her diverse range of clients impacted by drought.

“It’s hard from a personal viewpoint, as we all live and work in the areas and know a lot of our clients socially,” Kenafake says. “It’s hard to see people and their families personally suffering with something that’s outside their control.”

Andrew Morrison CPA, director Paisley Robertson Accountants in Wagga Wagga in New South Wales, says all his farming clients are feeling the effects of the drought, which in turn impacts the broader business community.

“Here in the Riverina area, farmers haven’t endured the drought for as long as those further north, but due to poor rainfall in recent years and severe frosts occurring over the most recent winter, crops and feed for stock have reduced dramatically,” Morrison says.

“The flow-on effect is felt in retail stores in regional towns and cities like Wagga Wagga, as farmers and the broader community haven’t income to spend.”

As a result, accountants are relied on to support their farming and other rural-based clients in multiple ways.

One of Morrison’s clients, although qualifying for Centrelink benefits, has held off applying because of the amount of information required. Further, a financial counsellor needs to be involved to help meet all criteria.

“They’ve decided to make do with the hay and grain they do have to get them through the summer to feed stock, and hope the rain comes in autumn,” Morrison says.

Kenafake admits her role has morphed into providing personal support and helping customers find and understand assistance for which they are eligible.

“It’s about being proactive in discussing when times are good, how they prepare for some of this from a funding and discussion point of view,” she  says. “It’s also about having an understanding of what’s available in businesses that may not be agricultural or primary production, but [on which] they rely.”

Morrison agrees, saying he’s totally conversant with the federal government’s FHA and NSW Rural Assistance Authority. Like Kenafake, he emphasises the importance of accountants being proactive in assessing the drought assistance packages available to clients.

“Accountants are best placed to advise their clients, as they’re actively involved in their financial affairs,” he says. “They can produce the financial statements government agencies require to process drought assistance applications.

“Clients trust accountants with their financial affairs and for them to tell them how it is and what they’re eligible to apply for.”

Justin Enright, managing partner of Morse Group, which operates in the Bathurst and Oberon regions of NSW, also acknowledges the difficulties accountants face when working with drought-stricken farmers, saying the role requires an emotional investment.

Farmers are reaching out for services like cash flow planning and advice on liaising with financial institutions, the Australian Taxation Office and other authorities on statutory liabilities and payment arrangements, assistance with drought relief payments and general business advice. Unfortunately, such discussions sometimes by necessity lead to life counselling, Enright says.

“You feel like doing financial or accounting work for a farmer who is struggling to pay bills must be done on a basis that doesn’t give rise to more financial hardship for the client, which in that environment makes it hard to run a professional, profitable business for any length of time.

“Having said that, farmers and primary producers are the most resilient business people I’ve encountered. They’re all very measured and a product of their environment.”

As well as financial counselling services, the Australian Government is offering farm debt mediation and business skills development and more support to look after the mental health of rural and remote farmers.

Beyondblue, an independent non-profit organisation working to address issues associated with depression, suicide, anxiety disorders and other related mental disorders has evidence that working in an agricultural environment is potentially hazardous to mental health, with many farmers experiencing high rates of stress and depression.

Anyone suffering depression or anxiety should contact beyondblue on 1300 22 4636.

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