Government Drought Support
Key points
• Many Australian farmers and rural communities have been experiencing hardship from the latest severe and prolonged drought. While this is not new to dryland farming, 'irrigation drought' is uncharted territory.
• Australia has always had a variable climate, with drought being a recurring feature. Looking to the future, experts predict higher temperatures and, for some regions, more frequent periods of exceptionally low rainfall.
• Most farmers are sufficiently self-reliant to manage climate variability.
– In 2007-08, 23 per cent of Australia's 143 000 farms received drought assistance, totalling over $1 billion, with some on income support continuously since 2002.
– In drought declared areas, most farmers manage without assistance. From 2002-03 to 2007-08, on average, about 70 per cent of dairy and broadacre farms in drought areas received no drought assistance.
• The National Drought Policy's (NDP) Exceptional Circumstance (EC) declarations and related drought assistance programs do not help farmers improve their self-reliance, preparedness and climate change management.
– EC interest rate subsidies and state-based transactions subsidies are ineffective, can perversely encourage poor management practices and should be terminated.
– EC household relief payments are limited to those in drought-declared areas, ignoring hardship elsewhere or for other reasons. They should be replaced.
– The EC declaration process is inequitable and unnecessary. It should not be extended to new areas. Current declarations should lapse as soon as practicable.
• Governments need to commit to a long term reform path that recognises that the primary responsibility for managing risks, including from climate variability and change, rests with farmers. To this end:
– research, development, extension, professional advice and training to improve farmers' business management skills and build self-reliance warrant significant government funding where they deliver a demonstrable community benefit.
– Farm Management Deposits, notwithstanding their use for tax management, have encouraged farmers to save and to be more self-reliant, and should be retained.
– policies relating to water, natural resource management and climate change, which all impact on farm businesses and local communities, are often at cross-purposes and need to be better coordinated and integrated.
– all farm households in hardship — regardless of cause or location — should have access to an income support scheme that is designed for farming circumstances.
• Similar recommendations from the previous reviews of the NDP have not been adopted. To ensure that this new policy direction is credible and enduring:
– the NDP should be replaced with extended objectives for Australia's Farming Future.
– an intergovernmental agreement with independent monitoring and financial incentives for complying with agreed commitments should be established.
