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Government Drought Support

Inquiry report

This inquiry report was released on 12 May 2009.

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  • Key points
  • Contents
  • 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.

Background information

John Salerian (Assistant Commissioner) 03 9653 2190 / 0409 814 424

  • Chapter Preliminaries
    • Cover, Copyright, Terms of reference, Contents, Abbreviations and explanations
  • Overview - including key points
  • Recommendations
  • Chapter 1 Introduction
    • 1.1 Drought policy — a continuing evolution
    • 1.2 The national review of drought policy
    • 1.3 Contextual matters
    • 1.4 The draft report process
    • 1.5 Outline of the report
  • Chapter 2 Agriculture and adjustment
    • 2.1 Introduction
    • 2.2 Profile of agriculture in the Australian economy
    • 2.3 Adjustment in agriculture
    • 2.4 Building a secure capital base
    • 2.5 Rural-urban drift, sponge cities and small towns
  • Chapter 3 Climate variability and drought
    • 3.1 Drought and climate variability in Australia
    • 3.2 Effects on agricultural systems
    • 3.3 Market impacts
    • 3.4 Social impacts
    • 3.5 Environmental impacts
    • 3.6 Recent experience and future outlook
    • Annex: Rainfall by district
    • Chapter 4 Drought policy in Australia
      • 4.1 The evolution of drought policy
      • 4.2 Current programs
    • Chapter 5 Exceptional Circumstances declarations
      • 5.1 Introduction
      • 5.2 Assessing the EC declaration system
    • Chapter 6 Program evaluation
      • 6.1 Introduction
      • 6.2 Assessing the appropriateness, effectiveness and efficiency of drought support programs
      • 6.3 Issues across programs
      • 6.4 Evaluation of programs that support rural families
      • 6.5 Evaluation of drought triggered business programs
      • 6.6 Evaluation of preparedness and advice programs
    • Chapter 7 A new policy framework
      • 7.1 A revised national drought policy?
      • 7.2 Objectives for agriculture policy
    • Chapter 8 Promoting self-reliance and preparedness
      • 8.1 Introduction
      • 8.2 Research and development
      • 8.3 Information and advice
      • 8.4 Education and training
      • 8.5 Farm management deposits
      • 8.6 Accelerated depreciation and grants for investing in preparedness
      • 8.7 Income contingent loans
      • 8.8 Assistance to develop insurance markets
    • Chapter 9 Farming family income support and adjustment
      • 9.1 Introduction
      • 9.2 Financial hardship and farming families
      • 9.3 An income support scheme for farming families
      • 9.4 The Commission's proposal for an income support scheme for farming families
      • 9.5 Agricultural adjustment
      • Annex: Indicative eligibility levels for the proposed Farming Family Income Support Scheme
    • Chapter 10 Related policies
      • 10.1 Introduction
      • 10.2 Water policy
      • 10.3 Land-based natural resource management policy
      • 10.4 Climate policy
      • 10.5 Other policies
    • Chapter 11 Implementation and outlook
      • 11.1 Context for reform implementation
      • 11.2 Making the transition
      • 11.3 Ensuring policy credibility
      • 11.4 Intergovernmental cooperation
      • 11.5 The outlook under the new approach
    • Appendix A Conduct of the inquiry
    • Appendix B Income support for rural families
    • Appendix C Exceptional Circumstances triggered business support
    • Appendix D Preparedness programs
    • Appendix E State and territory drought policies and measures
    • References

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