Government drought support
Inquiry report
Released 12 / 05 / 2009
Download the report
- 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.
- 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