Drought assistance
Peter
Hicks
Continued funding of longstanding measures which
provide household and business support to primary producers and,
more recently, small businesses is provided in the 2009–10
Budget. The major component of the measures is the Exceptional
Circumstances (EC) provisions for income support to households
– EC Relief Payments (RP) – and interest subsidies to
businesses – EC Interest Rate Subsidies (IRS).
The announced funding is summarised in the following table. For
some of the measures, expenditure is spread across several agencies
however the Department of Agriculture, Fisheries and Forestry
(DAFF) and Treasury account for the vast bulk of funds.
Drought assistance measures 2009-10 Budget ($m)
Source: Australian Government, Budget measures: budget paper
no. 2: 2009–10.[1]
Under the new arrangements for federal financial relations that
came into effect on 1 January 2009, EC IRS payments which are
administered by the states will now be funded from Treasury not
DAFF. EC IRS payments account for about half of total EC funding
announced in the Budget. For some of the measures identified in the
above table, Budget Paper no. 2 states that their cost in
2008–09 will be met in part or full from existing DAFF
resources. In addition, DAFF will provide $5.7 million in
2009–10 for transitional income support from existing
resources.[2]
The above table shows that the budget measures provide a total
of $564.9 million in new drought support funding with
$556.8 million of this to be spent in 2009–10. According
to the Minister for Agriculture, Fisheries and Forestry the
Government ‘has allocated $715.3 million in the
2009–10 Budget to continue support for drought affected
farmers, farm families, small businesses and rural
communities’.[3] This seems to indicate some $150.4 million of
drought support funding will come from existing DAFF resources
and/or amounts budgeted for previously. The Budget does not provide
further information on this matter.
EC support payments have increased sharply in recent years,
reflecting the prolonged and widespread dry seasonal conditions in
many of Australia’s agricultural regions. Between
1994–95 and 2004–05 annual payments did not exceed
$300 million and were well under $200 million for most
years during that period. In 2005–06 payments topped
$400 million. They reached $800 million in 2006–07
and almost $1 billion in 2007–08.[4]
The increase in EC expenditure is paralleled by an increase in
the number of recipients of EC support as reported by the
Productivity Commission in the following table.
Drought assistance recipients,
2002–03 to 2007–08
Drought policy review
In April 2008 the Minister for Agriculture, Fisheries and
Forestry announced a review of drought policy ‘to help
prepare farmers and local communities for climate change’,
with the aim of having an improved drought policy in place by July
2009. The Minister advised the review would include:
- an economic assessment of current drought support measures by a
Productivity Commission (PC) report
- an expert panel to assess the social impacts of drought
- a detailed scientific examination of likely future climate
patterns and the current Exceptional Circumstances standard of a
one-in-20-to-25-year-event undertaken by the Bureau of Meteorology
and CSIRO.
He also noted:
If droughts become longer and more frequent, farmers may not
qualify for drought support under the current definition of an
exceptional event, because it may not be something that only occurs
every 20-to-25-years.[6]
The scientific study and social impact report were finalised in
July 2008 and September 2008 respectively and are available on the
DAFF website.[7] The
PC report was finalised in February 2009 and released in May
2009.
The report’s key points include:
- Most farmers are sufficiently self-reliant to manage climate
variability …
- 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 …
- 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.[8]
The Government is still finalising it proposed changes to
drought policy.
[1].
Australian Government, Budget measures: budget paper no. 2:
2009–10, Commonwealth of Australia, Canberra, 2009, pp.
81–85, 162, 228, 297, 327, viewed 14 May 2009, http://www.aph.gov.au/budget/2009-10/content/bp2/html/index.htm
[2].
Budget measures: budget paper no. 2: 2009–10, p.
85.
[3].
T Burke (Minister for Agriculture, Fisheries and Forestry),
Drought support continues for farming families, media
release, Canberra, 12 May 2009, viewed 15 May 2009,
http://www.maff.gov.au/media/media_releases/2009/may/
drought_support_continues_for_farming_families
[4].
Productivity Commission (PC), Government Drought Support,
Productivity Commission Inquiry Report, No. 46, Commonwealth of
Australia, Melbourne, 27 February 2009, p. 101, viewed 15 May 2009,
http://www.pc.gov.au/__data/assets/pdf_file/0010/86275/drought-support.pdf
[5].
PC, Government Drought Support, p. XXVI.
[6].
T Burke (Minister for Agriculture, Fisheries and Forestry),
Drought policy for Australia's future, media release,
Canberra, 23 April 2008, viewed 15 May 2009
http://www.maff.gov.au/media/media_releases/2008/
april_2008/drought_policy_for_australias_future
[7].
Australian Government, ‘National review of drought
policy’, DAFF website, viewed 15 May 2009,
http://www.daff.gov.au/agriculture-food/drought/national_review_of_drought_policy
[8].
PC, Government Drought Support, p. XX.