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.
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