It is proposed to save $5 million per annum over four years from 1997-98 from the National Landcare Program appropriations to State-Territory Government agencies in addition to a decrease in NLP funding of $3.5 million in 1997-98. However, this decrease will be made up by an allocation of $35 million from the Natural Heritage Trust (NHT) to bring the 1997-98 funding of NLP to $87.4 million.
Details of the $94.8 million from the NHT to programs which are managed by the Primary Industries and Energy portfolio are given on pages 3-4 of their 1997-98 Portfolio Budget Statement. However, they are not included later in the document when the relevant Sub-programs are discussed, or in Budget Paper No. 2-unlike the situation with the Environment, Sport and Territories portfolio. The following table shows the funds DPIE programs from the NHT until the year 2001-2002. It should be noted that these figures are likely to be altered in the near future, since the Senate failed to pass amendments to extend capital funding from the NHT past 30 June 2001 to 30 June 2002.
Primary Industries and Energy Outlays from Natural Heritage Trust
|
Details of Costings |
96-97 $m |
97-98 $m |
98-99 $m |
99-00 $m |
00-01 $m |
01-02 $m |
|
Landcare (includes tax credits) |
10.2 |
35.0 |
63.0 |
57.0 |
54.0 |
44.8 |
|
Property Manage Planning |
0.4 |
3.0 |
3.0 |
3.0 |
3.0 |
2.6 |
|
National Rivercare Initiative |
0.4 |
12.4 |
24.4 |
25.4 |
25.4 |
9.0 |
|
Farm Forestry |
- |
1.6 |
4.8 |
6.4 |
5.8 |
3.4 |
|
Land and Water Audit |
0.2 |
7.0 |
7.0 |
7.0 |
7.0 |
7.0 |
|
Murray-Darling 2001 |
4.7 |
29.5 |
37.5 |
38.5 |
43.5 |
9.3 |
|
Feral Animals |
1.5 |
2.0 |
0.9 |
0.9 |
0.7 |
0.5 |
|
National Weeds Strategy |
1.2 |
3.1 |
3.0 |
3.0 |
3.0 |
1.7 |
|
Coasts and Clean Seas (Fishcare) |
- |
1.2 |
1.2 |
1.2 |
1.4 |
1.0 |
|
TOTAL |
18.6 |
94.8 |
144.9 |
142.4 |
143.8 |
79.3 |
The major Budget initiatives in this Program are the termination of the Rural Adjustment Scheme (RAS) and the introduction of an Integrated Rural Policy Package (IRPP). The net effect of these decisions on outlays will be negligible with savings from the RAS being redirected to the IRPP. The bulk of the variation in outlays for 1997-98 under this Program arises from a reduction of $123.6 million in spending on drought assistance. Outlays under this Program are determined through established drought relief provision based on existing provisions and this reduction in outlays reflects the improvement in seasonal conditions.
Rural Adjustment Scheme
The decision to phase out the RAS arises out of a recently completed mid-term review of the Scheme.(1) The Government has announced that no new applications for interest rate subsidies will be accepted after 30 September 1997 and that existing commitments will be met. These amount to $73.4 million over the next four years. Uncommitted RAS funds of $198.9 million over four years will be directed to the IRPP.
Adjustment schemes involving the Commonwealth date back to 1935 when debt reconstruction and farm buildup measures were instituted. After World War II commodity marketing schemes aimed at increasing output became the central plank of agricultural policy. However, the emergence of substantial farm viability problems in the 1960s led to the implementation in the early 1970s of reconstruction schemes in the dairy, fruit and beef industries as well as a generalised rural reconstruction scheme.
These schemes were reviewed by the Industries Assistance Commission in the mid 1970s which found they had not solved rural adjustment problems. This led to the introduction in 1977 of the first Rural Adjustment Scheme, which was a single integrated scheme to replace the previous ad hoc arrangements. There were major changes to RAS in 1985, 1988 and 1992 with each following a substantive review. Readers interested in a more detailed analysis of the RAS and its history are referred to the Department of the Parliamentary Library's Background Paper No. 14 of 1993, Commonwealth Government Assistance for Adjustment in Agriculture.
The current RAS (RAS 92) came into effect on 1 January 1993 and is given effect by the Rural Adjustment Act 1992. In his Second Reading Speech Minister Crean announced that it was intended that RAS be reviewed after four years and cease after eight years.
The RAS mid-term review which prompted the Commonwealth's decision, was announced on 10 September 1996. It concluded that RAS 92 will not be effective in meeting the needs of the farm sector into the next century and thus should be replaced. The major form of assistance, interest rate subsidies, has not been effective in promoting rural adjustment or fostering the development of a profitable and competitive farm sector.
The review recommended that (i) any government programs should clearly distinguish between the farm business and the welfare of the farm family and (ii) there should be new measures which focus on managing the farm business and its natural resources, farm re-establishment, farm savings and welfare. The measures which will replace RAS will be part of the IRPP to be announced later this year.
The announced changes do not apply to interest subsidies available under the Drought Exceptional Circumstances provisions of RAS.
Integrated Rural Policy Package
Although the details of the IRPP have yet to be announced, the Government has advised it will draw upon several policy reviews recently undertaken. These include the Mid-Term Review of RAS (see above), the National Rural Finance Summit Activating Committee, the Special Rural Task Force on the impact of the Social Security assets test on rural customers, the Drought Policy Review Task Force and the Rural Communities Access Program review.
The Government has also stated that the objective of the IRPP is to promote a self-reliant, productive rural sector supported by targeted Commonwealth measures which focus on building of skills and capacity of rural industries and communities to manage effectively in an uncertain environment. This is quite similar to the objectives of RAS 92 which are to foster the development of a more profitable farm sector that is able to operate competitively in a deregulated financial and market environment, and to improve the competitiveness of the farm sector in a sustainable manner on both a national and regional basis.
Meat Inspection
Major changes to the Australian meat inspection system are planned over the next four years resulting from a joint Government/industry review of the Australian Quarantine and Inspection Service (AQIS) meat inspection system. The review, which reported last November, proposed a contraction of AQIS' role in export meat inspection to the setting of standards and the administration, supervision and auditing of export meat inspection systems.
The outlays provided under this Budget measure will fund redundancies for some 700 meat inspection staff. These will arise from the introduction of a company based quality assurance (QA) system for export meat inspection. Trials of government-supervised QA-based inspection systems have commenced at five export meat establishments.
When the QA system is fully implemented inspection services will only be provided by AQIS when required by overseas importing authorities.
On the administrative front, AQIS will be restructured with a new Division responsible for meat inspection. The new division will be separate from the other quarantine and export certification programs and will also be separate financially. The changes are to be implemented from 1 July 1997 and will also result in AQIS ceasing to provide domestic meat inspection services in NSW, ACT and NT.
Quarantine
The announced measures are a part response to the recent major report Australian Quarantine: A shared responsibility (the Nairn report) and the report of the National Task Force on Imported Fish and Fish Products. The Government's full response to these reports is due by 30 June 1997.
These funds will be used over the next four years to upgrade the import risk analysis process and provide additional resources for quarantine awareness, border activities, monitoring and surveillance, pre border activities designed to keep quarantine risks offshore, fish and plant health and quarantine systems, and improved consultation with industry and the community.
The Government has also announced that there will be increased cost recovery for operational aspects of the Australian Quarantine and Inspection Service activities associated with implementing the Nairn and fish reports. This will raise $5 million in 1997-98 and $7 million in each of the forward years.
The Nairn Committee was established in December 1995 by Senator the Hon. Bob Collins to review Australia's animal and plant quarantine policies and programs. This followed increasing public concern about quarantine issues and a recommendation from the previous major quarantine review in 1988, that another review be conducted in 1994. The Nairn Committee reported in October 1996 making a total of 109 recommendations. The major changes proposed in the report were:
Formation of the National Task Force on Imported Fish and Fish Products was announced by Ministers Collins and Beddall on 27 June 1995. It was asked to report matters relating to aquatic uses of imported fish and fish products in Australia, including fish health and quality, industry implications and environmental aspects. The Committee's report was released in December 1996 and in many respects is a parallel document to the Nairn Report. It concluded that for Australia to remain relatively free of significant aquatic diseases a major commitment by the Commonwealth, States, industry, research and other agencies would be required.
Significant impacts on the Energy Sub-program will be felt following the Government's decision to wind up the Energy Research and Development Corporation (ERDC) and to modify the National Energy Efficiency Program.
Despite ERDC terminating, there is to be a 56% increase in outlays to ERDC in 1997-98 for the following reason. In the 1996-97 Budget a one-off reduction in outlays to the ERDC of $5.5 million was achieved by bringing cash balances held by ERDC back to account. These reserves, which had already been committed for future payments to long-term research programs, were in effect 'borrowed' to fund ERDC's on-going activities during 1996-97.
In the 1997-98 Budget an increased outlay of $3.7 million over the 1996-97 appropriation has been necessary to replenish part of ERDC's reserves for committed research programs- in effect the return of part of the reserves 'borrowed' last year.
Most ERDC project contracts run for three years with some as long as six years, so there will be a continuing but declining need for outlays to ERDC over the next several years to match committed ERDC energy research projects; hence the escalating string of forecast savings over the next four years. ERDC will not be entering into new contracts but it will not be abolished until arrangements to fulfil all of its commitments are in place.
If the one-off accounting action taken in the 1996-97 Budget is put aside, actual outlays by ERDC in 1995-96 and 1996-97 would have been in the range $11.8 million to $12.8 million, falling to an estimated $10.2 million in 1997-98.
National Energy Efficiency Program annual savings of around $2.8 million are expected to flow until 2000-01 through re-casting such that the Commonwealth will target nationally-based energy initiatives clearly appropriate to a Commonwealth role. The Commonwealth is continuing to require private industry to share the burden of collective programs by delegating non-national efficiency pursuits to industry as well as to State, Territory and local governments.
Back to Budget Review 1997-98 Contents
