Commission recommends end to drought payments

The Productivity Commission has said current drought programs fall short of addressing policy objectives of self-reliance, preparedness and climate change management.

The commission’s draft report into drought policy highlighted the exceptional circumstances (EC) scheme, devised in 1992, was unfair and incompatible with the new challenges associated with climate change.

Under the scheme, over $1 billion taxpayers’ money went to 20 per cent of farmers in the last fiscal year, with some on income support since 2002.

It said most farmers were sufficiently self-reliant to manage climate variability, and more than 70 per cent of farms in drought-declared areas had been managing without assistance.

Commissioner Mike Wood said drought policy changes should aim for expanded objectives to effectively tackle the shifting environment and broader farming issues.

“Drought is not new to dryland farming, but current conditions are similar to the severe and prolonged Federation and 1940s droughts, and the ‘irrigation drought’ is uncharted territory.

“Yet despite the severity of the conditions, most farmers have been self-reliant and have not received drought assistance,” Mr Wood said.

The report said the EC provisions needed to be replaced with temporary income support for all farm households facing hardship, including training and counselling designed for those considering leaving farming. 

It also said government should refocus their farm business support programs to help farmers through research, development, extension, professional advice and business management training in order to lift farmers’ self-reliance and preparedness.

The National Farmers’ Federation (NFF), however, argued the recommendations would remove all support except time-limited income support.

NFF president David Crombie said Australia was the second-least subsidised agricultural nation in the OECD, and further cuts in drought support would put farmers at risk.

“It must be acknowledged that interest rate subsidies have been and continue to be important for many farmers enabling them to survive the worst drought in history.

“Any phasing out can only be done once a suitable alternative is in place and an appropriate transition in place,” Mr Crombie said.

He also said the proposed 18-month transition period was far too short to develop and communicate a new policy model.

“Given the dire situation many families and communities are in, and the fact that the extent and duration of this current drought is unknown… identifying a specific period was not prudent with unpredictable circumstances,” he said.

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