Government Drought Support

Government Drought Support Report

Productivity Commission Inquiry Report

  • Author(s): Productivity Commission
  • Published: 2009

Abstract: • 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.

Notes: ISSN 1447-1329 ISBN 978-1-74037-275-6

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Productivity Commission, 2009, Government Drought Support, Report, viewed 05 December 2023,

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