Reforming drought programs: Moving from crisis management to preparedness

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Key points

  1. Australia is drought-free.
  2. With the improvement in seasonal conditions and no EC declared areas, governments have the best window for reform in over a decade.
  3. From 30 June 2012, the EC Interest Rate Subsidy will close.
  4. The government will continue to support farmers when they experience hardship.
  5. Future drought-related programs will move away from crisis management to risk management and preparedness.
  6. Governments will now work together on a new national drought package for consideration at the next Standing Council on Primary Industries meeting in October 2012.

For the first time in over a decade there are no Exceptional Circumstances (EC) declared areas in Australia. The government has been working with industry and the states and territories to review the existing drought programs so they can better support farmers to manage risks and prepare for future challenges. This included trialling a range of measures through a pilot in Western Australia. With the improved seasonal conditions, the time is right to move the reform process forward.

What is the government’s current drought policy

The objectives of the government’s current National Drought Policy are to:

  • encourage primary producers and other sections of rural Australia to adopt self-reliant approaches for managing a changing climate
  • maintain and protect Australia’s agricultural and environmental resource base during periods of extreme climate stress and
  • ensure early recovery of agricultural and rural industries, consistent with long-term sustainable levels.

This policy is still relevant today, however some of the measures in place do not help farmers manage risks and prepare for our increasingly variable climate.

The case for reforming drought programs

Successive reviews have found the current drought programs are no longer appropriate in the context of climate variability. In 2008, Australian agriculture ministers agreed that these programs must be improved to create an environment of self-reliance and preparedness and to encourage the adoption of appropriate risk management practices.

In July 2010, the Australian and Western Australian governments commenced a pilot of drought reform measures in Western Australia (which concludes 30 June 2012). These measures focused on a risk management approach to drought support and encouraged farmers and rural businesses to prepare in advance for difficult times. The WA pilot was a reasonable test of the alternative drought support measures and will inform the government’s decisions about future programs.

So, what’s changed?

A major step in the reform process is closing the EC Interest Rate Subsidy. Successive reviews since 1997 have found that the EC Interest Rate Subsidy is ineffective and inequitable. Australian, state and territory agriculture ministers also agree that the EC Interest Rate Subsidy should not form part of future drought measures. Therefore the subsidy will not be available from 30 June 2012.

The government will continue to support farm families experiencing hardship. The 2012–13 Budget provides $22.8 million over two years to continue household support for farm families through the Transitional Farm Family Payment.

The Transitional Farm Family Payment provides:

  • up to 12 months of household income support paid at the same rate as Newstart Allowance and
  • individualised case management assistance.

In addition, the payment is available for all eligible farming families in need, with or without an EC declaration.

The focus in 2012–13

The government is committed to putting in place measures that help farmers, their families and rural communities prepare for future challenges. Cooperation and collaboration is key. The focus in 2012–13 is:

  • working with the state and territory governments to develop a proposal for a future national drought package
  • consulting with key stakeholders including peak farm organisations as we develop this proposal
  • providing this proposal to ministers in October 2012 at the Standing Council on Primary Industries meeting.

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