Policy caught between exceptional drought and preparedness push

Policy caught between exceptional drought and preparedness push


National Issues
 Australian Farm Institute executive director Richard Heath.

Australian Farm Institute executive director Richard Heath.

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AFI's Richard Heath tackles the tough questions on drought response

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Drought policy is a complicated issue which must accommodate a varied sector, a range of concerns and varying views in the farming and broader community.

Now, Federal and state governments find themselves caught between the current policy push towards sustainability and drought preparedness and providing the direct emergency funding needed by farmers who are in the grip of extreme circumstances.

The complex situation requires nuanced answers. Fairfax Agricultural Media asked the Australian Farming Institute’s executive director Richard Heath about five key issues in drought policy.

Q: There has been some discussion about current drought funding being too focused on primary producers. Could assistance be better directed at other parts of the regional economy, like small businesses? 

RH: Many parts of the regional economy depend entirely on the farm sector for their survival. When farm businesses have no income they have no capacity to support the regional businesses and service providers that they would normally rely on.

Broader assistance to regional economies would ensure that those communities are not decimated during droughts and are ready to help in the post drought recovery phase.

Q: What kind of incentives could encourage farmers to better manage risk?

RH: Financial risk and production/environmental resilience need to be connected more in the discussion about drought preparedness. Farm businesses build financial resilience in good times by building healthy balance sheets so that they have borrowing capacity during downturns. 

Sometimes there is a trade-off between investing in drought preparedness measures (storing hay or grain, installing water points and dams, investing in innovation to be more water efficient with cropping practice) and reducing debt to repair a balance sheet. De-risking investment in innovation or drought preparedness through measures such as accelerated depreciation or tax offsets can help reduce the trade-off.  

Q: The NSW and Federal governments recently announced emergency funding measures, in addition to the existing preparedness policy. It could be described as edging toward the old Exceptional Circumstances regime. Do these latest support packages unpick preparedness gains? 

RH: Farm Household Assistance measures and extensions or additions to that scheme are designed to help individuals and families in extremely tough circumstances. They are emergency funds and are similar to those that would be provided in the wake of bushfires or floods.

In extreme drought events (which this drought appears to be falling into) it is reasonable to expect that government support would be given to ensure that families can continue to provide food and shelter.

However any emergency support that goes beyond supporting families and individuals to directly supporting business activity does potentially disincentivise preparedness and wind back the drought policy direction changes of 2013.

Q: We've seen a wave of public support for drought-affected farmers. Coupled with the new rounds of governmental support, is there a risk of charity fatigue among the general public? Is there a better way to handle drought relief?

RH: The Australian public is generous and will always support people in obvious and immediate distress. It is important to recognise however that while financial support is obviously important, there are many other measures that can be taken to relieve the burden that drought affected businesses find themselves under.

Mental health is always important but is especially at risk during prolonged drought. Initiatives and support for community events help to maintain good mental health by providing opportunities to participate in off farm events and maintain strong communities.

Q: Has climate change been adequately accounted for in the current public policy? 

Drought response policy will not immediately reverse climate change and climate change policy will not immediately stop droughts. The process of climate change is ongoing and will affect the frequency and severity of droughts for the foreseeable future.

This is by no means an excuse for lack of effective climate change policy which is long overdue if we are to start the process of reversing the effects of climate change.

The most immediate public policy need is to ensure that support mechanisms are in place that incentivise farmers to prepare for drought and build financially and environmentally resilient businesses that can be adaptable to an increasingly variable climate.

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