The Federal Government’s boost in assistance for drought-stricken farmers is unlikely to offer the quick fix desperately needed by many struggling families.
There’s no question that the significant injection of money and expertise into future-focused projects has the potential to make a difference in Australian farming communities over the long-term.
But for many families battling through the current crisis, there’s no silver bullet in the raft of measures announced.
Changes to the Farm Household Allowance Program are the most likely to have an immediate impact.
Under this program, farmers can access a payment equivalent to the unemployment benefit, which is designed to help with living expenses and to put food on the table.
Until now, the complicated application process and eligibility criteria have meant that many farming families have found it difficult to access. In fact, indications show that only about one-third of those eligible for it are accessing the allowance.
Streamlining the application process and assets threshold should make it more accessible to more farmers and provide a welcome break from immediate financial hardship. Unfortunately, the small amounts accessible through this program mean its benefits are limited and short-lived.
On face value, the doubling of low-interest loans available to farmers – from $1 million to $2 million – appears to be a significant benefit. The loans are also interest only for the first five years.
Although this is a better match in terms of providing the level of funding needed for urgent priorities like feed and fodder, it may not be a feasible solution for farmers with existing debt.
If assets such as land and property are already being used as security for debt, which is the case for many farmers, they may not be able to access the Government’s loan scheme.
For this reason, a better option would be for the Government to work alongside bank and finance institutions to come up with solutions to help get farmers back to a sustainable position.
Also limited in benefit is a change enabling farmers to immediately depreciate the costs of building silos, hay sheds and other storage facilities, instead of over a three-year period under current arrangements.
While concessions and changes to depreciation rules are helpful, they’re unlikely to be relevant to the vast majority of farmers because most don’t have the money to invest in infrastructure in the first place. Tax concessions are also unlikely to be a lifeline for day-to-day financial distress.
The Government has also been spruiking the benefits of Farm Management Deposits (FMDs) as loan offsets, in order to reduce the amount of interest being paid on existing debts. The FMD scheme allows farmers to make tax-deductible deposits during good years to draw on during hard times.
In reality, these are unlikely to help the producers who have managed to maintain their FMDs over recent years as much of their debt is held by trusts or companies they have set-up, whereas an FMD can only be held by individuals.
Funding for infrastructure projects, such as money for water projects for local councils and funding for the Bureau of Meteorology’s climate guides, was also announced as part of the relief package.
While these long-term measures offer hope for a better tomorrow, they have almost no impact on the current situation and provide little comfort for the many families doing it tough on the land.
- Ben Cameron is the Managing Partner and lead of the agribusiness advisory team for Bentleys Queensland.