Productivity Commission says Future Drought Fund failing at resilience

The Productivity Commission says the focus of the multi-billion-dollar fund was too short-term and should focus on climate resilience, not just drought resilience.

But the finding was slammed by the Nationals leader, who said the report showed the bureaucrats of Canberra didn't understand agriculture.

Since the fund was established in 2018 by the former government at the height of the last drought, $100 million has been spent every year on drought resilience projects across the country.

However, the Productive Commission's interim report found "significant change is unlikely, given the fund's initial focus on short-term programs".

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"We think the FDF can build on its first four years to deliver on its ambition, with some changes to design and strategy ... the fund aims to build resilience to drought but short-term programs operating in isolation will struggle to deliver this," commissioner Joanne Chong said.

The FDF was more likely to generate lasting change through programs that were better targeted at longer-term challenges, the report found.

The Productivity Commission also declared re-focusing the fund on long-term resilience would mean acknowledging that climate change was worsening adverse weather events.

Commissioner Malcolm Roberts said the fund should recognise the need for resilience to climate change, not just to drought.

"The fund should explicitly recognise that drought is one part of the broader challenge to communities and agriculture that climate change represents," Mr Roberts said.

"We cannot effectively build drought resilience in isolation from the other consequences of a changing climate."

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Nationals leader and former agriculture minister David Littleproud disagreed with the report, and said the "short-sighted comments" showed the Productivity Commission's "lack of understanding of agriculture".

"$84 million went to our Drought Innovation Hubs, which creates tools farmers need to face a changing climate, that was actually one of the most significant investments of the fund," Mr Littleproud said.

"That's the sort of common-sense solution and long-term project that shifts the dial, and goes to the essence of what the fund is about."

The report found the innovation hubs "need defined goals and time to demonstrate their value".

"There should be a review during the next Drought Resilience Funding Plan to decide whether funding should continue," the report stated.

Mr Littleproud also pointed out an independent panel determined where the $100m was spent, not the government.

Agriculture Minister Murray Watt was contacted for comment.

The Productivity Commission is seeking further feedback and submissions to inform its final report.