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Government needs a structured approach to drought response and drought recovery

11 February, 2021
Government needs a structured approach to drought response and drought recovery Image

DROUGHT ASSISTANCE

Mr ROY BUTLER (Barwon) (17:14): The drought recovery across much of regional New South Wales started in the eastern areas of Barwon with rain in February and March 2020. Improvements in drought conditions further west took many more months. We all know it does not rain money, so getting rain and soil moisture turned into income and employment takes some time. As 2020 drew to a close we headed for the best grain harvest we have seen since 1996, both in volume and quality. It goes to show, when we have rain and a moisture profile we can go to work and turn it into something. That is not to say drought or the impact of drought is finished. Let us not forget the people still looking to the sky, checking the various forecasting sites and apps, and waiting for rain in their area. People went into debt. Repaying that debt will slow recovery. People sold equipment for cash flow. Replacing those assets will take time. Repairing the mental health of people will take many years.

Let me provide some context. The easy answer to calls for financial support for farmers has been that it is an unnecessary subsidy. The context I provide is that once COVID-19 hit the economy our governments correctly provided large amounts of cash in a very short period to many of our business sectors, with minimal paperwork required. Farmers are expected to survive years of cash deficiency; the rest of the economy is assessed in weeks. Our farmers are also expected to provide reams of paper to prove they are worthy of assistance, paper they have to pay thousands of dollars to accountants to provide. It would be folly not to review what happened and the way State and Federal governments dealt with it. The two key areas to review are the incentives to increase resilience, and at which point resilience is exceeded and cash support is provided. It would seem sensible that the point where resilience is exceeded is then identified through graduated increases in cash support.

New South Wales should be congratulated on previous efforts to increase agricultural resilience through grants, loans and subsidies to purchase transport and fodder. A review should also check the levels of interest rates for the loans and consolidation of loans across various schemes. The interaction between the Commonwealth and State governments must be assessed. Many effective tools for resilience are held within Commonwealth responsibilities, such as tax and laws relating to financial institutions. The extension of the Farm Management Deposits scheme to associated service and product suppliers must be considered. These businesses have as peaked a cash flow as farmers. I am calling on State and Federal governments to develop a phased and structured approach to drought assistance and drought recovery that in the first instance is guided by the findings of an external review. We need a structure that has trigger points that gives primary producers certainty about what would happen and when. Any plan should also acknowledge and deal with the broader impacts on whole communities through drought.

A key measure of support is through finance for those who can access and afford it. My offices were constantly in contact with desperate people who were unable to access sufficient assistance to keep their heads above water. The offerings of loans were a problem. To qualify for a loan people need to meet the Australian Prudential Regulation Authority lending criteria. People with no equity available and no prospect of income cannot qualify for a loan. State and Federal politicians of all political persuasions offered their thoughts and prayers, and I have to believe their sentiments were genuine. But what people needed at that time was cash, money to pay bills, buy food, put clothes on their children's backs and fuel to get to town. This was not about subsiding luxuries; it was about necessities.

Where agriculture forms a significant component of a rural economy, whole communities suffer when agriculture is compromised. Employment is down, business turnover is down generally and towns lose population. I have spoken in this place previously about the importance of population. This acknowledgement of the community-wide impact of drought was never in the headlines enough. Whilst we have what looks like a good season ahead—and I hope it is followed by many more—the only certainty is that we will one day go back into drought. The biggest future cost from this most recent drought would be to fail to plan for the next one. Australia has one of the lowest levels of subsidy for agriculture in the world. If we are going to run with low levels of subsidy to primary production—and there are many reasons we do that—the flip side is that when agriculture is struggling we need to offer genuine assistance to keep people on the land and to keep populations in towns.

I call on the New South Wales Government to establish an independent review into the matters I have raised in this speech. Some names that indicate the type of character and experience that I would like to see on such a review are: Mal Peters, from the Regional Australia Institute; Wayne Dunford, former Chair Drought Taskforce; Fran Rowe, a highly regarded rural financial counsellor; Katrina Humphries, the Mayor of the Moree Plains Shire Council; and Danica Leys, from the Country Women's Association. It is such individuals who have the capacity to honestly look into drought policy in New South Wales.

 

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