THE Federal Government has approved a new drought assistance model and is waiting for State Government agreement before pilot programs and transitional arrangements are rolled out "soon".
While there is still no clear timeframe yet or publicly available model for the Government's much-anticipated drought assistance reforms, Minister for Agriculture, Tony Burke, told this week's ABARE Outlook conference in Canberra the current drought policy settings were only hurting farmers in the long term.
In a frank address to the conference, Mr Burke said some farmers are about to hit the $500,000 ceiling on interest rate subsidies payments under the exceptional circumstances drought arrangements.
These people, he said, would soon be faced with a very tough decision about what to do with their farm – a decision, though, which they probably should have tackled some years ago, he added.
"…they were confronted with a really tough decision, for some of them seven years ago and instead of helping them get out of that we gave them just enough money to hold them in that precise situation," Mr Burke told the conference.
"They then had seven years on the property where it's not making money, where they’re staying just afloat, and only just afloat.
"And at the end of it, either because they lose their EC declaration or because they reach the maximum of the half a million dollar payment they get told, now you’ve got to make the hard decision that you probably could have made seven years earlier.
"I am not surprised by at a whole lot of mental health challenges that we have in this portfolio."
Mr Burke said dealing with the drought reforms needed had been a "taboo" in his portfolio, despite more than 100 farmers privately telling him the assistance was "hurting a lot of people".
"There is no doubt a lot of good has been done by the interest rate subsidy and there is no doubt that for people who are in their current drought it must remain and see them through the current times they are in," Mr Burke said.
"But just think through the logic of that payment. Point one, government support and assistance is conditional upon how much debt you are in.
"If for whatever reason you’ve made some really hard decisions during the good times and are not in debt, your reward for that is to get no government assistance.
"Secondly by virtue of it being an interest rate payment it is effectively a payment to the bank, not to the farmer.
"Now people have locked themselves into those financial arrangements and we’ve got to see the policy through under its current policy settings.
"But I don’t believe for a minute that’s the best way to do things.
"I think we need to be brave enough to acknowledge that just because we are giving people money does not mean that we are doing them a favour."
Mr Burke said The Government now had a preferred model for the reforms and is negotiating at a State level to reach an agreement.
Once that is achieved, a "staged roll-out" with transitional mechanisms would be introduced, with Mr Burke pointing to the merit in the National Farmers Federation proposal for a pilot program in an area out of EC.
Mr Burke would not commit to the reforms being ready by budget time, but says a decision would be made soon.
Mr Burke said the new policy would be tailored to fewer people ever hitting crisis in the first place.
Opposition spokesman for agriculture, John Cobb, said to claim the interest rate subsidy was ‘illogical’ and did ‘more harm than good’ showed Mr Burke was "out of touch" with farmers who have battled more than eight years of drought.
"Even the best farmers have found themselves in debt following three failed wheat crops in a row," Mr Cobb said.
"Without the EC interest rate subsidy it is doubtful whether some farmers would even be able to get carry on finance to plant this years wheat crop or buy sheep or cattle to restock.
"…there would not have been as much wheat grown in eastern Australia and without the 2008 wheat crop Australia would have plunged into a technical recession."
Mr Cobb said the EC payments were not perfect but believes Mr Burke's comments are "a front" to cut funding to regional businesses.
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