Mr GAVAN O’CONNOR (5:31 PM) —The Farm Household Support Amendment (Exceptional Circumstances Relief Payment) Bill 2005 amends the Farm Household Support Act 1992 to give effect to some of the measures outlined in the 2005 drought assistance package announced by the Prime Minister. The major elements of the government’s package include more generous exceptional circumstances interest rate subsidies, with a revised assets test—and that measure accounts for $196.3 million—a more generous income test for EC relief payments of $49.3 million; additional counselling and support services, totalling $8.98 million; a second round of Envirofund grants of $10 million, taken from existing appropriations; an extension of the streamlined reassessment process for those EC declared areas nearing the end of their second year of assistance and a review by the National Rural Advisory Council of areas not recommended for EC extension over the past year; and $3 million for the CWA. Most of the changes announced by the government can be made by ministerial direction, but this piece of legislation is necessary to provide for changes to the income test for EC relief payments. It provides an exemption of up to $10,000 from off-farm wages and salaries to a person and their partner as of 1 July 2005, and it also provides that in future a person seeking exceptional circumstances relief payments will make an application directly to Centrelink instead of to a state or territory rural adjustment authority.

Labor welcomes the measures announced by the Prime Minister on 30 May and welcomes the measures that are included in this piece of legislation. However, we are disappointed that it has taken so long for the government to make even this tentative start at reforming and improving drought policy. It is fair to ask why it has taken the government 10 years to come to this position. Many of the criticisms of drought policy have been around for many years, yet it has taken this long into the government’s several terms of office for the government to come to grips with some of the more substantial criticisms of its administration of drought policy. I make the point which I have made in previous debates: the government can find $6 million for useless advertising in the lead-up to an election—indeed, that $6 million in the agriculture sector was part of a $100 million advertising package in place before the election—and it can find $1 billion for a war in Iraq, yet it cannot get its drought policy right.

This is not the only major area of policy neglect we have seen from this minister and from this government. We can all remember the live exports debacle and the fact that the minister almost single-handedly brought the trade to its knees as a result of his neglect and incompetence. Of course, we have the current shambles in quarantine policy—a similar result of the minister’s neglect. In that particular instance, we had legal actions by a major producer body, a trading mess and a scathing legal judgment on the administration of Australia’s quarantine policy. Now we have substantial criticisms of the government’s administration of drought policy. The Auditor-General has recently issued a report that contains scathing criticism of the Howard government’s performance in relation to drought. I am pleased to see in the chamber the honourable member for Lyons, who will accompany me in this debate, and the honourable member for Ballarat. They have some very important points that they want to make about the administration of drought policy in this country.

In light of those criticisms, I move:

I understand that the honourable member for Lyons will be seconding that second reading amendment in the context of this debate. As I pointed out, the Auditor-General has recently issued a report that contains scathing criticism of the Howard government’s performance in relation to drought. It is especially critical of the Minister for Agriculture, Fisheries and Forestry’s department in its contingency planning for and response to drought. The Auditor found:

I find it incomprehensible and beyond belief that in 2005 the Auditor-General could make this sort of conclusion about the minister’s department and the administration of drought policy in this country. It is a damning indictment of the minister’s administration of his portfolio area that in a country as dry as Australia, where droughts are common, he has made no contingency plans for dealing with drought.

The Auditor also found that while the department did identify risks and problems associated with the delivery of EC assistance, there were:

So we had 45 per cent of Australia drought declared and 85 per cent of one of Australia’s most important agriculture producing states, New South Wales, had been drought declared for several years, and the Auditor says, ‘nor did any plans identify the possibility that substantial additional measures might be needed.’ That was reflected in the budget measures that the government brought down. It is no wonder that the minister seriously underestimated the impact of the drought in this year’s departmental budget. His department had no plans and did not even understand that additional measures might be needed.

The Auditor also found that there was no whole-of-government implementation plan and no integrated communication strategy. It is little wonder that the Auditor came to that conclusion, because the minister has gone out of his way to abuse the state governments who have been involved in the front line in assisting farmers to cope with drought. He also found serious problems in documentation by the department. There were gaps in some documentation on files and the maps used for EC declarations did not line up with the areas described in press releases announcing EC assistance. Can you believe that in 2005, after 10 years of this government’s administration of drought policy, the Auditor could come up with these sorts of substantial criticisms? This is a scathing indictment of the Howard government’s administration of drought policy in this country.

Despite the bleating by members opposite on how much the government has allocated to drought, allocation is one thing; giving farmers access to the funds is another. We see this in various programs that this government administers in the agriculture sector. From sugar to drought, the government makes great play of the amount of money that it allocates. Some years down the line, when you examine exactly what has been accessed, you will find that it is a different story altogether. No wonder the Auditor found that many farmers find the whole process of applying for drought assistance very confusing. The minister has presided over serious failures in the administration of drought policy by his department. It seems that under the Howard government the delivery of drought assistance has been characterised by poor planning and poor administration. They are not my words but the conclusions of the Auditor-General.

When I view this package, there is one particular area where I am pleased to see a small increase in the funding. It is the funding for the Rural Financial Counselling Service, which was given additional funding as part of this package. The Rural Financial Counselling Service provides a wonderful service on very limited resources in very trying conditions. The additional funding is welcomed, but it does not address the concerns of the service itself or of farmer organisations about the long-term viability of this service. It is time that the government bit the bullet and announced secure, long-term funding for this service at a level that will allow counsellors to get on with the job of helping farm families and communities, without having to worry about the long-term future of the service and going to the government every year with a begging bowl, so that the basic expertise and infrastructure can be kept in place to meet contingencies such as prolonged drought.

I am also concerned that there is nothing in the exceptional circumstances arrangements that would help farm families complete a thorough assessment of the long-term, ongoing viability of the enterprise. I am thinking of the sort of assistance that is currently available under the Farm Help program to access the service of a professional accountant skilled in assessing farm businesses and assisting with forward planning. There would be considerable benefit in allowing farmers to access this sort of assistance at a much earlier stage than is available under current arrangements.

The measures announced by the Prime Minister and the Minister for Agriculture, Fisheries and Forestry on 30 May in the main dealt with making it a bit easier for farmers to access drought relief once an area has been drought declared. It is disappointing to me that the government has not also gone back a step and reviewed the measures in place to help farmers prepare for the eventuality of drought. The government has placed great store in the Farm Management Deposits Scheme as the centrepiece of its efforts to help farmers prepare for drought. In fact, the agriculture minister mentioned the Farm Management Deposits scheme in his press release of 30 May 2005, when he announced the package that we are discussing here today. This is a very important scheme that has proven invaluable for many farm families as they have struggled through the recent dry years.

Mr John Cobb —Correct.

Mr GAVAN O’CONNOR —Correct, as the Parliamentary Secretary to the Minister for Transport and Regional Services has stated. But it is a bit rich for the parliamentary secretary, the minister and the government to claim credit for the scheme. The scheme is in many important respects the successor to the arrangements that operated under the former Labor government from at least 1992. These arrangements included the Income Equalisation Deposit Scheme and the Farm Management Bond Scheme as well as a provision for tax averaging. The Farm Management Deposits scheme was not a new initiative by the Howard government but basically a rebadging of Labor policy. We need to get that very clear.

The Howard government can rightly claim credit for two actions related to the ability of farmers to prepare for drought. It can claim credit for axing the drought investment allowance. Tax deductibility for investment in increased drought preparedness was introduced by the former Labor government to help farmers and give them more incentive to prepare their enterprises to cope with drought. In a very short-sighted decision in 1997, this important initiative was scrapped by the Howard government. It was none other than the current leader of The Nationals, John Anderson, who was agriculture minister in 1997, who axed this very important allowance.

The government can claim credit for another very short-sighted decision. Just before Christmas last year, the government decided to reject the proposal for a cooperative research centre for climate risk technologies. Such a CRC could have played an important role in helping farmers prepare much better for severe drought events. The primary focus of the proposed CRC was to have been to convert our understanding of Australia’s complex climatic systems into easy-to-use products for farm businesses and rural communities to integrate into farm business catchment and regional planning. In this very dry continent of ours, this sort of research is absolutely vital if our farmers and rural communities are to prepare adequately for drought. By rejecting the proposal, the Howard government has deprived farmers and communities of the essential tools that they need for their businesses to survive in the long term in Australia’s harsh climate. In a press release dated 22 December 2004, the National Farmers Federation had this to say about it:

Mr Charles Burke of the National Farmers Federation had this to say:

Mr Burke also said:

There we have it from the National Farmers Federation about one recent decision of the government that has not found favour with the sector and that has certainly done nothing to assist farmers to prepare long term for drought.

It is clear that the Howard government has not done enough to help Australia’s farmers prepare for drought over the past 10 years. The government has been in power for over a decade, yet there are still yawning gaps in drought policy. That has been acknowledged by the NFF, by farmers themselves and by industry organisations. Farmer organisations, including the National Farmers Federation, have long criticised the current drought assistance arrangements as having restrictive eligibility criteria, an unnecessary and complex declaration system and discriminatory support measures resulting in more dollars finishing up in bureaucracies than in farmers’ pockets.

Labor have long agreed with the NFF that improvements are needed to the way drought relief is structured and the way it is delivered. We are pleased that in some of the measures that the government has included in this package those problems have been addressed—but not all, and certainly the issue of the long-term drought preparedness of the sector needs more work. We have long agreed with the NFF that there need to be changes to drought policy. The Howard government first promised drought reform more than five years ago. Since then, it has announced breakthroughs in numerous press releases from the agriculture minister. There are titles such as ‘Drought policy reform breakthrough’, 13 April 2005; ‘Headway made on streamlining EC’, December 2004; ‘Progress on drought reform’, May 2004; ‘National drought policy: the way ahead’, April 2004; ‘Truss offers way forward on exceptional circumstances policy’, 5 March 2001; and ‘Federal government seeks to make EC support fairer and more workable’, on 1 May 2002. We have had a lexicon of press releases announcing the progress on drought reform, yet we have had substantial criticisms by the National Farmers Federation and we have had the comments that I have just alluded to by the Auditor-General.

Mr John Cobb —You’re not mentioning your state colleagues.

Mr GAVAN O’CONNOR —I would certainly be happy to do that in the context of the debate if I get to that area. The parliamentary secretary, the honourable member for Parkes, is really echoing the sort of mantra that his minister has: when you fail in policy you blame the Labor states. That is an old, worn mantra from the conservative side. I challenge you to address the issues in the Auditor’s report. If you want to intervene in this debate, go to the audit report, because after 10 years it tells you exactly where the government has been on drought policy. The honourable member for Parkes was a farm leader before he came into this parliament. He knows the situation from both sides of the fence and I find it quite extraordinary that he would make the comment that he has about state government administrations when in fact he knows, as the NFF knows and as the Auditor-General knows, that this has been a substantial area of policy failure by the government.

Let us go to the 2005 budget. At the time of this budget, the government demonstrated that it had no interest in drought reform and no real understanding of the impact of the current drought on Australian farmers. The 2005-06 budget papers show an estimated expenditure on exceptional circumstances assistance in 2004-05 of $131.9 million and a budget allocation for 2005-06 of only $59.2 million—a cut of $72.7 million. It is not as though the government was not warned about the seriousness of the situation. Labor understands that on 15 April 2005—3½ weeks before the budget was handed down—the agriculture minister was briefed by the Bureau of Meteorology at a meeting of the Primary Industries Ministerial Council and was told that the first quarter of this year was the second driest on record and that another El Nino event was likely this year. This was almost certainly not the only time in the lead-up to the budget that the government was warned about the increased likelihood that the drought would get worse, but either the government ignored the warnings or the agriculture minister failed to pass them on to his cabinet colleagues. In any case, a number of newspaper articles repeating the same warnings from the bureau appeared at about the same time. For example, a piece by Asa Wahlquist along these lines appeared in the Australian of 21 April.

One Labor commitment that has been picked up by the Howard government has been to work with the states to remove the requirement that the majority of farmers in an area seeking drought assistance prove a severe downturn in income and to replace it with a new criterion based on the impact of drought on production. Under this option, the assessment of the impact of the drought on farm incomes would be considered on an individual basis after a region was declared to be in drought. The implementation of this national production monitoring system is now being considered. At least on this one issue the minister has been able to work with state governments. Might I say, he has been able to work with them on little else. I encourage the minister to continue to pursue the development of this important Labor policy and I encourage the minister to continue working with the states and territories to develop a real national approach to drought reform.

Despite the recent rains across significant parts of Western Australia, Victoria, New South Wales and parts of South Australia and Queensland, around 45 per cent of Australian farmland is currently drought declared. In New South Wales, the figure is closer to 85 per cent, as I mentioned previously. Some of the most productive areas of Queensland are also in drought, as are parts of Victoria, South Australia and Western Australia. In fact, large parts of New South Wales, southern Queensland and northern Victoria have been in drought since late 2002 or the early part of 2003. A significant number of families in these regions have had little or no income derived from their properties for three years in a row. The recent rains in Western Australia have considerably relieved the situation there and crop forecasts for that state are now positive, and the rains in the Eastern States have allowed some farmers to get a crop in and to at least have a chance of receiving some sort of income this year.

However, for many the outlook still remains bleak. The Bureau of Meteorology has advised that the first quarter of 2005 was the second driest on record—only the first quarter of 1965 was drier. In addition, it has been the hottest start to the year, with temperatures right across the continent 1.7 degrees above normal. The second hottest was 1998, when temperatures were only 1.3 degrees above normal. Each year since 2002 has been classed as a dry year, with rainfall below the historical norm. The agencies responsible for long-range climate forecasts in Australia—the Bureau of Meteorology, CSIRO and the Queensland climate centre—use a variety of models to make rainfall projections for the rest of the year. The overwhelming consensus of all these models is that we are in for a hotter and drier than average year over most of the continent, especially in the east and the south-east.

That advice was available to the minister before the preparation of the budget, yet the government cut exceptional circumstances funding in that budget. In recent reviews, the forecasters have stated that they now think that there is a 50 per cent chance of average or slightly better than average rains over winter this year. However, this also means that there is a 50 per cent chance of lower than average rains over winter, and the longer term projections still indicate another dry year. Most of the models used rely to a greater or lesser extent on measurements of the southern oscillation index, a measure of the so-called El Nino effect. There is a strong consensus that the likelihood of a full-blown El Nino is still at least 50 per cent. The situation going into this El Nino event is even more precarious than it was back in 2002, when only two per cent of farmland was actually drought declared compared with 45 per cent across Australia today. Those climate projections are concerning, and the issue of long-term drought preparedness is one which the sector must now face in a very real way.

I have stated before in debate that there are many in this chamber who have experienced first hand the impact of drought on their farm enterprises, their families and their communities. My own family experience with these effects of drought is vivid to me; we went through the drought conditions that occurred in the Western District of Victoria in the late 1960s. In many ways those impacts have not changed, although for some farmers who have been able to plan both financially and resource-wise these effects have to a degree been ameliorated. But for many other farmers, persistent dry periods and lack of rain, which in some areas has run into years, have put intolerable pressure on the viability of their farm enterprises and seriously affected their long-term sustainability.

The social, economic and environmental effects of prolonged drought can be quite profound. At the drought summit I attended in Parkes, which was attended by the honourable parliamentary secretary and other members of this House, I heard first hand the social impacts the drought was having on farm families and relationships within those families and the utter desperation of many farmers who are viewing the rapid erosion of the equity base in their farms as they struggle financially with massive downturns in their farm income. Poverty and stress point to a deep social crisis in rural Australia as a result of the drought. I could go on about the economic impacts of drought on this nation—they are substantial—but my time in this debate is running out. I have moved my second reading amendment and I ask the honourable member for Lyons to second that amendment. (Time expired)

The DEPUTY SPEAKER (Hon. BC Scott)—Is the amendment seconded?

Mr Adams —I second the amendment.