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Wednesday, 23 June 2010
Page: 6308


Mr JOHN COBB (12:43 PM) —Drought and all the issues surrounding it are supposedly the purpose of the Farm Household Support Amendment (Ancillary Benefits) Bill 2010. I have dealt with drought most of my life in agripolitics, politics and as a farmer—I am still a farmer. The bill inserts a new part 9D to the Farm Household Support Act 1992 to treat farmers receiving income support, under a pilot of drought policy reform measures in Western Australia, as if they were receiving exceptional circumstances relief payments for welfare related purposes. Talking to my Western Australian colleagues, it is becoming apparent that Western Australia is having a slow start to the winter cropping season and there is a need for more rain. However, being a farmer, I am an eternal optimist and hope that the season can only get better.

Right upfront of this debate I want to place on record my upset and my anger at the Minister for Agriculture, Fisheries and Forestry’s repeated comments that exceptional circumstances interest rate subsidies are causing mental health issues and should be scrapped because of it. This is a load of rubbish. If he had the practical experience of living in the areas and being affected by drought and the consequences of failing under it, he would see that the exact opposite of what he has suggested is, in fact, the truth—that interest rates subsidies have provided relief for agricultural families rather than the opposite. That is not a comment I want to hear ever again.

The government will provide $18 million over five years, from 2009-10, to pilot new drought reform measures in selected regions of Western Australia. The 12-month pilot will commence on 1 July 2010, in a few weeks time, and will be delivered and funded in partnership with the government of Western Australia, which has agreed to contribute $5 million. This brings the total cost of the pilot to $23 million over five years, with the state government contributing approximately 20 per cent.

The pilot includes $4.9 million for income support for eligible farmers experiencing hardship. Recipients will be eligible for the beneficiary tax offset and may be eligible for a healthcare concession card, youth allowance for their children and early release of superannuation benefits, as it does under exceptional circumstances wherever it is—in Tasmania, Western Australia or New South Wales. I am pleased that the income support component of this trial is not capped, unlike the vast majority of the funding for this trial drought program.

It should be pointed out that the Western Australian trial is not a drought program; it is an efficiency program, and I would be loath to support it as the new drought policy across Australia. I welcome the acknowledgement by the government that investment in on-farm efficiency is a wise and sensible investment. However, it will do nothing for farmers in future in exceptional drought situations, be that for two, three or whatever drought years in a row. Heaven forbid we ever have eight or nine years as in recent times. Les White from the Weekly Times in an article headed ‘Drought aid trial, farms to get $60,000’ states:

The trial is expected to cost $23 million—$18 million from the Federal Government and $5 million from the West Australian Government—however as there is no cap on the number of grants, the costs could potentially be higher. Grants will continue to be paid even if the $23 million figure is exceeded.

In a media release issued on 5 May 2010, Minister Tony Burke stated:

Almost 6,000 farmers in the trial region are expected to be eligible for assistance under the package … for grants of up to $170,000.

If it is uncapped, there is a potential liability of $405,000,000 from just two of the components of the trial. The government has allocated just $12 million when they know they have a potential liability of $405 million, or 40 per cent of their projected surplus, if each of the 6,000 eligible farmers took up only two of the components they were eligible for, namely, as the media release states:

Building Farm Businesses—grants of up to $60,000 to help farm businesses prepare for the impacts of drought, reduced water availability and a changing climate, and on-farm Landcare activities—

allocated up to $8.4 million, with a total liability of $360,000,000—and:

Farm Planning—support for farmers to undertake training to develop or update a strategic plan for their farm business with a focus on preparing for future challenges Farm Planning—

allocated up to $3.6 million, with a total liability of $45,000,000, if each of the 6,000 eligible farmers took up the grant offer. If it is capped, the program has been deliberately designed to fail and, as we found out at estimates, the Weekly Times had it wrong. These two components are to be capped, which, given there was no mention of the fact that the different programs within the drought trial would be capped—in fact, the minister for agriculture’s press release stated there were 6,000 eligible farmers—suggests the government is deliberately misleading farmers in Western Australia and around the country about the true nature of the government’s response to exceptional droughts. There is only enough money allocated in this year’s budget for one of the 6,000 eligible farmers to receive the full farm exit support grant of $170,000; eight per cent to receive the $7,500 farm planning grant and just enough money for 2.3 per cent to receive the full $60,000 Building Farm Businesses grant. Minister Burke’s media release stated:

… grants of up to $60,000 to help farm businesses prepare for the impacts of drought, reduced water availability and a changing climate, and on-farm Landcare activities—

and allocated up to $8.4 million, but only 140 out of 6,000 eligible farmers would receive the full grant if the program was capped, as we now know it is. Furthermore:

Farm Planning—support for farmers to undertake training to develop or update a strategic plan for their farm business with a focus on preparing for future challenges—

and allocated up to $3.8 million, but only 480, or eight per cent, of the 6,000 eligible farmers would receive the full grant if the program is capped, as we now know it is. The media release went on:

Farm Exit Support—grants of up to $170,000 to support farmers who make the difficult decision to sell the farm business—

And allocated up to $0.3 million, but only one of the 6,000 eligible farmers would receive the full grant if the program is capped, as we now know it is.

In his post-budget speech at the Rural Press Club, Brisbane, on 12 May 2010 the Minister for Agriculture, Fisheries and Forestry, Tony Burke, in relation to the drought policy reform pilot of new measures in WA stated:

So, under the pilot, lines on a map are gone and we have one test—a hardship test. If you’re in hardship you qualify and if you’re not in hardship then you don’t.

I would appreciate the minister clarifying a number of issues not just for me but for every farmer within the pilot program—that is, for the 6,000 farmers in WA—and for the whole sector generally. What is the definition of ‘a hardship test’ the minister referred to? What is the definition of ‘farmer’ used by the department in this trial? How many farmers located within the region of WA will be covered by the trial program? If during the 12-month trial period there were a hardship event—such as exceptional circumstances drought, locust plague, mice plague, bushfire, flood or dust storm—would the number of eligible farmers within the trial area increase? What is the name of the body that will decide whether a farmer qualifies for the help and is deemed to be in hardship, and how will this body be funded? Will the minister—and, if so, which minister, Western Australian or federal—has the final determination on whether an event qualifies as a hardship event to be eligible for the drought trial program? Will the minister—and, if so, which minister, Western Australian or federal—has the final determination? I am interested to know the answers to these questions as the definitions in the hardship test are extremely important.

The coalition do not oppose this bill and we will closely follow the so-called drought trial in Western Australia. We do not oppose the bill on these grounds. If there are farmers within this region of WA who are in strife and who can be helped, then far be it from us to deny them what the program is meant to do for them. But I have to say this: this is called a drought program, but drought as we know it is the kind of thing that would qualify as exceptional circumstances drought—and that is how we have dealt with it up until now—and it means pretty desperate times. It does not mean that you can spend $60,000 on a farm and drought proof it; you cannot.

I am not suggesting for one second that drought measures cannot be improved on, but I have a terrible suspicion following the Productivity Commission report. The minister called for it and got it; and the Productivity Commission does sit under Treasury, so it is not about handing out money. The report done by the Productivity Commission was scathing about drought, mainly because they are an arm of Treasury and they do not like money leaving. It was suggested that the interest rate subsidy had done harm rather than good; it has done good and it has held together areas within my electorate. There are areas that went into exceptional circumstances drought in June or July 2002—that is, eight years ago. There would be very few of them left, except for EC and except for the interest rate subsidy. That kept the banks on side, which kept farmers on the farms and gave them a chance when conditions improved to get some stock back and to do all those things. I take personal offence, as does the industry, to be told that the interest rate subsidy caused mental issues—and I would rather not go into those at this time. It saved them. It has done an awful lot for people. Whether or not you like the program, there is no getting around the fact that it has meant a lot to a lot of regional and rural Australians.

We support the bill because it will give a chance to those in the trial area of WA, who might be in particularly bad circumstances, to get the sort of relief that people get under exceptional circumstances.