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Monday, 18 November 2002
Page: 6593


Senator O'BRIEN (3:04 PM) —I move:

That the Senate take note of the statement.

Although it now appears that we will get an answer within 48 hours, it is entirely unsatisfactory in the circumstances to take so long to obtain a response to a question of this import—it is a question about the drought investment allowance. I await seeing the response before I determine its adequacy. On 15 August, I asked questions concerning the drought investment allowance of Senator Minchin, in his capacity as the Minister representing the Treasurer, and of Senator Ian Macdonald, in his capacity as the Minister representing the Minister for Agriculture, Fisheries and Forestry. Senator Macdonald provided answers on 23 September but advised me that some of the information I sought would be specifically addressed in the Treasurer's answer. Whilst I might touch on that later, I want to deal with the failure to date of the Treasurer, through Senator Minchin, to provide the requested information, despite the passage of 13 weeks and despite the additional request that I made on 30 September to Senator Minchin's office regarding this question—so I am a little surprised that he was not aware that I was chasing the answer, as his statement today indicates. In that written request, I said to Senator Minchin that I was not expecting the answer in a few hours or a few days, but I did indicate that I expected to have the answer within four weeks—that is, of 30 September. I had no response from Senator Minchin's office that that deadline could not be met.

I think that drought mitigation, at this time in particular, is an important public policy issue. The question asked was a serious attempt to gain a better understanding of the financial impact of the drought investment allowance. It is disappointing, as I said, that that answer could not have been provided before now. It demonstrates, either on the part of Senator Minchin or on the part of the Treasurer, a contempt for the process of the Senate in relation to responses to questions on notice. This matter is important because it highlights the attitude of some ministers of this government to the work of this Senate. It is also important because it highlights the question of the tax allowance—which, I might say, was introduced by a Labor government that encouraged primary producers to invest in the drought mitigation of property, that is, encouraged them to better prepare for drought. The drought investment allowance was part of Labor's response to the last crippling drought that this country faced. That allowance was introduced in 1995 and provided a five-year, 10 per cent allowance for investment of up to $50,000 per annum in drought mitigation property, including water and fodder storage facilities, water transport facilities and minimum tillage equipment. It was part of a suite of measures that Labor introduced to assist farmers to deal with climate variability.

Senators will be aware of how determined Labor has been in pursuing these issues and ensuring that farmers get timely assistance in the current drought. Together with my colleagues, I have pressed the government to improve the delivery of drought assistance and to fix up the measures that relate to exceptional circumstances—of which this government has made a complete and utter mess. It is regrettable that the minister responsible for Commonwealth drought policy does not share that commitment but immediate assistance is not the only component of responsible drought policy. A central feature of national drought policy, developed by Labor in government, was appropriate risk management. Labor's policy encouraged primary producers to adopt self-reliant approaches to manage climate variability. The drought investment allowance was part of a policy suite that included significant reforms to farm management bonds, part of Labor's income equalisation scheme, and the precursor of the current farm management bonds. Listening to the government in recent weeks, you could have been forgiven for thinking farm deposits were stumbled upon after 1996 as a revolutionary way to assist farmers to prepare for bad seasons. But the fact is that Labor had a very similar scheme operating when those opposite came to office six years ago.

While the Minister for Agriculture, Fisheries and Forestry, the Deputy Prime Minister, and even the Prime Minister, have rushed to boast about the value of farm management deposits in recent weeks, they have been a bit quiet about how many drought stricken farmers are in a position to benefit from the scheme. Certainly, there are ample deposits in the scheme. The scheme rules, however, require that funds must remain deposited for 12 months before a primary producer can claim a tax benefit. Despite the deposit level, farmers who have put money away in the past 12 months cannot gain any advantage until the 12 months are up. There is some irony, of course, in the recent attack by the minister for agriculture on the New South Wales government's six-month rule in relation to drought assistance. The fact is that Mr Truss operates a 12-month rule in relation to farm management deposits but he has not been so quick in condemning his own administration.

There are four things to be said about farm management deposits and the scheme itself. Firstly, income equalisations were not discovered by the coalition in 1996. Labor in government administered a scheme that included farm management bonds. Secondly, many farmers have been unable to deposit funds—I guess that is the nature of the cycle. Thirdly, farm management deposits belong to farmers. The headline grabbing deposit total does not reflect additional effort on the part of the government. Fourthly, the government has been reluctant to answer my questions about the scheme. A question on notice lodged on the same day as my question about the drought investment allowance languishes, similarly, unanswered.

Thanks to Senator Ian Macdonald's observation of the standing orders, there is one thing I know about the drought investment allowance about which the Senate should also be aware. Senator Macdonald advises me that the allowance was permitted to lapse without any investigation as to its effectiveness. Senator Macdonald in his capacity as the Minister representing the Minister for Agriculture, Fisheries and Forestry told me:

The Government has not undertaken any research into the effectiveness of the drought investment allowance in encouraging primary producers and lessors of property to primary producers to invest in drought mitigation property as the drought investment allowance was simply intended as an interim measure to assist farmers achieve a higher level of drought preparedness.

We know that the government permitted the allowance to lapse on 30 June 2000 with no analysis of its effectiveness and no intention to replace it with an equivalent or improved drought mitigation scheme. The government did this, of course, in the period immediately preceding the onset of the current crippling drought. Labor would, of course, like to know more about the allowance but the Minister representing the Treasurer has not seen fit—perhaps because the Treasurer has not provided it to him—to provide the Senate with an answer. The current Deputy Leader of the National Party and the Minister for Trade, Mark Vaile, thought he knew something about the allowance in 1995, when he said:

It provided a `paltry' sum to primary producers and it was too little too late.

It would be far too generous to describe the current government's commitment to drought mitigation as `paltry'. Of course, `too little too late' is not an appropriate label for a program that was allowed to lapse two years ago. The great shame is that the same coalition members of the parliament who criticised the generosity of the drought investment allowance in 1995 failed to raise their voice again when it was cut. The lapse of the drought investment allowance is a sign that the coalition is guilty of empty commitment to rural Australia. The government should have reviewed the allowance to ensure it was working as intended. If it was found that it was not working as intended, it should have been replaced with an effective scheme that helped farmers prepare for drought. The government's handling of this issue points to a National Party minister for agriculture unable or unwilling to defend the interests of primary producers.

There is some irony that the present motion has been brought on by the failure of Senator Minchin to do what standing orders require him to do. I suppose he will blame the Treasurer for that, but Senator Minchin is one of a number of government senators who wants to merge the National Party with the Liberal Party. The matter of the drought investment allowance has to be seen as a further sign that no-one in rural Australia would really notice the difference.