Program 1.11: Drought programs

​Program objectives

The objective of this program is to:

  • support eligible farmers and small businesses with targeted assistance during exceptional circumstances and events, including drought
  • increase the resilience and capacity of farmers, farming families and their communities to better prepare for and self-manage the impacts of drought, climate variability and reduced water availability.

Review of performance

This review addresses the deliverables identified in the 2011–1​2 Portfolio Budget Statements. Table 12 summarises the extent to which we have met key performance indicators.

Pilot of drought reform measures

In 2010–11, the Australian and Western Australian governments piloted a package of drought reform measures. The measures were piloted in a region covering half of Western Australia, from Karratha to Esperance. In May 2011, the Australian Government announced the extension of the pilot until 30 June 2012 and expanded the pilot area to include the entire south-west region of Western Australia.

The measures included in the pilot were designed to help farmers move from crisis management to risk management. Measures trialled in 2011–12 included:

  • Farm Planning—demand for these courses was strong, with 620 farm businesses completing the course. The program, delivered by the Western Australian Department of Agriculture and Food, provided training in business planning, allowing farmers to update or develop a strategic plan. Many participants entered the program with no business plan and left with organised goals and strategies directed at maintaining the short- and long-term sustainability of their farm enterprises
  • Building Farm Businesses—this program assists farm businesses that have completed the Farm Planning program to undertake projects that will help them manage and prepare for the impacts of drought, reduced water availability and a changing climate:
    • Phase 1 commenced on 1 July 2010, with the Australian Government committing $6.7  million and the Western Australian Government committing $0.8 million over four years. A total of $3.3 million was paid out to 127 recipients in 2011–12
    • Phase 2 of the Building Farm Businesses program commenced on 1 July 2011, with the Australian Government committing $20.1 million over two years. A total of $12.7 million was paid out to 670 recipients in 2011–12
  • Farm Social Support—this program was jointly funded by the Department of Human Services (DHS), the Department of Health and Ageing (DoHA) and the Department of Families, Housing, Community Services and Indigenous Affairs. We assisted in coordinating the program and chaired a Farm Social Support Committee. The program aimed to provide social support services that were more accessible, coordinated, integrated and efficient in meeting the counselling and mental health needs of people living in rural and remote areas. During 2011–12:
    • DHS Rural Services Officers and social workers visited 2752 farms and rural events to assist farm families
    • the Australian Government Mobile Office made 40 visits to towns in the pilot region and assisted more than 1400 rural people
    • the program provided free professional family relationship assistance to 3903 people and confidential and free professional online counselling to 475 young people in the pilot region

    The Online Counselling for Rural Young Australians Initiative has been made available nationally through the eheadspace program and has become an ongoing initiative

  • Farm Family Support—this program provided income support to help farming families facing hardship meet basic household needs. Farm Family Support recipients also received up to $2500 to complete a Farm Financial Assessment, which they used to develop an action plan in consultation with a DHS Rural Services Officer. The program was jointly delivered by DAFF, DHS, DoHA and the Department of Employment, Education and Workplace Relations. In 2011–12, the program provided household income support totalling $8.9 million to around 727 recipients
  • Farm Exit Support—this program provided exit grants, valued at up to $150 000, to eligible farm families in significant financial difficulty, to re-establish outside farming, as well as $10 000 towards advice and retraining and a $10 000 relocation grant. The Australian Government allocated $1.44 million to extend the program until 30 June 2012, or until the program had been fully subscribed. The department closely monitored uptake of the exit grant and announced in December 2011 that the program was close to being fully subscribed. We announced the close of applications on 28 March 2012, after receiving sufficient claims to exhaust the allocated funds. As at 30 June 2012, 10 grants had been approved for payment
  • Beyond Farming—the Western Australian Council of Social Service delivered this program on behalf of DAFF. The program engaged 27 former farmers to be trained as mentors, to help farmers make a decision about whether or not to leave farming. Demand for the program by active farmers was lower than projected. Mentors were matched with 30 farmers to talk about opportunities available beyond farming.

Review of drought reform measures

An independent panel reviewed the first year of the pilot of drought reform measures and submitted its final report to the minister in August 2011. The report was released in September 2011. The panel recommended future drought policy is based on:

  • an income support safety net for farm families in hardship, based on demonstrated individual need
  • the permanent presence of social support services, delivered via outreach to people in rural communities
  • continuing opportunities to engage in, and implement, strategic farm business planning
  • ongoing access to the Farm Management Deposits Scheme and existing tax incentives for primary producers.

From the outset, all of the information and guidelines provided have been clear about the pilot's purpose and its limited timeframes. A two-year trial period, combined with the findings of the Drought Pilot Review Panel, has provided the government with a reasonable test of alternative drought support measures.

The pilot has been an effective trial of drought reform measures that seek to assist farmers to better manage risks and prepare for future challenges, including drought. It will also assist in informing the government's decisions about future drought related programs.

Providing drought assistance

Exceptional Circumstances (EC) assistance is the government's existing support mechanism for eligible farmers, small businesses and communities affected by severe drought events. During 2011–12, this assistance included household income support payments, interest rate subsidies, farm exit payments and social support measures. ABARES continued to support decision making on assistance to drought-affected regions.

The 2011–12 expenditure on EC assistance was $48.46 million. This was lower than in 2010–11, reflecting the area of agricultural land that was EC declared falling from 0.3 per cent in June 2011 to no areas being declared as of May 2012.

Exceptional Circumstances Relief Payment

The EC Relief Payment is delivered by DHS and provides income support to farmers and small business owners who are finding it difficult to meet household living expenses.

During 2011–12, the government made EC Relief Payments of $6.48 million to 508 households (477 farms and 31 small businesses). At 30 June 2012, there were no households receiving EC Relief Payments.

Exceptional Circumstances Interest Rate Subsidy

Due to the improved seasonal conditions and expiry of all EC declarations at 30 April 2012, the government announced in the 2012–13 Budget that the EC Interest Rate Subsidy program would close on 30 June 2012.

Successive reviews of drought policy since 1997 have found that the EC Interest Rate Subsidy can result in farm businesses being less responsive to drought conditions. Over recent years, the Australian, state and territory agriculture ministers have recognised that the subsidy does not assist the farming community to prepare for future challenges, including drought. After years of drought, the improvement in seasonal conditions and favourable outlook for agriculture provided the context to implement the findings of the many reviews of drought policy and to close the EC Interest Rate Subsidy.

During 2011–12, the subsidy was paid as a grant to eligible farms and small businesses. The program was co-funded by the Australian Government (90 per cent) and state and territory governments (10 per cent). State and territory rural adjustment authorities were paid a service fee to deliver the program. The costs were appropriated to the Australian Government Treasury, which transferred funds directly to the states.

During 2011–12, 822 businesses received an EC Interest Rate Subsidy (761 farm businesses and 61 small businesses), with $32.9 million paid to eligible recipients. The state rural adjustment authorities claimed $0.8 million in service fees for processing applications received in 2011–12.

Re-establishment assistance

During 2011–12, 103 farmers received the EC Exit Grant, after deciding to sell their farm and re-establish outside farming. The exit grant package included a one-off payment of up to $150 000, an advice and retraining grant of up to $10 000 and relocation assistance of up to $10 000. The total value of grants paid in 2011–12 was $14.8 million.

Very strong demand took the program to full subscription earlier than expected and the closure date for applications was brought forward to 10 August 2011. Initial funding for the grant in 2011–12 was $9.6 million; this was increased by an additional $4.4 million due to demand being significantly higher than expected, to ensure that all eligible participants applying before 10 August 2011 could be assessed and paid accordingly. A further $0.9 million was allocated in April 2012, bringing the total budget to approximately $14.9 million.

Continuing household assistance

The Australian Government recognises that while it is necessary to work towards the development and implementation of reform, it is also important that support continues to be available to farmers suffering hardship. In the 2012-13 Budget, the government announced continuation of household income support through the Transitional Farm Family Payment. This allows farm families in hardship to apply for a maximum of 12 months household income support, paid at the same rate as the Newstart Allowance. The household income support provided is combined with individualised case management assistance and activities to help farm families improve their long-term security.

Key performance indicators

Table 12  Program 1.11: Drought programs—key performance indicators
Key performance indicator 2011–12 target Achievement
2011–12 2010–11 2009–10

Eligible applicants (farmers and small businesses) receive sufficient financial resources to meet immediate needs within timeframe specified by the Business Partnership Agreement

100% a

Met

Performance: Delivery of services by the Department of Human Services is in accordance with the Business Partnership Agreement between agencies. Delivery of services by the states and territories is in accordance with intergovernmental agreements. This is a new indicator.

Interim Income Support claims to be processed within 42 days, in accordance with the Business Partnership Agreement with Centrelink

N/A b

N/A

Met

Met

Performance: Achievement for this key performance indicator was not applicable for 2011–12. There were no applications made by state or territory governments in 2011–12 for EC declarations; as a result, no Interim Income Support claims were made. DAFF reported this indicator as a 'deliverable' in 2010–11.

Farm Household Support Act 1992, s. 57(3) – Exceptional Circumstances Relief Payment claims to be processed within 42 days, in accordance with the Business Partnership Agreement with Centrelink

80%

Met

Met

Met

Performance: Virtually all claims were processed in accordance with the Agreement. This is reported in the Department of Human Services' monthly performance reports. DAFF reported this indicator as a 'deliverable' in 2010–11

Drought Assistance re-establishment grant
claims to be processed within 91 days in accordance with the Protocol agreed with Centrelink

80%

Met

Met

Performance: Virtually all claims were processed in accordance with the Agreement. This is reported in the Department of Human Services' monthly performance reports. DAFF reported this indicator as a 'deliverable' in 2010–11.

Minister/parliamentary secretary and executive satisfied with the quality and timeliness of policy advice and support.

High level of satisfaction achieved

Met

Performance: DAFF provided policy advice and support to the minister and parliamentary secretary. This advice has been received with a high level of satisfaction. This is a new indicator.

a This key performance indicator requires that the Department of Human Services adheres 100 per cent of the time to the key performance indicator levels specified in the Business Partnership Agreement with DAFF. b In the Portfolio Budget Statements there were no forward estimates from 2011–12 onwards for Interim Income Support as there were no Exceptional Circumstances declarations that extended beyond 30 April 2012.

Outlook for 2012–13

While the Western Australian pilot ended on 30 June 2012, payments to approved farmers will continue, through the Building Farm Businesses program, until 30 June 2014 under phase 1 and until 30 June 2013 under phase 2.

Australia commenced 2012-13 officially drought free for the first time in over a decade. The improved seasonal outlook and conditions in Australia provide an opportunity to transition drought response from crisis management to a risk management approach that helps farmers prepare for the future.

Developing a proposal for future drought programs will be a major focus in 2012–13. In April 2012, the Standing Council on Primary Industries tasked the Primary Industries Standing Committee with developing a proposal for a future drought package. The reform work aims to improve farmers' preparedness and self-reliance in the context of a variable climate. The proposal will draw on the findings of previous reviews of the drought programs, including the pilot of drought reform measures in Western Australia.

This package will be considered at the council's meeting in October 2012, with implementation to occur from 1 July 2014. We will work closely with other Commonwealth agencies and state and territory governments, and consult industry and their representative groups, throughout the development process.

Last reviewed: 4 November 2019
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