THE federal government has announced $320 million in immediate drought assistance measures, underpinned by a $280 million boost to concessional loans in the Farm Finance Package (FFP).
"This is not a hand out - it is a hand up," Prime Minister Tony Abbott said this morning, stressing that the loans were not designed to prop up unviable businesses but to help viable ones.
"Drought of this severity is not 'normal business'," he said, when comparing the assistance package to the rejection of the SPC Ardmona bail-out request.
The $420 million FFP was announced by the former Labor government last April to assist farmers struggling with short-term viability issues and will now total $700m.
The Abbot government has also adjusted interest rates in the loan scheme from 4.5 per cent to 4pc, despite the National Farmers' Federation (NFF) requesting a 1.5pc cut.
The package also includes changes to social support services and payments, including “more generous criteria” for Farm Household Allowance payments.
The scheme was due to be implemented on July 1 2014 but will now be moved forward to March 3, as flagged by Prime Minister Abbott earlier this month.
Water infrastructure was allocated $12m in the package. The announcement also includes $10.7m to increase delivery of social support services in drought-affected areas, which NFF Brent Finlay said was “critical” for rural communities battling with drought.
The NFF boss also welcomed the government’s contribution of another $10m - primarily in Queensland and NSW - to help reduce wild dogs and feral pigs, which are having a damaging impact on graziers dealing with the dry.
NFF chief executive officer Matt Linnegar said while the announcement was "a package for the here and now", it was vitally important to have long-term drought policy in place. He said the Agriculture White Paper overseen by Mr Joyce would be a way to channel this plan.
Referring to extra money for concessional loans, he said while there would always be concerns about farmers increasing their debt, the asset test and changed eligibility criteria would help focus on viable agricultural businesses.
While the FFP has been bolstered by $280m, the federal government must still devise the scheme’s final delivery arrangements with each of the States, which has been an ongoing sticking point.
Mr Joyce said he informed State ministers in NSW and Queensland and the NFF of the package details as soon as cabinet had concluded last night.
The government said farm businesses and farm families across Australia are suffering financially and emotionally from prolonged drought and the new package would assist their recovery, when the current drought ends.
This week’s announcement comes after Mr Abbott visited drought affected regions of NSW and Queensland earlier this month with Federal Agriculture Minister Barnaby Joyce, meeting farmers and community members struggling to cope with the drought.
Queensland is now 70pc drought-declared while 52pc of NSW is also in drought, with both State governments providing emergency in-drought support measures.
Mr Finlay recently accompanied Mr Joyce on a tour of the east coast’s worst hit regions and was also present when Mr Abbott visited Longreach in Queensland on February 16.
The NFF boss welcomed the government’s assistance package and support for regional communities and businesses suffering from lost income due to extended periods of lost production, in some cases two years.
Mr Finlay said he was disappointed the concessional loan interest rate was only cut by 0.5pc, saying it needed to be 3pc as the government was “making money” at 4.5pc.
He said it was also critical to relax the net assets test around the family income support because those who needed the money most were “cash poor”.
“We welcome the government’s announcement of this drought support package,” he said. “Some people will have expected it to be far greater, but we understand the (economic) situation the government finds itself in.
“This will help get some money flowing back into these communities, from farmers putting some money into the bank again.
“I’d like to thank the Minister (Barnaby Joyce) because I know how passionately he’s argued this case and how concerned he’s been with getting an outcome.
“We welcome the... funding for mental health support services, which has been one of my main concerns for communities suffering long-term impacts from drought and multiple disasters.”
Mr Finlay said the government’s package provides some welcome short-term relief but work on the longer term drought policy, “where the big adjustments and the big fixes will be”, was also critically important.
“This is only one step on the journey of getting an outcome for a problem that no other government has been able to fix in the past,” he said.
“A lot of work needs to be done on the longer term structural reforms around drought, to build resilience back into these farm businesses.”
Mr Finlay said longer term reforms included adjustments to Farm Management Deposits (FMDs) and other tax incentives or adjustments to allow farmers to better-prepare for drought.
He said many farming areas were still in dire trouble and “don’t know if they’re in the start, middle or end of the drought”.
“Some areas have had rain and some fantastic rains, right up in the north, but I’ve been talking to producers who have had enough of the dust so that’s where the mental health support will be important,” he said.
“It’s also important that commercial lenders continue to support these farmers… but the only way we’re going to get out of this is with rain.”
The package was agreed at a meeting of federal cabinet ministers in Canberra on Tuesday night.
On Wednesday morning, Mr Abbott said it was important the government “does what we reasonably can to help farmers who are in the midst of what is akin to a natural disaster”.
“The package that we will be announcing later today; it will be economically responsible, it will be fair, it will make a difference but what we all are hoping and praying for is lasting rain,” he said.
“That is really the only way to deal with drought in the long run – to see the seasons change.
“This is a natural disaster – a very serious drought, drought of an intensity which we haven’t seen in some cases for 100 years, in other cases for a quarter of a century.
“It is not just normal business, and while it’s not the job of governments to support businesses to deal with something which is the ordinary part of business, it is the role of government to help people who are facing natural disaster and that is the fundamental difference.”
Shadow Agriculture Minister Joel Fitzgibbon questioned why it had taken the Abbott government so long to make an announcement on drought support.
He said Labor had been urging the government to provide a relief package for struggling farm families for a month.
Mr Fitzgibbon said Senate estimates hearing this week revealed that only 13pc of the original $420m allocated by Labor in the FFP had been spent; despite Mr Joyce’s reallocation of funds reserving $40m for the scheme’s second year. He said only 29pc of applications have been successful to date, with 36pc declined.
“That tells us that in six months the Abbott government has been very slow to respond to what has been a very severe drought,” he said.
“It probably reflects the guidelines were made deliberately tight (by the former Labor government), requiring farmers to demonstrate their viability.
“That’s why for the past month we’ve been calling on the government to relax those guidelines to give relief to those farmers who need it.”
Ahead of Wednesday’s announcement, Nationals leader Warren Truss joked about Mr Abbott's 'rainmaker' status.
“I know there's been some good rain in the places the Prime Minister has visited,” he said on Tuesday.
“We've got two options: one is a drought package, the other is to send the Prime Minister to every drought-stricken town in Australia.”
The Australian Greens welcomed increased drought support for farmers, but said action on climate change must be part of any effort to protect rural communities.
“The biggest challenge facing Australian farmers is the Abbott government’s denial of global warming,” Greens leader Christine Milne said.
“Tony Abbott and Barnaby Joyce insist that it is something that cannot be planned for. They do not understand drought.
The Greens supported urgent financial support for farmers and welcomed the provision of crucial mental health services to regional areas, but said the plan won’t help producers in the future if climate conditions continued to.
"It's cruel to say 'things will go back to the way they were before' - we need to plan for the long term," Ms Milne said.
- with FarmOnline