Is there a less scrutinised area of public funding than drought relief? The government today has announced — via drops to the media — another billion dollars to be handed to a key industry ally of the Coalition, and there is virtually no analysis from the media and no objection from Labor — which if anything will criticise the package for not being big enough.
If colossal sums of money in free loans were handed to the finance industry, or the construction sector, or manufacturing, specifically targeted at groups that support the government, at the very least there’d be media debate about how worthwhile an investment it was — or even Utegate-style allegations of corruption.
Connections would be made between the donations made by the relevant industry and the largesse they enjoyed from the government. But “drought relief” has a special magic that makes it immune to rational assessment.
Despite talk about switching the focus of drought funding to resilience rather than handouts, the government has once again focused on being an ATM for its supporters. The latest package expands agricultural concessional loans to any regional business, makes existing concessional loans cheaper still, and hands money to rural councils for make-work projects with no benefit-cost analysis.
Concessional loans are a damaging form of assistance that encourages recipients — the ranks of whom have now been massively expanded — to undertake investments for which there is no sound business case. The only — limited — benefit is that they are better than a handout. But with the repayment period for existing cheap loans extended, they’re becoming more and more like the latter.
Why shouldn’t other small business get access to interest-free loans? What about retailers, doing it just as tough in a struggling economy where households have had their spending curbed by wage stagnation and the government’s rapidly increasing tax take?
How about manufacturing, which lost 100,000 jobs — a third of the entire agriculture workforce — in the year to August? Those workers have to find jobs elsewhere, and possibly move to do so, especially if they’re in regional centres, where manufacturing has been hit hard by energy price rises. Why is it that an industry that is closely aligned with the Coalition gets help and other struggling sectors don’t?
That concessional loans are a counterproductive form of assistance has been known for years. So has the fact that drought assistance punishes those who have invested in resilience and rewards the lazy and profligate. These facts have been on the public record for at least a decade, since the Productivity Commission examined drought relief and found it fundamentally flawed in 2009. Even the National Farmers Federation has criticised handouts “that can undermine drought preparation and resilience”.
Yet you’ll look long and hard through the media’s coverage of successive drought packages to ever see that reflected. To the Financial Review’s credit, today it editorialised against yet more handouts to farmers and explained how counter-productive they are. But the bulk of the coverage of drought policy has consisted of sympathetic stories of struggling farmers or race-calling political stories about angry Nationals MPs and how the drought will factor into the Press Gallery’s favourite shiny thing — yet another leadership spill.
Yet more drought relief is a sugar hit for a Coalition-friendly sector already glutted with handouts — and particularly for farmers who haven’t made the hard choices to make their properties and their operations more resilient and more sustainable. Other industries doing it tough for reasons for less under their control can only look on in envy. Maybe they need their own political party too.
Viability, the word never spoken when drought once again grips large swathes of the big brown land. After importing farming practices from a different hemisphere, climate and biological environment, Australia continues to tough it out when the reality of the land, weather and local biological factors tell a completely different story. Time to talk viability. Time to insist on changed practice. Time to talk of something other than ‘when the next rain comes’ and ‘cash-that’s-not-welfare’.
Think that’s all a bit too sciency for Australia, Richard. Yesterday we had 11,000 scientists warning us of climate change emergency and today our PM announces $1,500,000,000 for a rural sector that will likely never recover from the current situation, much less take the actions recommended by the 11,000.
Whilst I agree with the premise of this argument, it is only one factor in the complete mismanagement of agricultural policy for decades. The news media can easily find heart-rending stories of the ‘man on the land’ suffering the effects of drought. What that does is create the impression that agriculture is conducted overwhelmingly by individuals and families that have been on the land for many decades. The truth is that the typical ‘man on the land’ these days is a manager employed by a large corporation. And I see no differentiation in this latest round of hand outs between authentic family farming businesses and the corporate farmer, especially where the corporate farmer has the in-house resources to maximise the hand out it can suck in.
As you allude to Bernard, these handouts perpetuate agriculture on marginal and unsuitable land. When is that issue going to be properly addressed by policy-makers? Government expenditure would be much better applied to simply buying out the marginal farmers and re-wilding that country. But the faux-hayseed Nationals will never support that. Seems to be a fertile area for innovative Labor policy in agriculture.
Excellent post Been Around as is Keane’s op ed.
They did initiate such a programme once upon a time under Doug Anthony. When the UK went into the EU and Australia lost its Commonwealth preference for dairy products a farm build up scheme was initiated. If you were a dairy farmer who wished to leave the industry and could find a neighbour willing to take on your land to then run a beef unit the Commonwealth would buy you out at valuation and then make retraining available to the vacating dairy farmer. A considerable number of North Coast NSW dairy farmers used the scheme of which I was one. The retraining option provided a second opportunity for most and a myriad opportunities were taken. It is possible if the will is there. Piling debt onto the desperate has only one outcome, at some point there will be distressed sellers and the corporate sector will be there to take advantage.
Bernard’s article reflects my thinking exactly, while the government demeans welfare recipients and threatens drug testing (because we all know they squander their pittance) they are quite happy to support the chosen lifestyle of marginal farmers, with ever more agrarian socialism.
If this was a normal drought I would agree, but we have been three years without decent or any crops in my town and we are NOT considered marginal. Unlike the Bernard Keenes I have seen plenty of droughts. On my family farm, once in 50 years we got a low interest loan to improve some aspect of our pastures. We had to buy feed a few times (we bought wheat and paid a freight levy up from Sydney when it had never been out f the local silo.) However, this is the worst drought since local records began in 1883. We need to seriously revise how agriculture works, but this is also the end result of idiot government policy and excessive deforestation which is proven to lower rain. I am happy to see farmers get cheaper loans as long as money also flows to the businesses in their communities which really are doing it tough as well. Government policy has seen services including health, especially mental health and every other conceivable area withdrawn. You could have emergency appendectomies at the local hospital and my sister was born there. Now you might be able to get a cut stitched. You could of course close regional Australia and import all the food (the cities have buried the coastal farms) and have a completely FIFO workforce. It would be a long time between drinks for a traveller though. All fibre would also need to be imported of course as we make nothing here much and unlike our competitors we were prepared to let industries die in favour of crap steel and low quality goods from China, including much of the dodgy building materials.
Yeah… Greybeard captures a lot of valid points. If we were to accept that a lot of Australian farming was inherently unviable and should be allowed to quietly die, then we would have to accept the disappearance of more than a few country towns and villages. Are we up for that?
Re this from Been Around… “Seems to be a fertile area for innovative Labor policy in agriculture.” We might, until recently, have been able to perceive Labor as our last hope for innovative policy. But that has been dashed by [1] their craven support for the bugging of the Timor Leste government offices (and allied matters) and, [2] their utter failure to articulate the visionary policies they took to the last election and to stand up to and to counter the unsophisticated LNP lying and sledging that resulted.
Fair enough, OGO, but what constitutes a normal drought these days.
The farmers have to adjust, and those that do shouldn’t be propping up those that don’t.
It will get a lot worse. What then?
“You could of course close regional Australia and import all the food (the cities have buried the coastal farms) and have a completely FIFO workforce.”
With respect, that’s the sort of extreme language you’d expect from the National Party, it shores up the idea that without farming at scale we’d all starve. We wouldn’t but we’d have trouble with the balance of payment as exports dropped. In the long term that’s the same problem we face as coal becomes less attractive to overseas buyers. If Australians were honest with themselves they’d realise that we run a first world standard of living on third world primary industries. The pivot towards on larger tertiary sector seems to be too hard but without it our time in the sun will be over within 50 years. I suspect this won’t be a problem for OGO.
The only thing which made sense in the drawn-out announcement today was the release of an extra 100GL of water along the Murray-Darling. But, if the government’s usual form is an indicator, it’s likely too little too late.
Will farmers or small business owners working in a degraded landscape &/or in a dying region risk incurring more debt regardless of the terms?
Does that water exist in liquid form and if so where is it to be released from. If it does exist who is going to monitor its journey and the temptations it will bring to appropriate just enough not to be noticed.
It probably exists only in money form, all for the benefit of the few supporters.