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Drought: avoiding a populist response
6 Sep 2004
News that Australia is on the verge of another El Nino event came as the national accounts showed how badly the drought has affected farm output. Farm GDP fell more than 7 per cent in the June quarter, putting pressure on governments and farmers to come up with a more effective way of responding to drought. Reforms have been interrupted by the federal election and the Primary Industry Ministerial Council won't make its recommendations until a month after the election.
The Government should avoid making a populist response to the drought conditions. Just throwing more money at the rural sector won't help: farm production has slumped even though more than $600 million has already been spent on relief.
Rural households need a faster and less complex way of applying for assistance. The business side of aid now focuses on interest rate relief but should instead reward drought-preparedness. What's needed is aid tied to farmers increasing equity in their businesses and taking practical steps to build drought resistance.
The other reform that's badly needed is removing politics from drought relief. Decisions on drought declaration should be made by an organisation which is independent of politics.
Australian Financial Review, 6/9/04.
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