Saturday, September 20, 2008

'Rich' farmers opt for drought relief in Australia

THOUSANDS of farmers are receiving taxpayer-funded drought relief despite having access to $2.8 billion in savings they squirrelled away during economic good times.

And the federal Government's National Rural Advisory Council has revealed the nation's Exceptional Circumstances drought relief scheme is encouraging farmers to live on handouts instead of adapting to make their farms viable, creating a new rural welfare dependency.

The claims from the NRAC, made in a submission to a Rudd Government review on relief arrangements, were underlined by southwestern Queensland farmer Rod Back who, while living in a drought-affected region, doesn't get EC funding because he and his wife earn more than $20,000 a year from jobs outside the farm.

Mr Back, 50, works as a truck driver in Roma and his wife, Margaret, works as a nurse.

So while the Backs work, other farmers in the area sit idle on EC payments - which are equivalent to the dole.

Sources confirmed yesterday that the Government is concerned that one of the key flaws in the EC scheme was that taxpayer-funded relief was being collected by farmers who had saved money in Farm Management Deposit accounts.

The accounts, introduced by the Howard government in 1999, give farmers tax breaks if they put money aside in good times tosupplement their income in bad times.

According to figures obtained by The Weekend Australian yesterday, $2.8 billion was parked in FMDs as at June 30.

The figures show that many of the 41,355 farmers who hold the accounts live in drought-declared areas and are claiming EC assistance, including interest subsidies.

Since March, with the nation in the grip of the worst drought in its history, $555 million has been added to the FMDs.

Farmers in the electorate of Maranoa, where Mr Back lives and works, have invested $129million in FMDs, while two EC areas within the seat have received $51 million in EC drought funding.

In the western NSW federal electorate of Farrer, $86 million had been invested in FMDs as at June 30. But in the past six years, taxpayers have pumped $38 million into drought-declared properties in the area.

Farmers in the western Victorian seat of Wannon have $139million in FMDs, while the area has received $35 million in EC funding in the past 18 months.

While the figures do not show that individual account holders are receiving EC payments, government sources confirmed the practice was widespread.

The Government wanted to "frontload" EC payments to encourage farmers in drought-prone areas to change their practices to insulate themselves against dry spells expected to become more common because of climate change.

In its submission to the inquiry into the social impacts of drought on rural communities, the NRAC argues the EC scheme provides no incentive to farmers to improve their viability, as well as penalising innovators.

"NRAC has encountered examples of welfare and business assistance impeding adjustment," says NRAC chairman Keith Perrett. "Assistance can lessen self-reliance in that it can encourage communities to consider EC support as a first option for responding to drought-related farm finance pressures.

"In supporting farms that do not take steps to adjust their enterprises, and by not supporting the operators who respond well to change, government may be discouraging farmers from learning about and adopting the innovative strategies used by successful operators."

The submission says some farmers had warned that income assistance had kept unviable farms in business, creating "long-term welfare dependencies".

The NRAC says about 2000 farmers had been reliant on EC payments for more than four years, with 7000 receiving it for two years.

"While paid at the same rate as Newstart, income support has more generous income and assets tests and there is no mutual obligation requirement," Mr Perrett says.

Agriculture Minister Tony Burke declined to comment while the inquiry was under way.

The Queensland Farmers Federation's submission says existing EC frameworks "discriminate against those who successfully plan and manage for drought by ruling them ineligible because of that success".

"To meet the wider community's interest in sustaining agricultural systems even in exceptional periods of drought then we need an array of public and private activities that can deliver better climate management tools," it says.

The National Farmers Federation's submission says drought assistance programs should include help for rural families to determine whether remaining on their farm was the best option.

"This should take into account financial and non-financial considerations," says the NFF submission, which also pointed to increasing stress on families struggling against drought.

Growcom, the peak representative body for the fruit and vegetable industry, calls for a reallocation of government funding. "It is essential that individual enterprises incorporate strategies and risk-management practices that ensure their future viability without relying on government support payments or 'handouts"," itsays.

As well as missing out on EC funding, Mr Back has applied several times for an interest subsidy but was deemed ineligible.

"If people in the urban areas think all drought-affected farmers are receiving assistance, that's not true because we aren't," he said yesterday.

"We're just getting on with life without it. We have no choice."

The Backs were saving the Government money by working.

"You could sit back and draw the drought relief but you'll go backwards doing that," he said.

"We'd all much rather be at home and doing what we do, but we have to go to work because we have to go to work."

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