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Drought aid: Where has the money been allocated and what difference is it making on-farm?

David Claughton, Tuesday October 16, 2018 - 14:28 EDT
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"It's not about making money, we're just trying to survive," say Walgett's farmers. - ABC

Billions of dollars in government aid, across all tiers, has gone to farmers during the drought this year.

Tens of millions more has been raised by corporations and individuals.

But has the money been well spent? Or is it a case of spending good money after bad?

ABC Rural has been tallying the figures and, while it is not at all a comprehensive list as the drought continues, it shines a light on who is putting in and where the funds are going.

Learning from history

During the millennium drought (from 1996 to the 2000s) the aid bill was a staggering $4 billion.



State and Federal Governments agreed it was a severe drain on the national economy and a new approach was needed that emphasised 'drought preparedness'.

A great deal of on-farm work has been done since then, funded by government programs, but as the drought bit harder in Queensland and then spread to NSW, Victoria and South Australia, both tiers of government started providing emergency assistance again.

The biggest single ticket item is the concessional loan scheme.

Farmers often say cheap government loans are of little value, but clearly some have leapt in with both feet.



Some have borrowed to improve the infrastructure on their farms.

Grazier Richard Wilson is carrying significant land debt and operating overdraft on his farm in the far-west of NSW, and his only income at the moment is from selling feral goats.



Despite his high level of debt, he saw cheap finance from the Government as a way to prepare for when the rain comes.

"If you stand still in a drought you're going backwards," he said.

He said that when the rain did arrive, his improvements would be able to store three times as much water.

So far, 854 farm businesses have been issued with concessional loans — worth $490 million.

Another 71 applications are being processed by the recently established Regional Investment Corporation, which could see another $142 million going out the door soon.

Canberra tops ranking, but farmers critical of some schemes

The Federal Government is the biggest contributor to drought aid with $1.8 billion committed to drought preparedness, emergency support, and low interest loans.



According to Federal Agriculture Minister David Littleproud, the loans are working because "they allow farmers to switch across from higher interest commercial loans, saving them thousands".

Reducing the interest rate by 2 per cent would save a famer with a million-dollar loan about $20,000 a year.



Meanwhile the Federal Government has provided $15m for the Foundation for Rural and Regional Renewal (FRRR), which has been quietly injecting small amounts into regional organisations to strengthen local communities, improve facilities and support activities that bring people together.

The next big ticket item for the Federal Government is the Farm Household Allowance (FHA).

It has allocated $534 million to the program but only a tenth of the people who could qualify have actually received it.

Farmers complain the form is too complicated and the criteria too onerous.

The Government has recently simplified the form and relaxed the criteria and there has been a spike in the number of applications in the past three months.

Around $234m has been spent on the FHA since 2014 and the Government says the scheme is uncapped.

State of mind

State Governments foot a large portion of the bill with a large part of it going into transport subsidies and waivers on a range of State Government fees including council rates, car registration and, in NSW, Local Land Services (LLS) levies.



NSW has also stumped up about a billion dollars to cover drought preparedness, emergency relief, and mental health services.

The states look after animal welfare and stock disposal and the NSW Government has offered transport subsidies up to $20,000 to help farmers bring in fodder and encourage them to move their cattle to agistment or to market.

Queensland has done the same, offering subsidies up to $50,000.

Banking on it

While governments have been providing cheap finance for farmers, the predatory behaviour of the banks during the drought has come under scrutiny in the banking royal commission.

and running internal systems that encouraged churn or created conflicts of interest for banking staff.



Many of the banks have responded by keeping some branches open in drought areas when they were scheduled for closure and offering a better deal for farmers in drought areas.

That includes discount loan rates, deferring payments, allowing an offset on the interest from farm management deposits, and waivers for break fees or costs associated with increasing or extending loans.

They have also made donations to charities.

Among the majors, the Commonwealth Bank donated $1.75m to the Red Cross and $250,000 to Rural Aid, ANZ donated $500,000 to the FRRR and the same to Financial Counselling Australia, while National Australia Bank donated $1.25m.

Martin North, an analyst from Digital Financial Analytics, said corporate donations were pretty "small beer" in the scheme of things.

"If you look at the size and shape of the profit profile of the major lenders in Australia and the amount of money that they make from the agricultural sector, it really is a very, very small amount," he said.

Charities piling in

About $50 million has been collected by a large number of drought charities, according to the national drought coordinator Major General Stephen Day.

"About $30 million of that has been given out to farmers and their families and the CWA and the NFF have been key players ensuring it gets to those folks who need it," he said.



His priority has been ensuring government policies are effective and that any gaps in support are being addressed, but exact figures on how much money has been raised by charities, who received it, and how it is being spent are hard to find.

"I don't know how many there are, I don't know if anyone does, but I have pulled the [24] national charities together," Major General Day said.

They are now coordinating their activities.

According to research by the ABC, the charities that received the lion's share of corporate and public donations are the Red Cross, the Country Women's Association (CWA) and Rural Aid — which runs the "Buy a Bale" program.

They have all received about $11 million each with Coles, Woolworths, Qantas and some of the banks among the major donors.



The Red Cross and the CWA are registered charities with established networks in regional areas and are well equipped to identify the farmers in need.

They also distribute cash rather than goods, which most farmers say is the most effective form of support in a drought.

Rotary, the Salvation Army, St Vincent de Paul, Need for Feed, and Drought Angels make up a second tier that have accumulated between $1–2 million each.



Even emergency organisations such as BlazeAid have got involved in drought aid.

While BlazeAid have only received $350,000 through the NFF, they have 100 volunteers working on farms in NSW and Queensland providing labour worth around $2.5 million over a 10-week period.

They have been helping NSW farmers Rob and Justine Aitken get through the drought.



The couple's property was burnt in a devastating fire in January 2018 and Justine was seriously injured in a horse accident shortly after.

A team of volunteers is helping to rebuild fences and a shipment of fodder was sent by a charity on the coast, but recovery from the fires has been grindingly slow in these dry times.

Haste makes waste

According to one contact in the sector, who wished to remain anonymous, the charities are being told to spend the money quickly, but the NFF is warning against that.

Many farmers in NSW will not get a cheque for the winter crop and may not be able to plant a summer crop either if they missed out on recent rain.

There are still many parts of NSW and Queensland in serious drought, where the soil profile is too dry to risk planting a crop with all the expenses that involves.

Farmers in those areas won't be getting any income for at least another 12 months and that could be the leanest and toughest period of all.



The NFF is releasing another $3 million of drought aid this week but want to preserve some of the available cash in case things do not improve down the track.

A spokesperson described it as "a marathon, not a sprint".

The squeaky wheel

The other issue troubling the charities is 'the squeaky wheel', the farmer who has not prepared well for drought, has run their land and their livestock into the ground, but is not shy about putting a hand out or taking more than a fair share of the assistance available.

Some make it into the media and attract a lot of direct donations, which is galling for farmers who are also in need but are less inclined to ask for help.

Truck drivers report delivering donated hay to some properties, only to find a brand new shed already full of hay.

Some charities see the same person turning up at multiple locations when aid is being distributed, taking undue advantage of the assistance being offered.

And there is a general view that "care" hampers are not an effective form of aid.

While they are usually accepted by farmers for the sentiment behind the gift, the products are often not what is required for the individual and the effort of collecting the hamper is not justified by the value of its contents.

Perhaps the most contentious issue with drought aid is that "buy a bale" programs end up disadvantaging farmers who have managed to stand on their own two feet.

Many report being .

A slow death

The population in regional Australia is growing at a much slower rate than the capital cities and some regional areas are in decline caused partly by the downturn in the mining cycle as well as the drought.



Whyalla, Mount Isa, and Geraldton all lost a significant number of residents, according to ABS figures for 2016–17.

The Collinsville population fell 5 per cent and there were similar slides in outback South Australia, Meekatharra in WA, and Bouldercombe in central Queensland.

Veterinarian Scott Parry runs three clinics in the far-west of NSW, a region that has seen the most significant population decline in the country based on ABS 2004–2009 figures.

He is calling for government investment in regional areas and tax breaks to encourage people to live in the country.

"We're not looking for too much really, maybe a bit of tax relief, a bit of incentive for young people to come and work out here would be nice. But in terms of handouts, a lot of businesses are just getting on with life."

Watch the with reporter Josh Becker and Queensland Rural Woman of the Year Krista Watkins, discussing the $50 million Australians have donated to drought relief and the billions more through government support.


- ABC

© ABC 2018

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