Exceptional Circumstances reform
Finally we see that the government may ask farmers to demonstrate that they have prepared for dry periods before they will qualify for drought subsidies.
http://www.theaustralian.news.com.au/story/0,,24543889-2702,00.html
All other sectors of the economy (with perhaps the car industry as a notable exception) have had to demonstrate that they have taken reasonable steps to be independent before they qualify for support from the government. Aboriginal families, the unemployed and even state governments through Competition Policy have had quite tough conditions attached to government support.
Economists, agricultural scientists and many farmers urged the previous Federal Government to change the inequitable system of Exceptional Circumstances payments since its inception. It clearly distorts the market and reduces the sustainability of our agricultural sector.
Efficient farmers have been frustrated that inefficient farmers have been rewarded for their lack of preparation by constant government bail-outs when things get tough. This has meant that land has been locked up by poor farmers, restricting the ability of the best farmers to expand their enterprises and become more globally competitive. The policy of Exceptional Circumstances was a rort that damaged Australia’s agricultural industry.
With the threat of climate change, the current model was clearly going to be an economic drain on the country. It is great to see some sense finally prevailing in this important policy area.
Written by Paul Dalby on 24 October 2008
The main problem is that those who have prepared, by having off farm assets, are the ones who don’t qualify for assistance. I agree with you that the unviable producer is protected to the detriment of the rest. In my mind it should not be a hand out but a loan of some description. repayable on say a hecs basis, or on sale of the asset should that farmer not return to profit.
cheers