Under the existing Exceptional Circumstances drought assistance scheme, producers in areas declared affected by drought are eligible for direct government income support as well as interest rate subsidies.
As at December 31, taxpayers were spending $61 million a month supporting drought-declared farmers through the EC program, with as many as 17,168 producers having received interest subsidies during the past two years. Some farmers have been granted up to $500,000 in interest rate subsidies — money which has gone directly to the banking industry.
But according to Mr Burke, the subsidies discourage farmers in marginal areas from making “hard decisions” about their futures and penalise farmers who use the good times to pay off their debts.
“I think we need to be brave enough to acknowledge that just because we are giving people money does not mean we are doing them a favour,” he said.
“Government support and assistance is conditional upon how much debt you are in. If, for whatever reason, you’ve made some really hard decisions during the good times and are not in debt, your reward for that is to get no government assistance.”
Mr Burke has been working on drought reform since Labor took office in 2007, based on advice that climate change will increase the problem of drought.
He wants a system that will encourage farmers to use good times to insulate themselves against future drought, by changing agricultural practices or switching crops. But he has stressed no changes will affect existing recipients of assistance, with any new system to apply to the next drought.
NFF chief executive officer Ben Fargher told The Australian last night his organisation wanted drought assistance reform, provided farmers currently receiving assistance were not “cut off at the knees”. “If it’s genuine reform, we will engage.”
Opposition agriculture spokesman John Cobb said Mr Burke was no friend of the farmer.
“Even the best farmers have found themselves in debt following three failed wheat crops in a row,” he said. “Without the EC interest rate subsidy it is doubtful whether some farmers would even be able to get carry-on finance to plant this year’s wheat crop or buy sheep or cattle to restock.”
Mr Burke also strongly defended the government’s recent decision to allow beef imports from nations where mad cow disease had existed in the past.