Alby Schultz (Hume, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Prime Minister. Is the Prime Minister aware of the serious impact the continuing long-term drought is having on farmers? Is the Prime Minister also aware how badly the driest winter on record is affecting canola and wheat crops?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Hume. I know that in raising this issue he echoes the views of people representing rural Australia in this parliament. The present drought, which has continued since 2001, is the worst on record and it has required and will continue to require an unprecedented response from the government. Thirty-eight per cent of all agricultural land in Australia is now declared as being eligible for exceptional circumstances, which is an astonishingly high percentage of agricultural land.

The Bureau of Meteorology’s outlook to the end of 2006 notes a high likelihood of above average temperatures over much of the country. Rainfall data showed that August 2006 was the driest August in 100 years and the warmest since recordings began in 1950. Large parts of south-western Australia and south-eastern Australia have had the lowest winter rainfall on record, and rainfall from December 2005 to August 2006 was in the lowest 10 per cent of records for large areas of the Murray-Darling Basin. ABARE forecasts that grain and oilseed production will fall sharply by 34 per cent in 2006-07 to a low level of 23.8 per cent below the 10-year average. Wheat production is forecast to fall by around 35 per cent; canola, by 46 per cent; and rice, by 62 per cent.

Over $1.2 billion has been provided by the Commonwealth government to more than 53,000 farm families since 2001. Under the existing exceptional circumstances arrangements, the Commonwealth pays 100 per cent of the income support and 90 per cent of the interest rate subsidies, with the remaining 10 per cent—a fairly nominal amount—being contributed by the states. We are spending at the moment $29 million a month on income support and interest rate subsidies.

I have two other observations to make. The first of those is to address an assurance to the farm community of Australia—that is that as you enter a period of this prolonged drought you may rest assured that the Commonwealth government will meet its obligations to you as hard-pressed producers and you will continue to receive, as you have in the past, the assistance of the Commonwealth government. We will ensure that the exceptional circumstances arrangements operate speedily and effectively to make sure that the difficult circumstances that you now face are shared as fairly as they can be within the broader Australian community.

I also make the observation that many Australian farmers are being assisted through this very severe drought by the operation of the Farm Management Deposits scheme, which allows taxable primary production income to be set aside in profitable years to be drawn down later. In that connection, farmers’ deposits have increased in value from $1 billion in early 2002 to $2.4 billion in March of 2006. It would not be exaggerating circumstances to say that the existence of this scheme has prevented many Australian farmers from going bankrupt as a result of the impact of the drought. I take this opportunity to record my continuing appreciation of the work of the former Deputy Prime Minister and member for Gwydir when he occupied the primary industry portfolio in advocating and securing cabinet support for the establishment of the farm management scheme, which in my view has been one of the most beneficial agricultural schemes introduced by any government in this country over the last 25 years.