The world of drought funding gets more bizarre by the day, the latest stimulus package includes $100m for South Australia to turn on their desalination plant to generate 100 gigalitres of water that will go towards fodder.
This is like using Mount Franklin water to grow hay in the desert, what’s next building desal plants at the top of the Murray Darling to top up the rivers. One phone call to Western Australia would have seen 250,000 tonnes of grain or hay at $400 a tonne heading east, a welcome boost to WA growers facing a below average year and frosted crops.
What the government is doing is the worst kind of market intervention, purely driven by the need to solve a political problem with the Nationals and One Nation. It’s almost as if John McEwan is back in Federal Parliament heading up the Country Party of the 1950s back at the height of the rural agri-socialism days of privatised profits and socialised losses. Western Australian farmers had thought we had moved on but it seems as if we are stuck deep in a time warp.
When 2GB’s Alan Jones beat up the Prime Minister and called for hay and water to be sent he was not asking for desal water to make hay. If the government wants to mess with markets, they should do it in the least market distorting way and just subsidise hay or grain and even then it is a bad idea, as it impacts on those farmers who have made provision for drought or are ready to sell spare fodder.
In Western Australia our pastoralists and farmers who are in drought right now are now asking where’s our share of the cargo cult that’s become drought money. There is no state government support in WA for fodder or transport subsidies and the last time they were in drought the federal government did not come running.
The real problem is it’s an unfair playing field across the states. Western Australia does the right thing and implements a non subsidy policy back in 2011 and tells farmers they are on their own. This current cash splash is reversing the shift of national drought policy and opens up the government to endless demands for more support.
It would not be a problem except our WA farmers are paying for this sort of support through their taxes and the mad Mt Franklin desal water idea which will supress the market for our grain and hay.
As for the interest rate subsidies all our farmers would love to access not just the 3.11% rate but the new 0% rate of the Barnaby Bank. If the government is going to support the eastern states it needs to ensure the subsidies are open to all farmers including those across our pastoral region and the Great Southern, not just this year but the next time there is a drought in WA when the east has long forgotten about this current drought.
If the government is determined to continue to throw money at farmers, they would be far better not becoming the lender of last resort through Barnaby’s Bank but looking at ways to underwrite income insurance. Putting that billion or the next billion dollars into some sort of risk mitigation scheme would be a far better way to use taxpayer’s money as it encourages the banks to continue to lend to farmers who’s equity levels have dropped to very low levels. Its bank credit that gets farmers through drought not government credit the billions of dollars that farmers need to plant their next crop or to restock once the rains come again.