THE Australian National Audit Office has highlighted flaws in the federal government’s capacity to deliver drought support measures to farmers.
An ANAO report released today, on the administration of the concessional loans programs by the Department of Agriculture and Water Resources, pointed to various problems and shortcomings caused by rushed design processes.
It said since 2013, Australian governments had announced $3.55 billion in funding for concessional loans to assist farm businesses with improving debt servicing capacity or recovery from drought.
The Office examined the $420 million Farm Finance Concessional Loans Program announced by the former Labor government in early 2013.
It also looked at the $280m Drought Concessional Loans Program which also offered five-year interest-only loans at a maximum of $1m or up to 50 per cent of the farm business’ eligible debt.
Labor’s program was designed to provide loans that assisted farmers in dealing with short-term viability issues caused by low commodity prices, high input costs and an ongoing high Australian dollar, at that time.
After the 2013 election, Agriculture and Water Resources Minister Barnaby Joyce reworked the scheme to direct funding towards larger States, such as NSW and Queensland, facing serious drought pressure, rather than Labor’s equal distribution method.
The ANAO report said, as of February 29 this year, there were 410 farm finance concessional loan recipients totalling $196m and 320 drought concessional loan recipients totalling $192m.
However, it said the effectiveness of the Department’s design and establishment of the Farm Finance Program was adversely impacted by various factors but primarily its limited experience, and that of the Australian government, in delivering such programs.
Other factors were; the condensed timeframe set by government to design and implement the program once a public announcement was made; and the Department’s inability to appropriately consult with the intended delivery partners prior to the program’s announcement, due to confidentiality considerations.
In comparison, the experience gained by the Department through the design and implementation of the Farm Finance Program meant that it was better placed to design the latter Drought Concessional Loans Program, the report said.
“While the department ultimately established workable arrangements with the States and the Northern Territory to deliver both concessional loan programs, there were shortcomings evident in design decisions and implementation activities,” the report said.
“These shortcomings included the absence of: an economic analysis of the costs and benefits of providing a subsidy to assist farm businesses; appropriate modelling to estimate potential demand and ultimately the required funding profile for each program; sufficiently robust arrangements to ensure that funding conditions were met before payments were made and that reported jurisdictional performance information was accurate and complete; and a sound performance measurement and reporting framework to determine whether the objectives set by government are being achieved.”
The report said the Department had not established appropriate arrangements to evaluate the impact or effectiveness of each program.
It made four main recommendations which the Department agreed to including to develop a program evaluation strategy for current and any future concessional loans programs and to publicly report on established performance measures.
Shadow Agriculture Minister said the report exposed the “political nature” of the Abbott/Turnbull government’s main drought initiative and confirmed how ineffective the loans program had been.
“The concessional loans were always about political cover and have failed drought affected families; it has been a cruel hoax on drought affected farming families,” he said.
“Tony Abbott went on a drought tour and took all these television cameras with him and they announced hundreds of millions of dollars which gave the impression help was on its way.
“But farmers were quick to find out the loans were almost impossible to secure or with interest rates so low, they weren’t worth the effort, or the offence they would cause to the farmers’ banks.
“Yet the government, for all this time, has continued to talk up the total value of the loans rather than the cost of them to government, including loans which they know were never going to be taken up by farmers.”
Mr Fitzgibbon said the ANAO audit confirmed “what we always knew” that no modelling was done on the likely effectiveness of the drought support loans.
“In other words the government plucked a big figure out of the air to hope it would distract the media form the issue and have them move on to something else,” he said.
“In the mean-time farming families have continued to be dramatically effected by drought and all Barnaby Joyce can ever say is ‘well the drought loans are there’ but it has now been confirmed by the ANAO how ineffective these drought loans really are.”
A spokesperson for Mr Joyce said the report was welcomed but “clearly exposes” strains place on the Department to design the Farm Finance Concessional Loans program, “amid the chaos of Labor’s final year in office”.
However, the spokesperson said the Department accepted the report’s recommendations and had already undertaken work to implement proposed improvements.
“The program has been vastly improved under the Coalition government,” the spokesperson said.
“The benefits of the scheme have been demonstrated by the fact more than 800 loans to farm businesses have been approved under the various concessional loans schemes.
“This successful policy is delivering real results for drought affected farmers, with more than $426 million in loans paid out.
“As the report indicates, the Coalition government is continuing to improve on the program’s design and administration.”
