Four years after the establishment of the Future Drought Fund, a Productivity Commission review has found the fund to be delivering a solid foundation to build drought resilience, however some problems have hampered its effectiveness.
In handing down its report this week, the commission highlighted a number of practical challenges, including:
The rapid development and roll out of initial programs meant there was a missed opportunity to launch the fund as an integrated, sequenced suite of programs.
The implementation of several short-term programs with limited collaboration and knowledge sharing undermined prospects of sustainable long-term change.
The design of some programs has limited the potential for achieving community-wide benefits.
To address these challenges, the commission made key recommendations, including clarifying the role of drought hubs.
"There has been some uncertainty about the role of hubs and concerns they are duplicating or competing
with (and missing opportunities to collaborate with) established services and networks," the report said.
"There is scope to further improve accountability and clarity about the role of the hubs and their links to other FDF programs.
"Funding for the hubs should be extended for two years in the next funding plan period (starting from July 2024). However, beyond this, further funding for any individual hub would be contingent on demonstrating adequate performance and governance in a review mid-way through the next funding plan period, and by the
end of the 2025-26 financial year."
The commission also flagged more focus on public benefits was necessary when it comes to the design and delivery of the Farm Business Resilience program.
"There is evidence that improving farm business planning can enhance resilience to risks such as drought," the report said.
"However, in assisting farmers to make their businesses more profitable, the FBR program is providing a largely private benefit and could be subsidising activities that many farmers would have undertaken anyway.
"The benefits for the broader community are probably limited, particularly given there is little or no private co-contribution to the costs of the program."
Two mechanisms to rectify this problem were recommended, including tightening program eligibility and ensuring course content prioritised material where there is the greatest public benefit, such as NRM and innovative on-farm practices that can support transformational change.
A more explicit recognition of climate change was also highlighted.
"While described as a drought resilience fund, in practice, the FDF also funds activities to build resilience to
the changing climate.
"Indeed, the 2020 to 2024 Funding Plan refers to climate change as part of the FDF’s vision. But this has created ambiguity about whether, and if so what, climate change resilience activities are within the scope of the FDF’s programs.
"As with drought resilience, the fund should not invest in climate change activities that are already being undertaken by other programs, and activities should remain focused on agriculture, agricultural landscapes and communities dependent on agriculture."
For these reasons, the Commission considers there may be a case to exclude climate change mitigation, biosecurity, public water infrastructure and disaster preparation and response activities from the scope of the FDF.
Speaking at a national drought forum in Rockhampton this week, Treasurer Jim Chalmers said while the fund has already had a significant impact in regional communities, the commission’s report highlights that drought is just one part of the larger climate change picture.
"That means we need to focus not just on drought resilience, but broader climate change resilience too," Dr Chalmers said.
"The latest analysis out of Treasury tells us that disasters and a warming climate have big, economy-wide effects.
"The black summer bushfires and October 2022 floods cost the Australian economy around $1.5 billion each, and the latest projections also show the significant impact that climate change could have on our regions.
"If further action isn’t taken, Australian crop yields could be 4% lower by 2063, costing us about $1.8 billion in GDP in today’s dollars.
"All this means that the challenge of climate is global in scope, but regional in impact."