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A Productivity Commission interim review of the $3.9 billion Future Drought Fund has found the program so far has been poorly implemented, lacked a clear strategy and was not addressing the long-term impact of climate change.
Announced in the depth of the crisis in October 2018, as a centrepiece of Scott Morrison’s drought summit, the fund pledged $3.9 billion to drought resilience with a total $5bn earmarked to 2028.
As of June 20, 2022, $400 million has been allocated to drought resilience programs including $76 million on farm business resilience, $66m on regional drought resilience and innovation hubs and $29m on making climate information more accessible. The current four-year program is to run until 2024.
While the Productivity Commission found it was too early to fully evaluate the success of the FDF, the interim report found that initial programs were “not well coordinated, were rolled out too quickly and were too focused on short-term objectives.”
“It is unlikely that this mix of short-term programs will produce significant long-term change,” the Commission found.
Value in a resilience program
The Commission said there is a role for the government to support drought resilience, finding there is a genuine risk of underinvestment by farmers and communities who may lack resources or information. It also found underinvestment was particularly likely when the benefits are dispersed, and individuals cannot justify the cost of the initial investment.
Agricultural extension programs should have a higher hurdle for support, the Commission found, to reduce the “risk that funds are invested in activities that producers would have undertaken anyway. Importantly, programs should only be funded where the overall benefits to the community outweigh the costs.”
Before a new round of funding was implemented by February 2024, the Commission highlighted the following key concerns with the existing structure;
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short-term programs have high transaction costs, weaker public benefits and are unlikely to deliver long-term gains
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the high number of programs have confused stakeholders, increased risks of duplication and added administrative costs
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an overarching strategy guiding integration and sequencing of programs can maximise outcomes
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inconsistent application of the funding principles diminishes their value as a guide for the design and delivery of programs
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learning opportunities have been constrained by limited mechanisms for knowledge sharing
Above: The PC found a focus on drought led to short-term thinking, rather than adjusting to long-term trends. Photo: Eliza Fessey
Climate change should be at the core of the FDF
The Commission recommended the scope of the Future Drought Fund should explicitly recognise building resilience to climate change, finding that it would help identify which programs to support or reject.
It found that focusing on drought, rather than climate, limited and potentially undermined the potential risks that may affect farmers. It found that a focus on drought, also led to short-term thinking, rather than adjusting to long-term trends that included increased variability and heightened climate extremes.
“This focus on planning for an event may diminish the prospects of the Fund stimulating essential, transformational change,” the report said.
It assessed the major programs under the FDF as follows;
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Climate information tools – Climate Services for Agriculture and Drought Resilience Self Assessment Tool
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Uptake of these tools has been modest given lack of awareness and limitations around user design and targeting. Moreover, it is unlikely that the tools have spurred significant on-farm change. The Commission is considering whether the FDF should continue funding
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Farm Business Resilience
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Participant feedback is positive. The program appears to be delivering largely private benefits but has the potential to generate returns for the wider community, especially if a greater priority is given to improved natural resource management
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Regional Drought Resilience Planning
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Implementation has been affected by poor integration, a lack of clear ownership and limited funding. In some cases, there are already existing/overlapping plans. Consequently, there is a high risk that the plans will not lead to tangible outcomes and could contribute to further confusion around regional priorities
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Drought Resilience Adoption and Innovation Hubs
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There are concerns that Hubs are duplicating or competing with established services and networks. Despite these concerns, Hubs are a valuable regional presence for the FDF. Funding for Hubs should be extended beyond the end of this Funding Plan, however, continued funding for any individual Hub should be contingent on demonstrating adequate performance and governance in a review
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Drought Resilience Innovation grants
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The Commission recognises there are a range of institutions undertaking agriculture innovation and it is unclear where and how the FDF can and should complement this. The Commission considering the merits of rescoping the program so that it better targets grants toward identified challenges
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Natural resource management grant programs
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More likely to deliver more enduring, transformative outcomes that deliver net benefits to the community. The Commission is considering recommending that the next Funding Plan include a natural resource management grant program
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Better Prepared Communities programs
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While there has been some positive feedback on these programs, it is inherently difficult to assess the lasting value of activities supported by these programs. It is also difficult to identify the exact gap in existing programs (Australian, state and territory) which the FDF can and should fill
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The Commission is taking further submissions on the interim report until 11 July, and will deliver the final report to the government in September 2023.
