Exceptional circumstances provisions in Australia—is there too much emphasis on drought?

Abstract

There has been a rapid evolution in drought policy over recent years. There is now much more emphasis on management capacity and preparedness building. A further step was taken in 1997 with changes to the exceptional circumstances welfare provisions to include risk factors other than drought. In this paper, the whole-farm stochastic budgeting model, RISKFARM, has been applied to New South Wales and Western Australian farming systems. The results confirm that for some farming systems, only around 10% of low net farm income years are caused by drought. Drought is just one of several factors that lead to poor financial performance. The analytical method described here provides a framework for estimating the significance of drought. The results support the use of a whole-farm approach to risk management but also indicate that the relative importance of the risk factors varies among farming regions. The likely frequency of three or four successive low net farm income years is examined and it is suggested that this could be part of the exceptional circumstances criteria. The possibility of support beyond access to welfare assistance in ‘business threatening’ situations is discussed. This suggestion should be approached from a whole-farm perspective in exceptional circumstances with limits on the frequency of access to support. Implications beyond the farm to other affected rural businesses are also discussed.