An Income-Related Loans Proposal for Drought Relief for Farm Businesses

Abstract

In 2004 the Commonwealth government is undertaking a review of its drought policy. This follows expenditure in excess of $1 billion on drought relief during 2002 and 2003 and comes only a decade after similarly large expenditure on support for farmers during the drought of the 1990s. Drought support for farm businesses has been provided within the framework of the National Drought Policy (NDP) agreed by Commonwealth and state governments in 1992 and at present is in the form of interest rate subsidies. This article suggests an alternative form of drought relief for farm businesses based on the Higher Education Contribution Scheme, which is more equitable between farmers, less regressive in its impact on tax payers and less open to politicisation.