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tv   Australias Drought  Al Jazeera  November 25, 2018 11:32am-12:01pm +03

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is well aware of the sufferings of the yemeni people and the urgent need to make effort for peace. we look forward to rep and peace we hope that his tour in riyadh with positive results and we are in constant contact ten more bodies have been found after flash flooding in northern iraq raise in this hotel of those killed to at least seventeen heavy rain forced thousands of people from the town of many have returned to homes and businesses swamped by mobs mexico says talks are ongoing over a deal to manage thousands of asylum seekers gathering at the southern u.s. border president trump wants the central americans to stay in mexico while asylum claims are heard in u.s. courts rising football fans in argentina to force the twenty four hour of the final of south america's biggest club competition several boca juniors players were hurt as river plate threw rocks at a bear bus and fought with riot police those are the headlines talked to al jazeera
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is coming up next stay with us. there's nowhere to hide isn't the easiest way to solve this to allow u.n. observers who you invited into the country earlier this year to finish their job i haven't said it's a right wing conspiracy or anybody's conspiracy. they think we're going to see some kind of sea change in the u.s. . we come. up from. the east of australia is in the grip of grants. to the states of new south wales and victoria received but no rain it's going to go straight into june july and august and that lack of rain came after more than
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a year of much drier than average conditions. are struggling. to. look at the weather maps of fifty. even though most australians live in cities they have a strong affinity with what's known as the bush and sympathy for those growing best . and governments do act australia's national and state governments. with almost two billion dollars. this is a lot that is important to australia's future. continues to be. subsidising transport costs offering low interest loans and giving cash payments to farmers were nine thousand dollars each assets worth more than three point seven five million dollars disqualifies a family from the hundred. these. it's few people to
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question but what used to be an uncontroversial government expenditure is now for the first time attracting critical eyes and economists are going public with their disapproval the reality is that's the business that we're in. you know if you want to be in agriculture you go to take the. top to al-jazeera has traveled to in the new south wales to talk to us about how bad this draft is fien and how much help they need. but we've also talked to those who are now questioning financial help for farmers who say it's not grounded in rational reasons but driven by an outdated political culture and misplaced emotions. farm sheep and cattle near the town the town with about six hours' drive from
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sydney in a good he wouldn't need to buy he'd grow crops in his animals will eat them straight out of the ground but the drowns has hit this region particularly hard this has been trucked in for a thousand kilometers away with transport it costs about two hundred fifty dollars a. week sixty cows for a day but has three hundred eighty so feeding them is costing him more than ten thousand dollars a week when there is. significant. but you know. that you're my get up the next. you know in general times what is it costing you what will be you'll read number at the end of this year broadly speaking and how long will it take you to make that back. well honestly don't know exactly because we've been selling range of stock and we've continued selling we're selling off stock now that we should be keeping but that's another sign of your selling.
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business decision you just can't keep up what we're doing indefinitely and that's what you've got to look ahead at some point was you should have done it six months ago and i just said well indications were. that it wasn't going to be disparity all experts said it's going to be maybe an average you a bit below average in certain. yeah i mean i can give you a percentage even probably would quickly have a top me head that it's going to be significant. and we'll really we'll have to assess that at the end of a guy. comes a point when your debt levels you say i will just. so you might look at selling off i property or something and i will. you know there's options they are spies but i mean we've got debt before these you just got to work with the banks and so on like some boys decisions but there are some people as you know in general to the state that will had enough. and that could be
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a combination of financial and mental thinking and i just by three three things you know i got to really up the ride at sixty five and he just. now is on the farm with me he said why would i bother busta me guts in the draft when he got real good money record prosper in this area so he's made a decision and it wasn't an easy decision because he was in his father's day before and and his grandfather was i'm a small grandfather and there's a fundamental problem with farming here you think this is a blip and nothing more than not well i think that's what we've had and i mean what intrigues me what with the blips five hundred years ago i mean we've only been here a couple hundred years and we know what's going on in that town but you know we're going harder we go to college at the end of the die. you know that's it a bite that we take seriously but that's so out of that as well it was off i was should get a bit smarter and do it better and i would suggest. a single set of twenty fifty
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two years every year just a bad nothing significant sound on we've done something a bit different in five. months to with their machinery and implements how we do it the number of tongs what we did is so at the top end of it we probably lead the world in moisture retention which is not an issue for some countries but i am assuring that it is up there with the best in the world so we've adapted i have these i mean you know when i left school we worked six seven times a year. we're not working there you know we just take a wage of chemical and conserve as much most you can and get a very similar result if not better. but if you go back the other question i mean we could also at this fall on. this. this a city with a phrase and way and living. john three ban has been studying the political and economic response to drought for almost four decades now an economist in melbourne he's previously worked in the department of agriculture in new south wales and for
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the business council of australia for him government bailouts aren't just bad government policy ironically they're also bad for farmers. a drought is a great time to restructure the industry it's no different to a cyclical downturn is a great time for the manufacturing sector for the tourists to for restaurants to restructure and build properly and we're providing policies to block that and it just perpetuates the problem so when you see scott morrison the current prime minister or the previous prime minister malcolm turnbull talking about the disastrous drought that's hit farmers on the t.v. in the corner of your office or when you're a high do you look at that and roll your eyes think here we go again. if we go again yeah. you know there's a government to do and of course you know when you've got the media is saying these
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people are doing it tough. and we are sympathetic government. in. a lot of politicians give in and say well let's throw a bit of money at them. i suppose what i would say is think seriously about how you want to throw that money if you throw it or subsidies you just perpetuating the problem. yes there will be some households who fall into poverty just as some people become unemployed well let's find a safety net to look after people in small business some farmers fall into poverty and of course also to some other small businesses you know people who are providing farmers with machinery fertilizer and all that sort of thing but also lots of small businesses and restaurants in. running to stick to verdi's even building and construction get themselves into trouble every now and again and
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said this is a kind of a challenge how do we look after those people because most of them have got assets of a couple million plus but they don't have any cash. and the question is can think out of the bank and borrow against that tsunami so i think the banks say listen you didn't do very well in the last stretch you didn't put money away in the last. i think you're a bit risky i don't want to lend money to you so there's a group that we probably need to find some handouts and that's what the family household a layout system does so these people are not the poorest in australia they have assets in some cases worth millions of dollars i think remarkable that they can if i have to sell those assets and get into something else or borrow against them. straight you makes a lot of those mistakes. the classic it's an old age pension system.
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if you put all your money in a great mansion that's worth millions it's not part of the mainstays for the aged pension so we've made some mistakes in that area that. we in other countries will always struggle on to have a look after small business people who have what we would call asset rich but income poor and the finance system often doesn't allow them to convert their assets into cash flow for current living expenses. and so we've got to make a call of a rough compromise we call on and that you know we've got unemployed people who have no assets and when come clearly look after them there are people with disabilities no assets no income clearly look after them that works but if we have caught a farmer or a restaurant owner or a mechanic who has for one reason or another business is going belly up
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and they struggle to put food on the table for the kids. then we feel we should look after them and so there is this safety net. it just turns out the one for farmers is really really generous and that's not available to other small businesses so do you as an economist think that people with millions of dollars just because it happened with the old age pension doesn't make it right in the farming context we can leave that to one side but do you as an economist think that it is sensible to be giving handouts of subsidies to asset rich farmers when they could sell their farms and they could then go off and do not another business they could put food on the table by selling what they've got if they can't borrow against their assets surely that would make more sense to you as an economist doesn't it oh yes you know and that means
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a smaller drag on government expenditure that means lower tax rates that gives private households and businesses greater incentives to get on to do their own thing or it means government has more money available to spend on say education health things so if i was thinking a bit where would i want to spain scarcest right in dollars yes for low asset low income people yes this is. the education bill defense that's available for everybody. that's pretty valuable most of our audience living in other countries they see australia as this barren dry continent they see images of dead animals and a pop slant on their t.v. sets and that's how old by the people in the reports they say that farmers have a very very tough life it's not quite as simple as that is that oh i feel sympathy
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for them but of the other hand of the stuff. farmers voluntarily choose for coming. they're not conscripted to do it so it's a voluntary choice. and also from the perspective of the individual for most and of the nation we would want them to be involved in being if on every inch what money they make during the good times will carry them through the bad top. if the firm a can't do that in the country can't do it then we're better off shifting those people to some other activity you know why subsidize farming. but not to resume or manufacturing no restraints let the market saw that what's the best way to employ
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a people and produce goods and services. so that's the level playing field story that says let's not subsidize farming. but farming is different it's not it's not like running a factory which stays the same year round it's not like running a shop where you kind of know your local customer base dogs have huge risks that are completely unpredictable a draft is a natural disaster nobody can see it coming it's not. it is a more variable guy and it's not just climatic conditions. in australia it's commodity prices we export sixty percent of their production. and if will prices really all right we do well if we'll prices a low then i do so well and that happens to we have these full attilla to eat and that's the no terms of trade. and so basically you would expect people would only take on this risky business go farming if they get on average a bit of
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a premium to justify taking that risk and they at the same time of course could plan strategies you know. when conditions are really good oh i stock up big. and i put money away in the bank. when a drought comes i sell a lot of more large stock and i start to run down some of my assets. and then when the conditions come good a good of all i'm a lot of stock and then money starts to flow back into the bank and this cycle goes up and down and what the she was subsidies or the downsides well the downside is that you're really taking resources away from one side of the economy so the service sector of the manufacturing sector. to subsidize the agricultural sector
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and the reason is why would you want a bigger agricultural sector and a smaller services in manufacturing sector that's what a subsidy does. and if i'm moving resources for manufacturing that all say one hundred ten dollars per hundred i invest and i move it to agricultural subsidies only making no id dollars per hundred i invest. on checking twenty dollars away. that's the whitest and the subsidize subsidies change incentives to oh yes gets it what they do is is really two things in terms of subsidies to found production in drought is one that encourage more people to become farmers. but also because famines seva feeling that whenever there's a drought government going to give us a subsidy and buy a way out. well when the times are good i'm going to have
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a ripping talk i'm going to spend it because i know when times are bad i never going to happen government going to buy me up. and so you get families who say well you know i'll just be stopped from assets of spend money on the family when times are good rather than putting quite a bit away for the next trip because i know when the drought comes. a put up my hand i'll get on to the media and we mange and then we'll get some handouts from government. well i can still feed my family and i can live through to the next good . linda botterill is a political scientist who's worked in the offices of two government ministers from her academic work explores the importance of values and sentiment in public debate she says the political attachment to farming is rooted in australians cultural
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affinity with those who work the land the idea that farmers are at the base of ara calling me and our civilisation has a very long history across western culture you can see elements of it in the agrarian democracy of thomas jefferson you can see it in the writing of j.s. mill and you can see it in more recent writing from agrarians in the united states so it's actually quite deeply held across western culture so let's fast forward to the day means in practice is that farming has a special place in the minds of australians regardless of whether they live on a farm or in the middle of a city exactly how the government treats them differently farmers in times of hardship give me an idea of the assistance that's going on right now with this latest trip ok it will fall most can qualify for a farm household alone household allowance so that's available all the time that's not just a drought measure and it's means tested but you can have a lot of assets and still be entitled to this twelve thousand australian dollar that's about nine thousand u.s. dollars annual payment county and that makes some sense because you can't just sell
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the back paddick so if you've got a property that's worth two or three million dollars you can just liquidate a small amount of it to help you through the drought it's essentially an asset that unless you're prepared to sell the whole thing and of course during a drought would not be a sensible time because that buys at a fair price. you you can't actually access is the investment that you've got nevertheless five million australian dollars is the test so you can have four million nine hundred ninety nine dollars in assets and the government can still give you this twelve thousand australian dollar about one thousand us dollars but you do have to pass an a separate assets test as well so if you've got other assets other than the farm so you have got investments for example in the government run farm management deposit scheme or you own and i and an apartment in sydney or anything like that's my point as i'm not telling you people are they we generally think the government is there
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a particular right of center governments as there is in australia to support the poorest of the poor the people who are really desperate need of help these people are not poor but could have as you say investment properties or the investment properties will exempt them from getting the this support because that this the assets test for all saw message supplies sick for italy from the on farm assets test so if they've got those investments they're not going to be eligible but we do need to remember that fall poverty is a difficult area because first of all we haven't actually measured it in australia since the nine hundred seventy s. so we actually don't know how many farmers are poor and why they're poor there's quite a lot of anecdotal evidence that there are people who are actually struggling to make the day to day needs of feeding the farm family and that's what these schemes i now it is possible to be on a property that on paper is worth seven million dollars but which you're not getting any income from because you haven't been able to take
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a crop of or you've had to do stock the shape of your cattle because of the drought and you've got no form of income to meet your day to day needs in which case it's not unreasonable that the government should help out the question though from a public policy perspective is whether that support should be in the form of a grant or whether there is some other form of government fine. that can be used that helps out when help is needed but perhaps recoup some of that money to the government's coffers during the good is because in lots of industries people can have a bad year a bad few years but then make up for that with bumper profits down the line and farming is no different to that but what seems to be the case is that profits are kept by the farmers and losses are partly met by the taxpayer that's simplistic but it's true or no i don't it's not necessarily true i think that a lot of if you look at the numbers of farmers actually taking up these programs
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they are remarkably small there were reports this week that the government thinks there's about eight thousand farmers out there who are not applying for these schemes who are eligible the latest numbers i've seen is that in new south wales just four hundred twenty farm families accessing the farm household allowance that there's not a lot of papers that will tell you something else the government is making a lot of this and the media indeed in australia is making a lot of this public plea well actually the need possibly isn't as great as they suggest it is and that goes back to what we were talking about earlier about agrarian sentiment so people in the city see i mean drought makes great television and you know strong visually add drought so really. confronting so people in the city who don't necessarily understand the economics of agriculture who have these deep cultural sympathy for farmers want their governments to act so it's good
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politics for the government to be making these programs available if the farm is a not taking them up because they don't need them well in a sense it's a win win for everyone because the fall is a clearly not in need of it those who are in need of it and who qualify the general population is not going to deny them that support if they need it i suppose where i come from i think this is a cup or is this country's never going to angriness lot of european countries know what starvation is and i'll never forget that guy back there was all the why. this country has never had that issue people remember it that have come in from overseas but i know he that they are always going to have three fields to die so. if we were pure economists possibly and the money that's tied up in agriculture. and the return we're getting would be better off selling out and down in bond traders to shop and now which is shops but you know as i would say it has its ups and downs
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and it's a surprise the problem is we all going through it before and we now return to rand and there's been some good to arms and your flour on and you know it's something we just love doing and it's spies it's in your blood to a point but not a maze of business it's not something you can just roll around and have it works you know i think it's tried it the day of the die and a jagger culture because we are cleaning grain and we produce food we do it on a juris a top spot we've done it coming out of the solar. this is the journey you've been looking forward to the one you've been dreaming about.
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