Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024

Explanatory Statement

Issued by Authority of the Minister for Agriculture, Fisheries and Forestry

Future Drought Fund Act 2019

Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024

Legislative Authority

Subsection 31(1) of the Future Drought Fund Act 2019 (the Act) provides that the Drought Minister must determine a Drought Resilience Funding Plan.

Purpose

The purpose of the Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024 (the Plan) is to ensure a coherent and consistent approach is adopted in making arrangements with, or grants to, a person or body under section 21 of the Act and for entering into agreements under section 22 of the Act setting out the terms and conditions of such grants.

The Plan provides a high-level, principles-based framework to guide relevant decision-making under sections 21 and 22 of the Act.

Background

The Australian Government’s approach to drought focuses on preparedness, sustainability, resilience and risk management for farmers, businesses, landscapes, and communities. Drought occurs in a cycle, with three stages of preparing for, responding to, and recovering from drought. Preparedness and building system wide resilience is key to mitigating the impacts of drought and climate change and enabling those affected to bounce back better. The Future Drought Fund represents the Australian Government's secure and ongoing commitment to invest in activities which strengthen drought preparedness and resilience. Each year $100 million is made available for initiatives that build the drought resilience of Australian farms and rural, regional, and remote communities.

Drought is recognised as an established feature of, and risk to, Australia's agriculture sector, landscape, and communities. Farmers are well accustomed to the impacts of climate variability. They are responding well to climate uncertainty, with sustainable practices already commonplace on Australian farms. However, climate change has and will continue to present new challenges. Droughts are predicted to increase in frequency, intensity, and duration in many regions. The impact of drought on farmers, agricultural landscapes, and communities, is likely to become more severe, unless we continue to adapt.

In response, Australian farmers need to continue to build their capacity to plan and prepare for drought. There is a need to reassess strategies to strengthen drought resilience and consider the incremental, transitional, and transformational changes required to build capacity and better manage drought and climate change.

The impacts of drought and climate change are multifaceted, with significant economic, environmental, and social impacts. Further, the impacts of drought do not exist in isolation from other issues including natural disasters, biosecurity incursions, and market conditions.

The strategic objectives in the Plan consider the economic, environmental, and social factors in building drought resilience. No single aspect of this approach is more or less important than the other, although people are certainly central to all of them. It is the people working on the ground—building the connections, adopting the technologies, trying new farm management strategies, providing leadership, and supporting each other—that are the key to success.

Drought is not just an issue for farmers. The communities that are dependent on agriculture are also affected by drought. Further, government, industry representatives, farming systems groups, First Nations people, Natural Resource Management organisations, professional advisors, universities and other research organisations, the private and not-for-profit sector, and rural, regional, and remote communities all have a role to play in building drought resilience.

First Nations people are the Traditional Owners of Country throughout Australia and their experiences of, and responses to drought conditions, can be different to those of the broader Australian community. Their continuing connection to land, sea and community has underpinned their management of Country for millennia. The Australian Government recognises the benefits of working closely with First Nations people to address the challenges of drought and our changing climate.

Australian farmers and their communities operate within unique, complex, and dynamic environments. As a result, diverse place-based arrangements are needed to build drought resilience that align to the unique attributes of different farming businesses, landscapes, and communities.

Development of the Plan

The Plan replaces the Future Drought Fund (Drought Resilience Funding Plan 2020-2024) Determination 2020 (the 2020 Plan). The 2020 Plan focused on the foundations for building drought resilience. The Plan for 2024 to 2028 builds on this, and addresses lessons learnt from the first phase of the Future Drought Fund.

Subsection 32A(1) of the Act requires that before the end of the period of 3 years after a Drought Resilience Funding Plan comes into force, the Minister administering the Productivity Commission Act 1998 (the Productivity Minister) must under paragraph 6(1)(a) of that Act, refer to the Productivity Commission for inquiry the matter of the effectiveness of Part 3 of this Act. This includes an assessment of the effectiveness of the Drought Resilience Funding Plan and having regard to economic, environmental and social outcomes.

In 2023, the Productivity Commission (the Commission) reviewed the effectiveness of Part 3 of the Act, including the effectiveness of the 2020 Plan (as required by section 32A of the Act). The recommendations of the Commission’s report have been considered in the development of this Plan. In particular, the Commission suggested that the funding principles captured in the Plan could be clarified, including how they apply to the Future Drought Fund as a whole and specific grants and arrangements. The Commission also recommended a greater focus on monitoring, evaluation and learning.

Under section 32 of the Act, the Drought Minister must, before determining a new Plan:

The development of the Plan involved an extensive stakeholder consultation process during 2023, as described above. In accordance with subsection 32(1) of the Act, the draft Plan was published on the Department of Agriculture, Fisheries and Forestry’s (the department) website on 20 October 2023 and public submissions were invited until 6 December 2023.

The Committee and the department conducted 20 face-to-face consultations in each state and territory as well as two virtual meetings, one of which was First Nations focused. Over 320 people attended the public meetings, and 158 written submissions and survey responses were received.

As required by section 36D of the Act, the Future Drought Fund Consultative Committee (the Committee) provided the Drought Minister with advice on the draft Plan and the Drought Minister had regard to that advice before determining the Plan. The Committee supports the Plan and notes that their advice, and the Plan itself, was informed by the extensive stakeholder consultation.

Implementation of the Plan

The Future Drought Fund is an enduring commitment to support drought resilience in the short, medium, and long-term. The vision, aim and strategic objectives of the Plan, are intended to facilitate funding decisions which produce enduring outcomes, including beyond the 4-year funding period.

The strategic objectives and funding principles guide funding decisions regarding programs, grants and arrangements. The Plan contains two categories of funding principles. The fund wide principles will guide decision-makers about the mix of programs that will provide the greatest benefit for the community. These principles relate to the proposed design of programs of arrangements and grants to be made under section 21 and 22 of the Act. The Committee must advise the Drought Minister whether the proposed design of programs is consistent with the Plan, including these funding principles under section 36D.

The second set of funding principles apply to making decisions about arrangements or grants to a person or body under section 21 or 22 of the Act. These principles may also be considered by the RIC Board when providing advice to the Drought Minister under section 28 of the Act. The RIC Board is required to provide advice on whether the Drought Minister should make an arrangement or grant or enter into an agreement with a person or body under section 21 or section 22 of the Act. Under the legislation, the Drought Minister is required to give regard to the independent advice from the RIC Board and comply with the Plan when making decisions to distribute funds.

Consistent with subsection 31(6) of the Act, the Plan is a high-level framework and cannot specify programs or activities to be delivered, specifically it cannot require:

The Future Drought Fund Investment Strategy 2024-2028 (the Investment Strategy) will be finalised in mid-2024 and is a supporting policy document that provides detailed information about the delivery of programs and activities from 2024 to 2028, consistent with the vision, aim and strategic objectives of the Plan. It will identify the funding priorities across the 4-year funding period and will facilitate better planning, sequencing, and coordination of programs. It will also demonstrate links to the broader landscape of drought and climate resilience initiatives.

Review of the Plan

Every four years, the Drought Resilience Funding Plan is reviewed, and replaced with another plan, as required by the Act. This regular process of review, informed by robust consultation, ensures the Plan continues to reflect the needs and lived experience of farmers and their communities in building drought and climate resilience over time.

The legislated review process includes an inquiry by the Productivity Commission (section 32A of the Act) and public consultation (section 32 of the Act).

Impact and Effect

The Plan’s implementation will result in an innovative and profitable agriculture sector, a sustainable natural environment, and adaptable rural, regional, and remote communities—all with increased resilience to the impacts of drought and climate change.

Given the dynamic nature of drought, and other risks to agricultural business, landscapes and communities, there is no clear end point to confirm when resilience is attained. Rather, resilience is measured on a continuum. Further, every person, farm, community, and agricultural landscape has unique circumstances which mean that unique interventions are required to increase their drought resilience. The ability to respond effectively is in-part gained through the lessons learned.

Monitoring, evaluation, reporting, and learning is fundamental to the success of the Plan. The funding principles in subparagraphs 6(2)(e) and 6(3)(e), (g) and (h) of the Plan seek to ensure robust monitoring and evaluation, communication, and knowledge management are maintained to ensure the Future Drought Fund is measuring its outcomes and sharing the lessons learned for scalable impact.

Consultation

The development of the Plan involved an extensive stakeholder consultation process during 2023. In accordance with section 32(1) of the Act, the Plan was published on the Department of Agriculture, Fisheries and Forestry’s (the department’s) website on 20 October 2023 and public submissions were invited until 6 December 2023.

The Committee and the department conducted face-to-face consultations in each state and territory as well as two virtual meetings, one of which was First Nations focused. Over 320 people attended the public meetings, and 158 written submissions and surveys were received. Consultation outcomes informed the Committee’s advice to the Drought Minister under section 36D of the Act.

The extensive nature of the consultation process prescribed by section 32 of the Act, satisfies the requirement that consultation is appropriate and reasonably practicable for the purposes of section 17 of the Legislation Act 2003. Further, the consultation process was designed to ensure that persons likely to be affected by the Plan would have an adequate opportunity to comment on its proposed content. In addition to this consultation process, the Plan sets out an enduring commitment to ongoing consultation, collaboration, and co-design of future programs.

The Office of Impact Analysis was consulted in the preparation of this instrument and confirmed that the preparation of an Impact Analysis is not required (OIA23-06093).

Other

Details of the instrument are provided in Attachment A.

The instrument is compatible with the human rights and freedoms recognised or declared under section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011. A full statement of compatibility is set out in Attachment B.

The Plan is a disallowable legislative instrument for the purposes of the Legislation Act 2003.

Attachment A

Details of the Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024.

Section 1 – Name

This section provides that the name of the instrument is the Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024.

Section 2 – Commencement

This section provides that this instrument commences on the day after it is registered.

The note to section 2 states that subsection 31(4) of the Future Drought Fund Act 2019 provides that the Drought Resilience Funding Plan comes into force at the start of the day after the Plan is registered under the Legislation Act 2003. The Plan is repealed at the end of the 4-year period that began when the Plan came into force, unless it is repealed earlier.

Section 3 – Authority

This section provides that this instrument is made under section 31(1) of the Future Drought Fund Act 2019.

Section 4 – Definitions

The note to section 4 provides that a number of expressions used in this instrument are defined in section 5 of the Act, including Drought Resilience Funding Plan and Future Drought Fund.

Section 4 of the Act further provides that Act means the Future Drought Fund Act 2019.

Section 5 – Details of the Drought Resilience Funding Plan

This section provides that Schedule 1 sets out the details of the Drought Resilience Funding Plan.

Section 6 – Replacement of existing Drought Resilience Funding Plan

This section provides that the instrument replaces the Future Drought Fund (Drought Resilience Funding Plan 2020 to 2024) Determination 2020.

The note to section 6 provides that The Future Drought Fund (Drought Resilience Funding Plan 2020 to 2024) Determination 2020 is repealed when this instrument commences because this instrument is expressed to replace an existing Drought Resilience Funding Plan and refers to subsection 31(5) of the Act.

Schedule 1 – Details of the Drought Resilience Funding Plan

Clause 1 – Preliminary

This clause sets out the preliminary matters in relation to this Plan, that is:

• The impact of drought and climate change on the agriculture sector
• The contributions of Australia’s First Nations people to managing land and sea
• The role of the Future Drought Fund; and
• The review and re-making of the Plan.

Clause 2 – Purpose

This clause:

• Notes that the purpose of the Plan is to ensure a coherent and consistent approach is adopted in making arrangements with, or grants to, a person or body under section 21 of the Act and for entering into agreements under section 22 of the Act setting out the terms and conditions of such grants. The Plan provides a high-level, principles-based framework to guide relevant decision-making under sections 21 and 22 of the Act.
• Describes the Future Drought Funding Investment Strategy 2024-2028 and its relationship with the Plan
• Notes that the object of the Act is to enhance the public good by building drought resilience and how decisions relating to grants and arrangements can be consistent with, and promote that object
• Notes that a key aspect of drought resilience is the ability to adapt, reorganise and transform in response to certain climate events for improved economic, environmental and social resilience; and
• Notes that the Act represents an enduring commitment to support drought resilience in the short, medium and long term.

Clause 3 – Vision

This clause sets out the vision of the Plan, which is an innovative and profitable agriculture sector, a sustainable natural environment, and adaptable rural, regional and remote communities – all with increased resilience to the impacts of drought and climate change.

Clause 4 - Aim

This clause sets out the aim of the Plan, which is to build drought resilience, for the public good of the Australian agriculture sector, landscapes and communities.

Drought resilience

The object of the Act is to enhance the public good by building drought resilience. Building drought resilience is a complex and long-term endeavour. There is unlikely to be an end point, as continued adaptation is required to meet changing circumstances over time and build resilience. This is reflected in the secure and continuous funding made available each year for drought resilience activities, under the Future Drought Fund.

A key aspect of drought resilience as it relates to this Plan, is the ability to adapt, reorganise or transform in response to changing temperature, increasing variability and scarcity of rainfall and/or changed seasonality of rainfall, for improved economic, environmental and social resilience.

Climate resilience

Drought and climate resilience activities and outcomes are often interconnected. Building resilience in one area can often have multiple benefits of building resilience for managing other risks. While drought preparedness and resilience remain the key focus of the Future Drought Fund, programs can consider a broader range of climatic risks where they meet the requirements in the Plan. A new funding principle confirms that where multiple outcomes can be achieved through funded activities they will be prioritised (funding principle 6(2)(b)).

Public Good

The Plan is consistent with the object of the Act, which is to enhance the public good by building drought resilience. The concept of public good is discussed further below in relation to funding principle 6(3)(b) of the Plan.

Clause 5 – Strategic objectives

This clause sets out the strategic objectives to deliver the vision and aim of the Plan.

The Plan adopts a holistic, systems approach to building drought resilience, through improved economic, environmental, and social resilience for current and future generations.

The three inter-connected strategic objectives, as outlined in the Plan, seek to build:

While programs may have key areas of focus, they should also work together to build drought resilience. Where possible, the design of each program should seek to address all three strategic objectives and deliver a holistic approach to building drought resilience.

The three strategic objectives are explained further as follows:

Economic resilience

Enabling farmers to make informed decisions and adapt quickly to reduce the impacts of future droughts on their business viability is essential. Business management planning has been associated with greater practice change as well as financial performance.

Economic resilience has strong public benefits in terms of reduced requirements for government in-drought financial assistance, providing the financial means to invest in natural resource management and transformational practices and can drive change at scale with spill over benefits for the broader agriculture sector. It also has important flow on effects for rural, regional, and remote communities, who rely on a thriving agriculture sector to support regional economies.

Environmental resilience

The Plan can support improved information, planning, management capacity and incentives that deliver on this objective at all agricultural landscape levels—from the farm and community level through to regional and agriculture industry groups and organisations. The Plan can also support improvements to the natural resource base to foster long-term productivity, landscape health and sustainability credentials. This will improve the agricultural sector's access to economic diversification options related to natural resource management, including through emerging markets and alignment with existing or future sustainability frameworks.

Management of natural resources is an important contributor to drought resilience of farms and farm businesses and the long-term sustainability and productivity of Australia's agricultural landscapes. While natural resource management practices and programs are generally designed to have environmental and sustainable agriculture outcomes, there are also farm productivity and profitability benefits created through the protection and enhancement of the natural resource base and associated ecological services. This strengthens the capacity of primary producers and of farming systems to withstand and recover from drought conditions.

Social resilience

Drought can cause strain on maintaining the social fabric or social capital of rural, regional, and remote Australia, which may threaten the viability of some communities. Despite sometimes sharing similar challenges, Australia's rural, regional, and remote communities differ greatly.

Social capital is built on social networks of trust, mutual support and understanding. When people are part of social networks, they are more involved in community life, and can be better supported through challenging times. Drought can reduce people's ability to work together for the benefit of the whole community, for example, a reduced capacity to engage in social and business networks, community projects and sporting activities. Maintaining positive mental health is also an important aspect of personal resilience. Drought can undoubtably cause personal and family stress which can be lessened when social connections, networks are strengthened.

Clause 6 – Funding Principles

This clause sets out the two categories of funding principles, that is, the fund-wide principles in subclause 6(2) and the principles relating to decisions about arrangements and grants in subclause 6(3).

Fund-wide principles

The fund-wide principles guide decision-makers about the mix of programs to provide the greatest benefit to the community. They include:

Funding principle (2)(a) – Support a range of activities across Australia at different scales, including farm, community, regional and national levels and consider the unique place-based circumstances of each

Supporting a range of activities across Australia at different scales and actively encouraging participation of a diverse range of people, will facilitate a mix of programs that together create the greatest net benefit.

Funding principle (2)(c) – Consider opportunities for incremental, transitional, and transformational change

The rate or type of change required to build drought resilience can vary from incremental, transitional, or transformational changes. In some cases, incremental changes, such as improving the efficiency of farm production, will be sufficient. In other cases, over time, more fundamental, transformational changes may be necessary.

The Plan will support individual farmers, industries, and communities to develop strategies for managing drought, including the extent of change required. While the Future Drought Fund may offer different types of projects, long-term projects are more likely to support transformational change and achieve lasting public benefits. This intention is reflected in funding principles (2)(c) and (2)(d).

Incremental change is the ability to preserve or restore a system (including its basic structures and functions) by preventing, preparing for, or mitigating the impacts of an event or risk. An example could include diversifying income with off-farm employment.

Transitional change is the ability to maintain the essential functions and structures of a system by modifying or changing some of its characteristics in response to future adverse events or risk. An example could include changing aspects of a production system (such as seed varieties or agronomic practices) to continue the production of certain commodities in a region.

There are competing perspectives on what transformational change is. While change at a large, spatial scale may be transformational, it can also be achieved at smaller scales. Further, the level of change that is recognised as ‘transformational’ is subjective and relative. Sometimes, incremental adaptation can accrue to result in transformational adaptation.

Funding principle (2)(j) – require co-investment to maximise program outcomes, where appropriate

The Plan contemplates co-investment by other parties to strengthen program outcomes and to offset private gain, where appropriate. Depending on the circumstances, these co-contributions could for example, come from a state or territory government, private investor, universities or another research organisation, philanthropic organisation or an individual. By leveraging co-contributions in this way, the Plan acknowledges that the benefits and role of building drought preparedness and resilience in agriculture are shared across many sectors of the economy and all levels of government.

Where private benefits are created, private or industry co-contributions (financial or in kind) should be leveraged to offset them. However, co-investment may be less appropriate where it would create a substantial barrier to uptake, for example where there is a known market failure or where a small community or community organisation cannot contribute due to financial constraints.

Funding principle (2)(k) – ensure there are no unnecessary ongoing operational or maintenance dependencies

The Plan contemplates that ongoing operational or maintenance costs should be avoided. This principle rules many infrastructure projects out of scope. However, it may be necessary and appropriate to provide ongoing funding where a net benefit and/or market failure can be demonstrated. For example, investing in institutional capacity or platforms to share information across a range of stakeholders and address information barriers.

Principles relating to decisions about arrangements and grants

The principles relating to decisions about arrangements and grants in subsection 6(3) of the Plan apply to making a decision about making grants to, and arrangements with, a person or body under sections 21 and 22 of the Act. They include:

Funding principle (3)(b) – Ensure activities deliver a public good

In pursuit of public good outcomes funding should seek to support benefits that can be ‘accessed and or shared by many’ including where there are significant spill over benefits, well beyond those derived by private beneficiaries.

This funding principle complements the other funding principles in this Plan, and provides high‑level guidance on applying the public good test, specifically funding principles (2)(a) and (2)(j) and (3)(d) and (3)(g) of this Plan. For example:

• where private benefits are created, private or industry co-contributions (financial or in kind) should be leveraged to offset them (see also funding principle (2)(j)).

• supporting a range of activities across Australia at different scales and actively encouraging participation of a diverse range of people, will facilitate a mix of programs that together create the greatest net benefit (funding principles (2)(a) and (3)(d)).
• ensuring data and knowledge obtained is shared freely will ensure benefits are shared beyond the recipient (funding principle (3)(g)).

Other relevant considerations include achieving value for money (including where the benefits achievable from the funding outweigh the costs) and maximising the impact of activities across Australia.

Examples of activities that enhance the public good by building drought resilience may include those that:

• Address information gaps
• Drive collective behavioural change or change at scale
• Maximise the value of research and development
• Enhance the natural resource base
• Build human capital through improved decision-making
• Build social capital through strengthening networks
• Sharing of knowledge
• Improving overall well-being.

Funding principle (3)(c) – Arrangements and grants are not to provide in-drought assistance to directly address hardship

Decisions made under the Act and the resulting programs, grants and arrangements can be made available throughout the drought cycle, regardless of conditions. As such, the resources, tools and practices developed or supported under the Future Drought Fund can be drawn on across the drought cycle. However, the Plan has a clear drought preparedness and resilience focus and will not provide in-drought assistance to directly address hardship or replace existing sources of support, including the Farm Household Allowance, Regional Investment Corporation loans, and taxation measures.

Funding principle (3)(e) – Foster collaboration to improve integration, coordination, communication, planning and implementation of drought resilience activities, and avoid unnecessary duplication

The Plan encourages decision makers to take on opportunities to align with and, where possible, leverage existing policies, programs and user knowledge. Further it encourages policy and program development, which enhances outcomes for the Australian agricultural sector and rural, regional, and remote communities. This funding principle emphasises collaboration for the purpose of improving integration, coordination, communication, planning and implementation of drought resilience activities and to avoid unnecessary duplication.

The Plan is consistent with Australian Government drought policy and the National Drought Agreement (the NDA) as agreed by all jurisdictions in 2018. The NDA is currently under review, it will be finalised in 2024, and sets out a joint government approach to drought preparedness, response and recovery.

Other relevant Australian Government initiatives and strategies that complement the Plan include, but are not limited to, the National Soils Strategy, National Heritage Trust, and Disaster Ready Fund.

The Plan is also consistent with the National Farmers' Federation vision for Australian agriculture to become a $100 billion industry by 2030. When finalised, the Investment Strategy and the Australian Government Drought Plan will outline how the Future Drought Fund will align with and complement these and other relevant initiatives.

Attachment B

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The purpose of the Future Drought Fund (Drought Resilience Funding Plan 2024-2028) Determination 2024 (the Plan) is to ensure that a coherent and consistent approach is adopted in making arrangements or grants under section 21; and entering into agreements under section 22 of the Future Drought Fund Act 2019 (the Act). 

The Plan provides a high-level, principles-based framework to guide relevant spending under the Future Drought Fund. It does not specify programs or activities to be delivered or delivery partners, which is consistent with the Act. The Plan is a part of the implementation of the Future Drought Fund, established under the Act. The Future Drought Fund represents the Australian Government's secure and ongoing commitment to invest in drought preparedness and resilience. Each year $100 million is made available for initiatives that strengthen the drought resilience of Australian farms and communities.

The strategic objectives and funding principles contained within the Plan recognise the opportunities and benefits within the agricultural sector and rural, regional, and remote communities to build drought resilience and enhance public good. The Plan contains two categories of funding principles. The fund-wide principles will guide decision-makers about the mix of programs that will provide the greatest benefit for the community. These principles relate to the proposed design of programs of arrangements and grants to be made under section 21 and 22 of the Act. The second set of funding principles apply to making decisions about arrangements or grants to a person or body under section 21 or 22 of the Act. These strategic objectives and funding principles will guide the design of the fund’s programs to ensure a coherent and consistent approach is adopted.

Before the Drought Minister allocates funding, the Minister must first seek advice from the Future Drought Fund Consultative Committee on the design of programs to ensure they comply with the Plan and seek independent expert advice from the Regional Investment Corporation Board on the making of individual grants and arrangements.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

Senator the Hon Murray Watt

Minister for Agriculture, Fisheries and Forestry