Policy success fails to be newsworthy

One of the frustrations associated with becoming a politician must undoubtedly be the divide between public discussion about policy matters – usually confined to criticism – and the available evidence about the positive results some policies achieve.

Two current examples are the Australian Government’s climate change and drought policies. Both these are issues on which the government has at different times received unrelenting criticism, yet available hard evidence indicates that current policies have achieved considerable success, and are working as intended.

The current government’s climate change policies have been the subject of constant criticism from some sectors of academia, some public commentators, and certainly most environmental groups. The main policy instrument currently in place is the Emission Reduction Fund auction process, under which the government has made available $2.55 billion for emission abatement projects that deliver internationally-recognised reductions in greenhouse emissions. To date there have been four auctions held, with the fifth to be held in early April. These auctions provide an opportunity for proponents who have developed an emission reduction project (utilising one of the authorised methods) to make a bid for these funds and to enter into contracts of up to 10 years duration to deliver certified emission reduction units (carbon credits) to the government that can be counted in the nation’s greenhouse emission inventory, and will help the nation achieve its commitments of a 26–28% reduction in net emissions by 2030.

To date, approximately 360 projects have been successful, and will deliver an annual emission reduction of approximately 180 million tonnes CO2-e, at an average cost of approximately $11.83 per tonne. About 80% of these projects are on farmland, and are generating about $240 million in annual revenue for the owners of those projects. The auction process has operated very smoothly, there has been strong levels of participation, and perhaps most important of all is that the emission reductions that will be achieved will be at a considerably lower cost than most projections.

Not only is the policy delivering inexpensive and robust emission reductions, but it is also generating very significant income for farmers, and at the same time resulting in the preservation or regeneration of large areas of native forests on farmlands. It has also had minimal impact on the broader economy, and no impact on energy prices or additional costs to consumers.

Critics of the policy usually claim it is not working (which is directly refuted by the results to date), and that it will be too expensive (again the evidence is that this is not the case). A further criticism is that once the current funding is allocated (likely in the forthcoming auction) there will still be a need for further emission reduction, which means that more funding or additional policies will be needed.

This latter criticism is accurate, but the experience of the policy to date has provided some very important lessons, and an extremely robust framework and systems that constitute a ‘platform’ on which future policies can be built. Plus, all this has been achieved without the rorts, corruption and outright policy failures associated with much more grandiose policies implemented overseas! Hardly the policy failure which it is so often painted as.

The second example of a set of policies that seem to be achieving good results are current Australian drought policies. These have undergone substantial reform since 2010, and the mainstays are now enhanced incentives for drought preparation – either through grants or the ability to reduce annual tax in high income years by putting money into Farm Management Deposits (FMDs) – welfare payments for low-income farm families, and the availability of concessional loans for some farmers.

While there is no doubt that several good seasons in southern Australia and current high livestock and wool prices have been a big help, changes the government made to FMD eligibility have seemingly encouraged farmers to put money into these, with some $4.3 billion dollars held in FMDs at the end of December 2016, an all-time record for the December quarter. This means that farmers are very well-prepared for a future drought. In addition, the Farm Household Allowance and concessional loans have been very well-received, and despite some initial hiccups over loan eligibility, state governments and Centrelink now appear to be successfully administering these programs, and they are working as intended.

No doubt these policies will be tested by the next significant drought, but to date they appear to be performing very well. Perhaps the best evidence of this (apart from the FMD statistics) is that despite dire predictions to the contrary, there has not been a rash of farm foreclosures by banks as a consequence of the recent extended drought in northern Australia.

Perhaps Australians are culturally more comfortable throwing brickbats than bouquets, and that explains the lack of acclaim for these policies. However, there is no doubt that both are delivering substantial long-term benefits for Australia, and for farmers in particular. Perhaps it’s time these successes were acknowledged.

Image:  USDA