Future Drought Fund

Terms of reference

Inquiry into the effectiveness of Part 3 of the Future Drought Fund Act 2019

I, Jim Chalmers, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, and section 32A of the Future Drought Fund Act 2019 (the Act), hereby request that the Productivity Commission (the Commission) undertake an inquiry into the effectiveness of Part 3 of the Act.

Background

The Future Drought Fund, established by the Future Drought Fund Act 2019 (the Act) provides secure, continuous funding for programs, grants and arrangements that support Australian farmers and associated communities to prepare for, and become more resilient to, the impacts of future droughts. Building drought resilience is a complex and long-term endeavour. It requires tailored and practical support reflecting the unique circumstances and diverse needs and aspirations of different farmers, their communities and agricultural industries.

Under the Act, $100 million is made available each year for drought resilience programs, arrangements and grants. The design and delivery of such programs, arrangements and grants is guided by a Drought Resilience Funding Plan and governed by Part 3 of the Act.

On 12 February 2020, the then Minister for Agriculture, Drought and Emergency Management made the Future Drought Fund (Drought Resilience Funding Plan 2020 to 2024) Determination 2020 (the Funding Plan). This Funding Plan sets out a 4-year framework to guide the design and delivery of programs, grants and arrangements under the Act.

A first tranche of programs was announced on 1 July 2020, at the same time the first $100 million became available. This has been built on with successive programs, announced in the context of federal budget processes. Programs are in varying stages of delivery.

As a new and enduring initiative, a range of foundational systems and processes have been established to support administration of Part 3 of the Act.

Under section 32A of the Act, the Commission must periodically undertake an inquiry into the effectiveness of Part 3 of the Act, including the Funding Plan that is in place. A referral for the first inquiry must be made by 12 February 2023. Under the Act, this inquiry process is followed by a requirement to establish a new Funding Plan by 12 February 2024.

Scope of the inquiry/research study

In accordance with section 32A of the Future Drought Fund Act 2019 (the Act), the Inquiry must undertake an assessment of the effectiveness of Part 3 of the Act, including:

the Future Drought Fund (Drought Resilience Funding Plan 2020 to 2024) Determination 2020
programs, arrangements and grants made under Part 3 of the Act
processes and systems to administer, govern and evaluate programs, arrangements and grants made under Part 3 of the Act.

As also required by section 32A, the Commission should have regard to economic, social and environmental outcomes in assessing these matters.

In undertaking the Inquiry, the Commission should also:

Consider the effectiveness and appropriateness of the Funding Plan in guiding progress towards the objective of drought resilience.
Consider the effectiveness, efficiency and appropriateness of the programs, arrangements and grants in delivering against the Funding Plan and objective of drought resilience.
Consider the effectiveness, efficiency and appropriateness of Part 3 of the Act, including its administration through the systems and processes established to develop, deliver, govern, monitor and evaluate programs, arrangements and grants.
Provide specific and practical advice to inform the development of a new Funding Plan; the development, delivery, monitoring and evaluation of future programs, arrangements and grants; and the processes and systems to administer the Fund.

In addition to these general evaluation questions, the Commission is asked to also consider:

Opportunities to enhance proactive collaboration in planning and delivering drought resilience initiatives, including with state and territory governments.
Opportunities to enhance engagement with, and benefits for, First Nations peoples.
The merits of longer planning and program timeframes in building resilience.
The merits of broadening the scope of the Fund to support resilience to climate change for the agriculture sector and communities dependent on agriculture.

Process

The Commission is to undertake a public consultation process as part of the Inquiry.

The Commission may elect to engage directly with stakeholders, including representatives from the farming sector. It is also specifically requested that the Commission consults with Future Drought Fund Consultative Committee and, the Australian, state and territory governments.

The final report must be provided within 8 months of the receipt of these terms of reference.