4 May 2007

Budget strengthens rural communities in crises

Rural communities will benefit from a Budget allocation of $2.3 million over the next four years," Leader of the Progressive Party and Agriculture Minister Jim Anderton announced today. "It will be used to develop local capacity to respond to adverse climatic events and to assist with risk reduction and readiness issues. With a changing climate and more extreme weather predicted, local capacity to cope with such events will be increasingly important."

This initiative complements the review of the On-farm Adverse Events Recovery Framework also announced today. "The Framework has been revised to provide certainty to affected individuals, families and communities over the nature of support they can expect from central government. It is important that the rules are clear, transparent and fair," he said.

The Minister made this pre-Budget announcement in Waitangi, speaking at the Northland Pastoral Development Group Conference.

The Framework ensures that Government support is given in such a way as to strengthen individuals' and communities' primary responsibility for risk management and preparedness. Those with good risk management plans in place are better placed to recover from the effects of adverse events when they do occur, so it is important that we don't discourage personal responsibility."

Normal Task Force Green and Enhanced Task Force Green assistance will continue as before. "This has been very successful and useful for many farmers for clean-up and repairs," Jim Anderton said. "And we remain committed to making sure that family welfare needs are also met. Depending on the scale of the event, that can include assistance through Inland Revenue, Rural Assistance Payments or New Start Grants.

"However, individuals have a responsibility to take all reasonable steps to look after their families and their assets. It is unrealistic to expect that the Government should always be an insurer of last resort.

"In major events, where it is beyond the ability of the local community to manage, the Government will step in even further. In other words, if the wider regional community and economy are at risk, as they were following the February 2004 floods in the Manawatu, Wanganui and Rangitikei, the Government will provide extra recovery measures.

"This assistance will target restoration of uninsurable damage to infrastructure, pastures, crops and forestry plantations. Individual businesses will receive assistance at a rate of 50% of qualifying restoration costs – a threshold of $10,000, or 10% of qualifying costs, and a cap of $250,000 will be applied. These Special Recovery Measures will assist an affected regional economy to get back on its feet quickly," Jim Anderton said.

"The primary production sector has always had a strong risk management ethos, but there are further ways to strengthen the ability of rural communities themselves to respond to and recover from floods or other natural disasters."

The Labour-Progressive Government recognises the importance of Rural Support Trusts, which play an important part in providing response and recovery capability. This Budget provides $2.3 m over the next 4 years to support work that will strengthen the existing Trusts and new support organisations," Jim Anderton said. "The intention is to have an effective organisation in all regions. While they would be largely autonomous, we would like to see them linked nationally, particularly in sharing experiences and best practice initiatives."

www.beehive.govt.nz/anderton www.progressiveparty.org.nz

Background

What is an adverse event?
An adverse event is a climatic event such as a storm, cyclone or drought or natural disaster such as an earthquake, tsunami or volcano that is beyond the capacity of the community to cope.

What is the difference between an adverse event and a civil defence emergency?
Adverse events can be grouped into three broad categories:

 Adverse events that are civil defence emergencies and do not impact on the rural sector. These adverse events impact on urban areas with limited or no impact on the rural community.
 Adverse events that are civil defence emergencies and do impact on the rural sector. These adverse events are civil defence emergencies, where the local Civil Defence Emergency Management (CDEM) Group coordinates the response by activating their own plans and co-ordinating their activities with other sectors (e.g. tourism, rural etc).
 Adverse events that are not civil defence emergencies and do impact on the rural sector. These adverse events do not require a CDEM response, but may still require a coordinated rural response and recovery effort. Drought, frost and hailstorms are examples.

What was the scope of the review?
The “4R’s” framework is:
 Risk reduction - identifying and analysing long-term risks from hazards; taking steps to eliminate these risks where practicable; and, where not, reducing the likelihood and magnitude of their impact.
 Readiness – developing operational systems and capabilities before an emergency happens
 Response – taking action immediately before, during or directly after an emergency to save lives and property, as well as help communities to recover.
 Recovery – the co-ordinated efforts and processes to affect the immediate, medium and long term recovery of a community following a disaster.

The review was focussed on what happens at the on-farm level in the recovery phase after an adverse climatic event or natural disaster and discussed the role of Government and the principals behind Government assistance following these events. Some consideration to the response phase at the on-farm level was also discussed.

What did the review focus on?
The Review focused on three action areas:
 Enhance the effectiveness and awareness of on-farm recovery measures available for primary producers in adverse events.

 Confirm a special on-farm recovery measure for primary producers in a large-scale adverse event; and

 Improve the criteria that guide central government’s decision-making when deciding what type of on-farm recovery measures should be provided after an adverse event.

When was the review undertaken?
Consultation on the Building Resilience: A review of the on-farm adverse events recovery framework began September 2006 with submissions closing October 31st 2006. Cabinet agreed the policy on the 23 April 2007.

What prompted the review?
The Government wants to see increased resilience to hazards and adverse climatic events. As part of obtaining increased resilience, Government wanted to provide greater certainty to the role it would play in these events at the on-farm level.

What were the objectives of the review?
In February 2006, Cabinet agreed that central government recovery assistance at the on-farm level should achieve the following seven objectives.
1) ensure individual and local communities maintain primary responsibility for recovery through risk mitigation and preparedness;
2) ensure that any central government recovery assistance is aligned with local government, industry, and community group recovery assistance measures;
3) ensure basic family welfare needs are met in a timely manner through assistance measures that are appropriate and equitable (including equity across the urban and rural sectors);
4) enable economic recovery to occur at optimal speed;
5) ensure the central government recovery assistance measures signal the necessity for sustainable land management practices, prudent risk mitigation and optimal insurance cover by individuals;
6) ensure any assistance is delivered efficiently and minimises the Crown’s fiscal risk; and
7) ensure the Crown acts fairly and reasonably to citizens in hardship, while recognising the role of local government and community agencies.

What about biosecurity recovery?
MAF is reviewing policy for recovery after a major biosecurity incursion. As the effects of a major biosecurity incursion can be felt far beyond the farm gate and affect a multitude of sectors and government agencies this review has been conducted separately to the on-farm adverse event recovery framework.

What’s the responsibility of rural people?
Rural people are primarily responsible for themselves, and the recovery of their business. They need to consider risks they face from climatic and other natural events and develop strategies to protect their families, businesses and communities from those risks. Rural community members need to work together to manage emergencies with localised, district/multi-district, or regional impacts.

What’s the responsibility of Central Government?
Central government’s primary concern is for the safety of all New Zealanders. It is responsible for maintaining basic family needs are met and is focussed on the wider social and/or economic impacts. Recovery assistance is targeted towards areas of public good.

What’s the responsibility of local CDEM groups?
CDEM groups are consortia of local authorities working in partnership with emergency services, major utilities and others to ensure the emergency management principles are applied at the local level. They are responsible for reduction, readiness, response and recovery at the local level and are individuals’ first point of call in a climatic emergency.

What assistance does Central Government provide for a
a) small-scale event recovery measure

Initial clean-up
Task Force Green Affected individuals are able to apply for the labour assistance scheme Task Force Green for initial clean up. MSD
Business assistance
Late election of provisional tax estimates IRD accepts late estimates of provisional tax from those significantly affected by an adverse event. IRD
Adverse Events Income Equalisation Scheme Enables individuals who have money deposited in the income equalisation scheme to make an early withdrawal or deposit funds arising from forced sale of livestock. IRD
Additional flexible tax provisions IRD can also look at late payment and late filing of tax and tax outstanding. IRD
Individual and family support
Rural Assistance Payments Payments to families affected by specific events when their farm/orchard business cannot meet essential living needs. These payments are set at 75% of the unemployment benefit level. MSD
Emergency Unemployment Benefits This is available for employees for whom work (and income) is not available for a short period. Income and asset tests apply. MSD
Seasonal Work Assistance This provides financial assistance (up to $680 in a 26-week period) to workers who are unable to work (and lose income), due to poor weather conditions. Income and asset tests apply. MSD
Special Needs Grants, Recoverable Assistance Programme This is usually to meet a one-off need and is discretionary, based on individual circumstances for example, a food grant. MSD

b) medium-scale event

Initial clean-up
Enhanced Task Force Green This is an “enhanced” labour assistance scheme that provides assistance for clean up and repairs. The enhancements may include assistance for personal safety equipment and machinery. MSD
Individual and family support
New Start Grants A one-off grant for families to permanently leave commercial farming activities where the farm is no longer viable. MAF
Psychosocial recovery Psychosocial support such as counselling can be made available. MSD
Civil Defence Payments If a civil defence emergency is in place, evacuees can receive assistance for food, temporary accommodation, clothing, loss of livelihood MSD
Local recovery assistance
Grants to Rural Support Trusts Grants to assist RSTs in providing support to primary producers, including financial advice and welfare support. MAF
Technology Transfer Grants Grants to provide assistance for education and technical advice on recovery options relating to financial and contingency planning, including animal welfare. The grants can be used for activities including workshops, meetings and brochures. MAF
Agricultural Recovery Facilitator The Government may appoint an Agricultural Recovery Facilitator. The facilitator’s main role is to co-ordinate the response and recovery initiatives. MAF
Volunteer costs Costs are met for volunteer travel and accommodation. MAF
Media communications Costs are met to enable dissemination of key information to the media for publication/broadcast. MAF

What changes have been made to current on-farm recovery assistance for small and medium-scale events following the review of the on-farm adverse events recovery framework?
After consultation this review found the recovery measures for small-scale and medium-scale events were generally working well and were adequate in meeting the government’s objectives for these events. Enhanced Task Force Green was seen as a particularly valuable measure, and the Ministry of Social Development (MSD) will be reviewing this measure further during 2007.

c) large scale event
For a large scale event the government may provide a Special Recovery Measure (SRM) in addition to any medium-scale event recovery measures.

What does the SRM cover?
The SRM is targeted at restoration of uninsurable infrastructure, uninsurable silt and debris removal, uninsurable pasture, crops and forestry plantations (excluding slips). The reimbursement rate is set at 50% and has a $10,000 or 10% of damage cost (whichever is greater) excess and is capped at $250,000 per farming business.

What does uninsurable mean?
Uninsurable means that there are no insurance companies providing insurance cover available for a particular product for a particular type of event.

Insurance cover is a direct function of risk in that the higher the risk, the higher the premium. There are some insurance products with a very high premium because insurers deem them high risk. The high premium can lead to a low uptake as individuals choose not to insure. If individuals choose not to insure the individuals take this risk on themselves.

Insurance cover changes over time – does that mean the SRM does too?
Yes, MAF Policy would assess the availability of insurance before a SRM is provided following any large-scale event to ensure eligibility and to clarify exactly what would be supported. This is to ensure the policy is dynamic and recognises the need for individuals and businesses to mitigate their risk against climatic events.

Why is the reimbursement rate 50%, and not 75% as per the 2004 Agricultural Recovery Programme and the 2006 discussion document?
The Government considers that 50/50 is fair and reasonable. It sends a signal that the primary responsibility for recovery lies with individuals, but that the Government will play its part.

Following feedback, the government agreed to widen the scope of eligible items from what was proposed in the discussion document. The overall effect of widening the scope (e.g. to include re-grassing) and reducing the reimbursement rate is that more farmers would be supported after a large-scale event, but at a lower level.

There’s been a huge storm in my area. Even though the damage was very localised, my farm was significantly damaged. Why is Government not providing me business assistance?
Individual business owners bear the primary responsibility of risk management and recovery of their business. Government can not be the insurer of last resort for every individual.

In large events, where the wider community and economy are at risk, the Government may provide special assistance.

Why does the Government provide business assistance to the primary sector but not to people living in urban areas?
The SRM will reimburse only uninsurable items. For a land-based business, these are more significant than for an urban business, because things that are part of the land (e.g. tracks and culverts) are often not insurable.

Who assesses the scale of the event?
MAF in close consultation with the local CDEM group, industry organisations such as Federated Farmers and Horticulture New Zealand, other Government agencies and lifeline utilities will assess the adverse event and provide advice to the Minister of Agriculture on the scale of the event. Cabinet will ultimately decide on the measures to be implemented.

What do you call a large-scale event?
A large-scale event is an event that has regional or national impacts. It is an event with limited risk management options available and is usually rare in frequency. An example of a large-scale event would be the 2004 Lower North Island floods (see Matrix of Government Response below).

What about essential infrastructure like roading, telecommunication and power restoration – where does this fit into the on-farm adverse events recovery framework?
Government funding is available for the restoration of essential infrastructure such as public road repair and water supply systems. Roading repair costs have regularly been the largest portion of Government expenditure after an adverse event. The on-farm adverse event recovery framework is complementary to restoration of essential Government owned infrastructure.

Restoration of electricity and telecommunications are the responsibility of the provider.

Building rural capability
The government has decided to make resources available to help rural communities build their capability for adverse events response and recovery. Ultimately the government would like to see rural communities that are resilient and prepared for adverse events and natural disasters and who have the capacity to respond to adverse events in their region.

What’s happening next?
The Minister of Agriculture is keen to foster ongoing discussion of risk and resilience in the primary industries. MAF will be discussing these issues with sector organisations. MAF will also be distributing a leaflet explaining who is responsible for adverse events that affect farm (agriculture, horticulture and forestry) business viability and what assistance measures are available in a small, medium and large-scale event. Updates will be provided on the MAF website www.maf.govt.nz when available. Any questions regarding this policy can be emailed to AdverseEvent_Feedback@maf.govt.nz

ENDS

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