Australia's Farms Thirst
Australia's Farms Thirst
USA: September 28, 2006
SYDNEY - Drought is again gripping Australia's farms, threatening to sap economic growth and complicate life for policy makers as they ponder whether to raise interest rates again.
Australia's farm sector is relatively small, accounting for a little less than 3 percent of Australia's annual A$918 billion ($690 billion) in economic output.
But agricultural output, including wheat, barley and sugar, still makes up 16 percent of exports and is prone to violent swings from year to year.
"A severe drought could wipe 0.8 percentage point off Australia's growth rate," estimated Craig James, chief equities economist at Commonwealth Bank.
"Rural exports would slump, farm incomes contract, and food, transport, retail and financial firms would experience sharply lower revenues," he said.
Such a drag would be significant given annual economic growth slowed to just 1.9 percent in the second quarter of this year, the slowest pace in three years. "During the last drought in 2002/03 we were coming from growth levels of 4 to 5 percent, but this time other sectors of the economy just aren't as strong," said Brian Redican, senior economist at Macquarie Bank.
That was an added uncertainty for the Reserve Bank of Australia (RBA) as it weighs the balance of risks between growth and inflation.
The central bank has judged inflation to be the danger so far, raising interest rates in August to a five-year high of 6.0 percent and warning that more may come.
"But drought could easily take a full percentage point out of growth and that has to be a factor for the RBA when deciding whether to raise rates again," said Macquarie's Redican.
THIS DRY LAND
Drought never seems far away here. Australians are the fourth biggest users of water among 30 industrialised nations, despite living on the driest inhabited continent on earth.
Eastern Australia has already experienced five consecutive years of below-normal rainfall, while last month was the driest August on record. Some 92 percent of New South Wales, the most populous state, is considered officially in drought.
Now, meteorologists are reporting strengthening signs of an El Nino event, a warming of temperatures in the central and eastern Pacific often associated with severe droughts in Australia.
More at the link.
Does this or does this not show a complete lack of leadership on the part of the Australian government to secure water resources for their people? FIVE CONSECUTIVE years of below normal rainfall that can be linked to climate change, and nothing. However, don't try to impart any truth to Howard... he's a Bush puppet. What good is their office on water going to do now after FIVE YEARS? Is it because there is an election next year that they feel they have to set up something to look as if they are doing something?
When we see a comprehensive plan to fight the climate crisis that also includes lowering fossil fuel emissions along with water conservation with the required amount of funds being given for a complete overhaul of their water infrastructure, then perhaps they will look serious. Australia needs water NOW, not when it is politicallly advantageous for them to formulate a real plan.