Bankers not supportive of Rural Crisis Committee’s Rural Reconstruction and Development Bank
The Federal Agriculture Minister Barnaby Joyce says he’s working as fast as he can to prepare a drought assistance package to present to Cabinet.
The minister toured drought-hit regions of northern NSW and Southern Queensland over the weekend, and heard pleas from local farmers for help.
Some of those meetings again raised calls for a federal Rural Reconstruction and Development Bank, which would buy rural debt from commercial lenders.
Mr Joyce says he’s ‘not philosophically opposed’ to such an idea, but it won’t form part of what he takes to Cabinet within weeks.
“There’s a lot of land to cover, if you were to go down that path, before you’d get such a bank in place,” he said.
“I’m not dismissing the idea, but what I’m saying is that the issues pertaining to the drought are right here and now and I’ve got to deal with them right here and now.”
What will be in the package the minister takes to Cabinet is still unclear.
While a rural reconstruction and development bank isn’t on the Minister’s list of short-term goals, it’s been commonly raised by farmers, particularly in Queensland, as an idea they’d like to see seriously considered by government.
The banking sector, however, is more sceptical.
Australian Bankers Association’s director, with responsibility for rural and small business banking issues, Stephen Carroll, says the industry doesn’t have a specific policy on whether or not a rural reconstruction bank is needed, but it also doesn’t have any evidence for why it’s needed.
“We don’t have any information that suggests why one would be required,” he said.
“We are aware that there is currently a Rural Adjustment Act that enables the government to provide grants and loans to farmers in the sort of situations [where] farmers are in financial difficulty. We haven’t seen anybody explain why there’s a problem with that legislation as it currently exists.
“Obviously the minister needs to have the funds to be able to provide those sorts of support mechanisms to farmers, and obviously he’d have to go through a process of getting government agreement for that to happen. But the provisions are in the legislation to enable the government to do exactly that, to provide grants and loans.”
Debate over the shape of Australia’s national drought policy has dragged on for years, since the controversial and costly Exceptional Circumstances policy began winding down as the Millennium Drought ended.
Since then, the focus has shifted to drought preparedness rather than crisis management, with assistance payments equivalent to the Newstart allowance also being made available to farmers experiencing ‘hardship’.
The current Federal Government has also continued with the Labor’s Farm Finance debt relief scheme, offering concessional loans to ‘viable’ farmers.
While not specifically designed as a drought relief package, drought-affected farmers have been among those applying for the cut-price loans. The Queensland Rural Adjustment Authority has so far received 100 applications for concessional loans, of which 40 have been approved, worth a total of $19.172 million. Nine applications were cancelled or withdrawn.
In Victoria, 54 out of 160 applications have been approved, to a total value of $20.5 million. In both states, applications are still in the pipeline.
In NSW, the third state to sign up to the Farm Finance scheme, 36 out of 131 applications for concessional loans have been approved, totally $18 million.
Mr Joyce says he’s spoken with the Prime Minister Tony Abbott and Treasurer Joe Hockey about the circumstances facing farmers in drought-affected areas of Queensland and NSW in particular.
The Treasurer Joe Hockey says he understands how bad the drought is for farmers, particularly in parts of Queensland and New South Wales, but he’s given little indication of what form of assistance the Federal Government might be prepared to consider.
While there’s been concern that the government’s rejection of assistance for SPC Ardmona could mean it’s harder to win help for farmers, Mr Hockey says the two situations are very different.
“The difference between a drought and what’s happened at SPC Ardmona or any one-off grant is the fact that the drought, at its worst, is a complete natural disaster.
“And state and federal governments work together to help those that are affected by natural disaster.”
In far western NSW, Chris Wilhelm, the president of the Pastoralists Association of West Darling, says that freight subsidies are at the top of his list of desires.
“Freight subsidies on stock to agistment, and also freight on stock to sale and subsidies on water carting, because there are quite a few people having to cart water quite a distance because some people are struggling with availability of suitable water at the moment.”
Mr Wilhelm says he also believes low-interest loans would be taken up by a number of farmers in the region.