STOCK JOURNAL: Farm finance debate rolls on
Tuesday, 25 June 2013
VICTORIAN Nationals Senator Bridget McKenzie remains dissatisfied with ongoing delays in delivering the federal government’s Farm Finance package to struggling primary producers.
During a heated Senate debate on Wednesday, Senator McKenzie attacked federal Agriculture Minister Joe Ludwig demanding he explain why the government was profiteering from the farm assistance package.
In late April, Minister Ludwig and federal Treasurer Wayne Swan announced the government would provide concessional loans of up to $650,000 to individual farmers in financial need, over two years, under the $420 million program.
However, Senator McKenzie was angered by a recent admission from Treasury officials - gained during Senate estimates hearings - that the government's average cost to borrow the loan funds was 3 per cent.
But farmers would be charged 4.5 per cent interest on the borrowings with the 1.5pc difference going into the government’s consolidated revenue.
“Why is this government seeking to make money from the plight of farmers in this country, many of whom are struggling precisely because of this government's inept decisions - such as shutting down the live cattle trade to Indonesia?” she asked.
Minister Ludwig said the package was designed to help farmers struggling under the weight of a high Australian dollar and reduced land values.
But he continued to blame state governments for the delays in delivering the actual funds, due to lack of cooperation setting up necessary administration facilities.
“Our package of concessional loans will give farmers the breathing space they need to focus on growing and improving their farm businesses,” he said.
“One thing Senator McKenzie could do is encourage the Victorian government to come on board and ensure that we can deliver this package to help farmers, particularly in the electorate where Senator McKenzie lives.
Senator McKenzie also asked the Minister why the Commonwealth was making money off the concessional loans but also demanding State governments pay for the administration costs.
She said two months had lapsed since the initial assistance package announcement but not one State had signed up to the scheme.
Minister Ludwig said the government had asked the states to look at how they could provide assistance in delivering the loans, “a reasonable request”.
He said the 4.5pc concessional rate provided a “generous discount” against commercial rates, while managing default risk which represented “responsible use of public money”.
“This is a good opportunity for states to use some of their state instruments - such as, in the case of Queensland, the QRAA - to provide these concessional loans to farmers,” he said.
“What we will not do is give up, as the states look like they have.”
In a later debate, Senator McKenzie accused the Minister of avoiding her question and having “no clue what he was actually talking about”.
“A 4.5pc concessional loan is going to be a significant benefit to our farmers, to the struggling northern cattlemen right across Queensland and the Northern Territory, to the dairy farmers in western Victoria, to the fruit growers in central Victoria and to the WA sheep and wheat farmers, who are all struggling with the realities of farming in this nation,” she said.
NSW Labor Senator Ursula Stephens said she was “perplexed” by Senator McKenzie’s approach, accusing her and other Nationals of being, “very quiet on convincing the states to provide this assistance to farmers”.
“It is pretty unfair that Senator McKenzie has come into this place, supported by her National colleagues, to play mischief with the fact that the delay in all of this is with the state and territory governments,” she said.
“They are the ones who are playing hardball on signing up to this assistance package.”
Tasmanian Liberal Senator Richard Colbeck said Minister Ludwig was trying to blame the states for slowing the loan process down.
But he said the delays resulted from the states not understanding the loan terms and conditions, which were only revealed in a letter on May 24 - a month after the Minister’s initial letter advising them of the package.
“So a month later he writes to them and tells them that the rate will be 4.5pc and that, at the end of five years, it will revert to commercial rates,” he said.
“There was no consultation with any of the stakeholders in this process, yet now the Minister expects the states to pick up the bill when they find out that the Commonwealth is making $6.3 million a year on the interest rate.
“Don't you think it is reasonable that they might ask a question about that?”
South Australian Liberal Senator Anne Ruston also took objection to the government’s claims states were to blame.