House debates
Thursday, 17 August 2017
Bills
Regional Investment Corporation Bill 2017; Second Reading
11:25 am
Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source
Drought, floods and fires are, of course, constant companions of Australian agriculture. As a farmer, I know that—it's in my DNA, if you like. As farmers, we do need to have resilience. We do need to be able to cope on a day-to-day basis with most of those challenges. But there are times when we are tested beyond our limits: when a drought enters a second year, a third year, or a fourth year. There is no realistic way for any business to be able to budget and allow for that type of catastrophic failure. It's a repeated story in Australia. We could just let the market rip, and there would be some agriculturalists—those who are in a stronger position—who would get bigger on the back of those types of rationalisations. But what we also need to consider is the fabric of our rural communities.
By and large, governments, over a long period of time, have tried to reach some middle ground when it comes to drought and disaster relief. While we accept that we need farmers to be competitive and to be up to the challenges of both the market and the environment, there come times when we just cannot allow a large number of them to fail, and we need some kind of mechanisms to back them up. A lot of these policies, despite the best intentions of both sides of parliament, are made in an ad hoc manner—'Yeah, we've got a policy'—but then they get tested. The weather tests us beyond the limits of the policy, and then governments have to make another move.
Upon coming to government in 2013, the drought policy cupboard was bare. We'd had the previous exceptional circumstances arrangements, which accompanied the millennium drought, under the Howard government. Then it began to rain right across Australia, and it got to the point where there was nowhere in drought—in fact, we were dealing with floods, to be quite honest—and so those policies were wound up. But there was nothing put back in their place. Upon coming to government, the droughts have returned—certainly not the Australia-wide droughts of the millennium drought, but there have been some very difficult patches. Some of my electorate of Grey has been significantly affected.
The Regional Investment Corporation Bill is progressive policy. We are trying to cement into place policies that are developed not under the pressure of the minute but have a long-term prospect for underwriting Australian agricultural production in the nation's interest. The bill establishes the Regional Investment Corporation as a corporate Commonwealth entity and delivers on the coalition government's election commitment of $2 billion farm business concessional loans, and $2 billion for water infrastructure loan programs in the Agriculture and Water Resources portfolio.
I said that essentially we came into this area having very little policy on the shelf. Since 2013-14 the Commonwealth has been offering concessional loans to farm businesses to help them through these times of difficulty. Concessional loans are a very important part of the government's drought policy framework. One of the main reasons is that the enthusiasm of the banks—who are the major financiers of agriculture and many other things in Australia—for agriculture and other things waxes and wanes. It's not a consistent source of money that farmers can rely on. Sometimes, as farmers, we feel as though the banks are throwing money at us. At other times, you can't get two and six out of the banks to get you through to the end of the week. So having the Commonwealth concessional loans in place actually presents a sort of stability in the market. It's the lender of last resort, but it does help stabilise the market and it helps stabilise the commercial market as well.
To come to the detail of the Regional Investment Corporation, the concessional loans that we've had in place since 2013 have been delivered through the states. In my state of South Australia, that means Primary Industries and Regions, SA—or PIRSA. That is what we call it. I'll come back to that in a moment. This is a very important point to do with why I am so strongly supportive of this legislation. As well as administering the farm business loans, the Regional Investment Corporation will administer the government's National Water Infrastructure Loan Facility. In the past, delivering through the states has proven unwieldy, with a lack of consistency across the country. Currently the Commonwealth has to negotiate separately with each state government to change existing arrangements or roll out a new program for farmers.
I said I'd come back to PIRSA and their role in the concessional loans that have gone out to South Australian farmers. The Commonwealth has delivered $724.4 million of loans throughout Australia since this program was instigated in 2013. In South Australia, despite vast regions being in drought, there has been $17 million. It doesn't matter how you slice up the pie, there is something intrinsically wrong with this. I and the member for Barker, who spoke previously on this bill, have tried and tried to get to the bottom of why that discrepancy exists. Why is it possible for farmers interstate to access these concessional loans but it seems all but impossible for farmers in South Australia to do so? We keep coming back to the door of PIRSA and the South Australian government. I am bereft of an explanation as to why they have made it so difficult. It is not as if we asked the South Australian government for a co-contribution. All we asked them to do is run the concessional loans program, and yet they seem to be so reluctant to support our South Australian farmers. I don't know why that is.
If I were a state government, I would be out there backing my farmers all the way. But, for whatever reason, these blokes—and I use 'blokes' as a generic Australian term—don't seem to have any enthusiasm for our South Australian agriculture at all. In fact, that is across a wide range of programs. We have seen state governments in Queensland and New South Wales putting in state contributions around drought relief—like freight subsidies, for instance. We've never been able to entice the South Australian Labor government down that path. They just do not seem to want to back agriculture. They will refrain, in fact, from declaring an area drought-declared in case there is a financial implication for them. But, in the case of these Commonwealth concessional loans, they don't have to put any money in and yet they still won't back it. We got $17 million out of $724 million. It's a disgrace.
So I am absolutely in favour of us at the Commonwealth level taking over this entire capacity so we can get consistency across the nation. We are, after all, a national government. We are a national government and we should have nationally consistent programs. The trouble is that, when we filter things down through the state governments, they get corrupted at that level. I think we can probably say that across a wide range of programs, but on this particular day we are focusing on agriculture. Those figures that I have quoted to the House so graphically demonstrate exactly what is wrong with the current system.
So the loans under the new regional investment strategy will not be exactly the same as those currently offered. The system will be broader, with the loans drawing on constitutional authority that includes the Commonwealth's trade, commerce and external powers. The restrictive approach to assessing loan applications, which has had very low approvals, will be upgraded. We will reduce some of those restrictions. There's not much point putting money on the table for people who are struggling to stay on their properties and then making it too difficult to access, so we are here to help, as I think this government have been since we were elected in 2013. I get to talk to a lot of farmers. I have been very proud of this government's engagement with agriculture. I think over that period of time we have done very well.
We certainly now are making the 10-year commitment on farm business concessional loans, but we have upgraded the access for farm household allowance during times of financial hardship. One of the things that I argued for very strongly—and I approached the agriculture minister over it repeatedly, let me say—was the lifting of the thresholds, the limits, in the farm management deposits scheme. This is something that I used as a farmer before I entered politics. I found it one of the most enabling pieces of policy to allow farmers to plan for the inevitable droughts—and the inevitable floods, but generally the droughts—and it became quite apparent to me that many of my farming friends continued to expand their properties. As I have said in this House on many occasions, that's good for the farmers, it's good for the state and it's good for Australia. They farm the land in a very good environmental fashion, but it does tend to claw at the intestines of regional communities, unfortunately.
Some of these farmers are spending up to $4 million putting in a crop. The idea that they had $400,000 set aside to cover a drought—it was simply not enough in this environment. Farming is a very big business. It's a very expensive business. It doesn't have big margins, so it is high investment for moderate returns. So the lifting of the farm management deposits to $800,000 per person was a great step forward. We have delivered on that.
We have accelerated depreciation on water reticulation, fencing and fodder storage. There is a 100 per cent write-off on water reticulation, one of my favourite schemes. I keep telling farmers on Eyre Peninsula, 'You need to put in plastic-lined dams and plastic water runs.' I can give you some figures, but I haven't got the time now. But the water run-off, when you get 100 per cent, is enormous. It is absolutely enormous. It is a great opportunity for farmers at the moment to take advantage of the accelerated write-offs that this government has put in place for them.
We've also guaranteed the future, if you like, and put in a better funding line for the Rural Financial Counselling Service. It's a vital service to so many farmers when they're under pressure.
We've had the $20,000 instant tax write-off for capital equipment—not just for farmers, of course, but for businesses right across Australia. We have extended that time frame. I personally hope that we make it permanent, but let's see what future budgets bring us. We have lowered the tax rates for small and medium businesses. I think something that's probably not been well advertised out there to our businesses, many of which operate as partnerships, is that there are commensurate reductions in taxation for partnerships as well that are running those same and similar businesses. We put an extra $100 million into agriculture research.
One of the things that I say brought me into parliament in an indirect way was access to good levels of education, particularly to tertiary education for our kids from the country. I am a great supporter and very appreciative of the government's moves to eliminate farm assets from the assets test for independent youth allowance and just rate that on an income assessment, because we know well the old story about farmers being asset rich and income poor. This has addressed an anomaly that has sat in the system for some time. Sometimes our assets are worth more than others, but with the vagaries of agriculture that I addressed right at the start—drought, fire and flood—these are variable assets which sometimes are locked up very tightly and in times of drought are producing no income.
All across a wide front, across a wide range of areas, this government has delivered for farmers. It's not surprising that we do deliver for our regional areas, because the coalition are largely, almost exclusively, the federal political representatives of rural and regional Australia. Thank you.
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