House debates

Tuesday, 21 August 2018

Grievance Debate

Farrer Electorate: Drought

6:06 pm

Photo of Sussan LeySussan Ley (Farrer, Liberal Party) Share this | | Hansard source

I grieve for the farmers in my electorate of Farrer, who are struggling with the drought, with zero water allocations and with a lot of different issues and problems that sometimes seem to overwhelm them. However, we are a resilient bunch and we will come through this stronger and better than we were before. When I go into my electorate and meet and speak to farmers or call them from here or from my electorate offices in Albury and Griffith, I have to say I really do share their pain.

Around my electorate, most graziers are continuing to bring in feed for livestock. To the north, where the extended dry spell has been around for much longer, some have been doing this for the last eight months. In contrast, an area such as Hay in the middle of my electorate has been feeding out for about a month. Most graziers are not qualifying for assistance as they're still getting good prices for their livestock and they will still make a profit this financial year. Prices to run the farm are jumping. Some graziers are ordering feed only to find that the cost of feed is increasing daily and that sometimes their orders have been resold to a higher bidder. Cotton growers are looking at the price of temporary water and assessing whether or not they will grow. The current price of temporary water is over $350 a megalitre, and that's bordering on not being profitable.

The worst-affected areas are the dry cropping areas such as Hillston and Goolgowi in the Carrathool shire. There's also the flow-on effect from any rural and agricultural downturn to small businesses in towns and communities, something that we should never forget. In Finley, at the heart of the Murray irrigation area, all the dryland wheat is going to die unless it receives 20 to 25 millimetres in the next fortnight. The dryland canola is already a write off. Although more water is probably too late for the non-watered crops, it might help for irrigated rice, corn and cotton and for forage crops like millet and hay. The same producers warn that with water trading at a minimum of $350 to $360 per megalitre, buying water is becoming out of reach for most rice growers. In short, one of Australia most important domestic and export foods, if not its most important, is quickly becoming unviable.

In Blighty, which is close to Deniliquin, local farmer Mary Browne notes they are completely bewildered that environmental water could be pushed through the forests while they have zero watering allocation. She asks: 'Wouldn't it be far more beneficial to allocate the environmental water to our irrigators, whose only desire is to finish crops and have some return on their large expenditure? Two years ago we lost crops due to flooding and now we have crops floundering.' In Jerilderie, I've been talking to Martin Robertson, who says, 'We want to be part of a solution, but if we don't get water soon we'll be part of the problem.' That is a very telling remark, because most of the irrigated farmers that I represent are not looking for drought assistance. They are looking to complete their farming programs for winter and for summer. They absolutely hate having to come to government for assistance. It's not who they are. It's not how they were brought up. They understand that of course it's necessary from time to time, but they see that there are other options available for governments to support them—and I've been talking now for two weeks about an 'environmental borrow' which would see environmental water in the storages in the Dartmouth and Hume dams allocated, on a 'borrow and pay back' basis, to irrigated farms in my electorate; thus giving them the water to stop the crops that I've just been talking about from dying in front of them but also guaranteeing that the environment gets that water back when it wants it. I've talked before about financial instruments in water that could make this possible. Irrigators would be prepared to underwrite the risk. We aren't talking about wanting something for nothing.

The latest round of drought support, which was announced at the weekend by the Prime Minister and the Minister for Agriculture and Water Resources, is very welcome. My electorate, in southern New South Wales, is mainly around the Murray and the Murrumbidgee rivers but also contains some western dryland areas. It is not as badly hit as the areas to the north. The Prime Minister was in Forbes on the weekend. It's not as bad as that, but obviously it's rapidly getting so. But that drought support is very welcome, and the government is delivering tax relief to help farmers invest in feed storage, which could help around 50,000 broadacre livestock and dairy farms. Fodder storage, such as liquid feed storage tanks, silos and bins for grain, and hay sheds and bunkers for silage, can now be deducted in one year rather than three. That's very welcome.

We learn a lot from every single drought. I think from this drought we've learnt of this national fodder scarcity. It's not something I've seen previously to the same degree. We have to ask ourselves the question: what could we do differently or do better? I was talking to my constituent Harold Clapham, from Deniliquin, who remembers on one of the FS Falkiner properties north of Deni in the 1950s they buried 10,000 acres for silage and, in the mid-1970s, dug that silage up and fed their soon-to-be-starving stock. Not one sheep left the property. So there was fodder conservation undertaken, and it worked really well.

What we tend to do now is encourage people, with a tax deduction, to hold money in cash, which doesn't really make all that much sense. I'm not against farm management deposits—I think we should still keep them—but I also think they're probably a lazy way of securing those variable returns back to farmers, particularly when you consider that, when you get them out, they have a tax implication—as they should. Wouldn't it be better if we really encouraged farmers to invest in fodder storage? That would mean in some way valuing bales of hay. If you keep fodder on your farm, the equipment to keep it there is tax deductible, but the fodder itself isn't. If it were, I think we would see farmers doing that much more than when we see them buying FMDs. I encourage the government to look very closely at that.

In relation to low-interest rate loans, the government is increasing the amount of money a farmer can borrow in a concessional loan from the Regional Investment Corporation from $1 million to $2 million. I've done the rounds of my drought counsellors and asked how useful these loans are. Unfortunately they're not very. What we are seeing is that loans are extended to farmers who have sufficient commercial viability not to go to a low-interest loan. I'm not saying it's not a good thing for them, but let's consider for a moment the young farmer having a go, with high debt and therefore reasonably low equity, who unfortunately fails the test from our big four banks and often misses out on such low-interest loans—because the banks always make sure that everything is in their favour and they have to approve what you're doing. If you have any other lenders, they have to agree, and they all start tiptoeing around the issue. It doesn't work as well as it should, which is why, to begin with, many of these loans weren't taken up. Let's face it, the interest rate environment in Australia is not high, and knocking a couple of percentage points off a loan, while useful, probably isn't the best thing we could do around financial support.

We've got four banks and they all behave exactly the same, as far as I am concerned. Sometimes they are good—and I like it when they are—and sometimes they are bloody awful to farmers. What they could do is take the pressure off farmers by having a much earlier discussion about the penalties they apply when you can't make your payments in time. Interest rate penalties are terrifying for farmers. You go into a holding pattern and you don't have any income and then you look at your loan balance and it is suddenly beyond your control. Then the banks will say, 'We're going to leave that there,' and they do, so that you can sort of be constantly made anxious about it.

During the millennium drought, in the western division of my electorate, which I represented for that whole 10 years, we paid a billion dollars in exceptional circumstances interest rate support to those farmers. Where did that $1 billion go? It went straight to those four banks. I remember meeting them once with the then agriculture minister, Peter McGauran, and saying to the banks, 'What are you going to do in return?' and the reply I got was, 'We'll look at everything on a case-by-case.' Really what they need to do is recognise that they are in it for the long haul with these farmers. Working capital has to be extended and penalty interest rates should not be imposed. If your farmer applies for a low-interest rate loan, don't demand excessive paperwork and please say yes. Look after the farmers.

Photo of Ian GoodenoughIan Goodenough (Moore, Liberal Party) Share this | | Hansard source

The time for grievances has expired. The debate is interrupted in accordance with standing order 192(b). The debate is adjourned and resumption of the debate will be made an order of the day for the next sitting.

Federation Chamber adjourned at 18:16