Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of the answer given by the Minister for Agriculture, Fisheries and Forestry (Senator Ludwig) to a question without notice asked by Senator McKenzie today relating to farm finance concessional loans.

If there was ever any doubt about the Labor government's issues and understanding of the regional economy and regional people, we had it on display today. We have had numerous examples: live cattle, the impact of the carbon tax on our food production systems, the dairy industry et cetera. Two months ago, with no consultation with the states, the government announced—like it has done right throughout its history—packages that have financial implications for others and about which it had not sought to actually consult with them before going about the announcement. The government announced the concessional loans at 4.5 per cent. You saw from the minister's answers today, and it could be seen from the evidence given in estimates, that he had no clue what he was actually talking about. I asked the minister a question in good faith during estimates. A 4.5 per cent 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. They need this concessional loan. But the 1.5 per cent difference between what the government is setting it at and what the government is lending it out at adds up to $100,000 a year. That money could be going into farmers' pockets if it was not going into consolidated revenue, as was the evidence that was given.

Senator Wong, Treasurer Swan and Prime Minister Gillard are always very keen to quote that revenue is down. But this takes the cake in terms of a new revenue measure, the $6.3 million that will be raised per annum if this differential of 1.5 per cent is applied. As I found out, they have not done the modelling on the administration costs. My understanding is that the typical amount that is allowed for this is around the one per cent mark. But they could not even confirm that during estimates.

This is basically taking money that should be going to farmers and putting it into consolidated revenue. It is actually burdening the states even more, who right now are working very hard at paying back ALP government debt. I might say that there are a few who are working extremely hard and extremely well at that. Victoria was left with $7.9 billion and New South Wales was left with $9.2 billion. They are doing a damn good job of paying it back, but it requires that they stick to their budgets. It requires carefully considered and strategic planning for contingencies. But for this federal government and its poor decision-making you cannot plan.

You cannot plan for the contingency of Joe Ludwig standing up one day and announcing that you are going to have to find additional money in your budget for the administration of the farm concessional loans program and then going on a PR campaign with struggling farmers groups to apply the pressure. We should not have been surprised. That is out of the ALP playbook of the moment in how to treat our states. We can see that if we look at the health funding issues from last year and the Gonski negotiations that we are watching play out right now. Then there is environmental regulation: the Prime Minister stood up and said, 'We're going to streamline all this environmental legislation and work cooperatively with the states.' We all breathed a sigh of relief. Kevin said he was going to end the blame game.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Order! Senator McKenzie, I let you go the first time when you did not refer correctly to Senator Ludwig and I was going to pull you up at the end. But please refer to members of the other place, ministers and senators by their correct titles.

Bridget McKenzie (Victoria, National Party) Share this | Link to this | Hansard source

I apologise, Mr Deputy President. I should know better. Mr Kevin Rudd, when he was Prime Minister, was going to end the blame game between states and the feds, and that has not happened—if anything, it has gotten worse. Prime Minister Gillard saw a jump in the polls late last year when she took the premiers on, and that has become her modus operandi.

This week, we have been trashing and we continue to trash our Federation as the ideology of the Greens and their lack of respect for the place of state governments in our Federation is being subsumed into ALP ideology. We know have a toxic relationship. That relationship needs to be restored so that it functions effectively for all, and especially for those struggling farmers in regional Australia, across every single state. The minister is right that they need access, but you cannot keep expecting state governments to pick up the can for every harebrained idea that you have, because when you actually have a good one they cannot afford to make it happen. (Time expired)

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I too rise to take note of the answers to Senator McKenzie's questions today in question time. I am a bit perplexed, I have to say, because prior to being in this place I spent quite a long time as a member of the New South Wales Rural Assistance Authority and I remember many stories of distressed property owners seeking to have some kind of access to farm finance. Many of those people have welcomed the farm finance package that was announced by the government in April this year. In fact, I am even more confused because I recall that at Senate estimates Senator McKenzie admitted that this was a very good deal. But unlike those others of us who acknowledge that it is a good deal she—like the rest of the National senators here and the National members of parliament—has been very quiet on convincing the states to provide this assistance to farmers.

I spend much of my time in regional New South Wales talking to farmers, farmers' groups, farmers' wives and rural producers of all shapes and forms, and I know that the concessional loans that are being outlined in this package are going to provide breathing space so that people can focus on growing and improving farm businesses. 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. They are the ones who are playing hardball on signing up to this assistance package.

To be perfectly frank, 4.5 per cent is a very good rate. It is a significant loan. In terms of farm management deposits and concessional loans, 4.5 per cent is very good access to the finance supporting our farm businesses. As someone who works with them quite closely, I know that the farming community is pursuing and appreciating these issues, and the New South Wales Rural Assistance Authority and the Rural Finance Corporation of Victoria have been meeting to work out the arrangements that will come into place. The starting concessional rate of 4.5 per cent will apply nationally, and it will be reviewed to make sure that it remains relevant. I have to say that any one of us seeking finance for a business enterprise would be very pleased to be able to borrow at that generous rate of 4.5 per cent. It is at least one per cent below what you would get from a commercial lender. It is all about the government's intention to assist in relieving debt pressure and allowing eligible farm businesses to grow and improve.

If you support the concept of a reconstruction bank—as Mr Katter might propose, and I know many people in rural Australia might consider it—then you need to get behind the work that is being done now. A reconstruction bank in the future might deliver something, in Mr Katter's world, but farmers need the money right now. Until our state and territory colleagues get behind this proposal, it is the farmers who will be missing out.

The Farm Finance package includes additional rural financial counsellors. They are the people who are talking to me and asking me to see what can be done to escalate the issue and get these farm packages, these concessional loans, in place. We want this funding to be ready to go from 1 July. That is the week after next. It is our state and territory governments who are playing hooky on this and preventing it from happening. So let's just call it what it is: a stalling tactic by Liberal-National governments. (Time expired)

Richard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Fisheries and Forestry) Share this | Link to this | Hansard source

I have to say that was a very disappointing presentation by Senator Stephens. I think—and I think Senator McKenzie sees this too—that she misrepresented the situation in her contribution. I was present when Senator McKenzie was asking questions at both the DAFF estimates and the Treasury estimates as part of this process, and Senator McKenzie, along with the rest of us, has cause to be concerned about the way the government has approached this particular measure.

Let's take the way that the measure was started. On 27 April, Minister Ludwig writes to the states, without any prior consultation, and tells them in the letter that they will be responsible for administering the loans, for applicant assessment costs, application processing costs and delivery of the loans. No consultation and no discussion—'You're paying the bill.' That is the way that this government has approached this process. We start asking questions at DAFF estimates, some time later, about this particular measure, and Minister Ludwig says, 'But I've written to the states again to tell them what the details of the loans, the conditions of the loans, were.' So we ask when he wrote to the states. The answer is 'last Friday'. He is trying to blame the states for slowing the process down, which happened because they did not understand the terms and conditions of the loans, they did not know the interest rates, until that letter went to them, on 24 May—almost a month after his initial letter went out to the states advising them of the package that was going to be launched. So a month later he writes to them and tells them that the rate will be 4.5 per cent and that, at the end of five years, it will revert to commercial rates. So they are not 4.5 per cent across the life of the loan; we accept that 4.5 per cent is a good deal for farmers, but the rates are 4.5 per cent for a period of time, five years, then they revert to commercial rates.

You talk to the banks and they had no idea this was coming. How did these loans interact with their existing loans? Were they on top of existing debt? Did they replace existing debt? The banks did not know that. Senator Stephens talks about the rural financial counsellors. I was talking to rural financial counsellors only weeks prior to this announcement: they did not even know if their funding was going to be continued, let alone if there would be new rural financial counsellors. They found that out when Senator Ludwig's press release came out to advise them of this magnificent new package. 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?

Minister Ludwig, Senator Stephens and, I am sure, others on the other side will try and blame all the Liberal states. How come none of the Labor states have signed up? What about the Tasmanian government? They have not signed up. What about the South Australian government? They have not signed up. I have a joint statement from New South Wales, the Northern Territory, Queensland, Victoria and Western Australia: 'The Commonwealth should not profit from farm loans'—and yet we know that it is.

We asked at estimates about the numbers in the budget and we were told as part of that process that they were effectively the opportunity cost of the loans. The numbers in the budget, we were told at estimates, were the opportunity cost of the loans. Yet we now find out that the Commonwealth is making $6.3 million a year on the interest rate. So how is the calculation of the interest rate of the opportunity cost made? The officer quite correctly said, 'I'm not an accountant, but I'm happy to provide the details.' We have not received any of that back yet from the government. We have not received any answers to questions on notice from estimates yet, so we do not have that information. We do not know how the calculation of the opportunity cost has been made in the budget. I would seriously love to see the answer.

As Senator McKenzie quite rightly said, this is indicative of the way that this government has treated agriculture. The budget for the portfolio used to be $3.8 billion; it is now only $1.6 billion. This portfolio has been hollowed out. I put on the record that part of that was EC payments, but this issue is indicative of how the government continues to treat agriculture and the states. (Time expired)

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to take note of answers from Minister Ludwig on the issue of assistance for farmers. Our government has a plan for Australian agriculture. Contrary to what we have heard from the other side, this plan was brought to life in the last federal budget delivered by our government. That was an investment of $1.9 billion in our farmers and our food. Part of that was a plan for agriculture that will include a whole range of people: farmers, fishers, foresters, industry leaders, researchers and officials. The aim of that is to ensure that Australian agriculture can continue to grow from strength to strength into the future.

We know that, while many are able to succeed in agriculture, not everyone is feeling the benefits of this strong economy. I absolutely welcome the opportunity to speak about the government's Farm Finance package. In April, $420 million in concessional loans for farmers was announced, particularly for those farmers doing it tough. There are lots of reasons why farmers are doing it tough. There are lots of fires; there are droughts; there is the high dollar—there are a whole range of issues as to why farmers in this country are doing it tough. Even viable operations are still struggling under the weight of that high dollar and, of course, reduced land values and other issues. But we have listened to the concerns of the farmers.

That is why this government announced that Farm Finance package. The package is one of concessional loans that give farmers breathing space so that they have time to focus on growing and improving their own farm businesses. They are a relief for the farmers. That is what the loans are; they are to provide relief for farmers in a tough time. Eligible farm businesses can save anywhere around $100,000 if they want to consolidate an existing loan. Our plan for agriculture is to assist our farmers and strengthen the foundation for them to be able to tackle debt head on.

But this support requires cooperation and partnership with the states. We want the state and territory governments to make the loan products available across the country as soon as possible so that the farmers can access the assistance they need at a time when everything is tough for them. The state governments have the infrastructure and the expertise on the ground to do this. However, as yet they have been very slow coming to the table. The only contribution we have asked them to make in this agreement is to deliver the loans and cover the administrative costs. It is not a huge ask for the states to come forward and provide this assistance for the farmers, who are doing it tough for many reasons. This is real money for our farmers. It is about real money to assist them in the process of getting on with the business they are out there doing every day, which is to grow product, wheat, sheep, beef or whatever it is they grow. This is about helping them.

As my colleague Senator Stephens indicated, the starting concessional rate is set at 4.5 per cent, and that would apply nationally. That is a very reasonable rate—of course, it is going to be reviewed, but it is a reasonable rate. We are bearing the entire risk of these loans. The government is doing this to assist people when times are tough. Our No. 1 priority for farmers is to get this rolling, and to do this we need to have the state governments onside to make sure we get this out to those who need it most. We know there are lots of benefits in this.

The farm finance consists of four measures: concessional loans to help restructure debt and invest in productivity; additional rural finance counsellors to work directly with farm businesses; progressing a nationally consistent approach to debt mediation; and to enhance the Farm Management Deposits Scheme— (Time expired)

Anne Ruston (SA, Liberal Party) Share this | Link to this | Hansard source

I, too, rise to take note of answers given by Senator Ludwig to questions from Senator McKenzie and to the responses we have heard from senators Urquhart and Stephens. Regarding the comment about the 4.5 per cent loan being at a reasonable interest rate, I do not think anyone is disagreeing with this. But this is actually not the point. The point raised is that 4.5 per cent is actually 1.5 per cent over the interest rate at which the government can borrow this money. So we have a situation where the federal government are crowing about helping out our farmers by providing them with concessional loans, while they are actually profiting from it. That is the crux of the issue. It is about profiteering on something. They have gone out there and made it sound like they are jolly good chaps because they have put these concessional loans in place, but it is really just a revenue measure. Those opposite then have the audacity to say that it is the fault of the state and territory governments for not taking this up. But it is they who have been left with the actual cost and expense of administering these loans, while the federal government are making money out of it. I think this shows extraordinary hypocrisy and it is something the government need to be called to account on. It is a complete and utter outrage.

The other thing Senator Urquhart crowed about is the fact that it is a plan for farming and a strong economy. When you announce a policy there are two things you do: you announce it so that people know what you are doing and then you have to put the policy implements and actions in place to support the policies. But, when it comes to agriculture across the whole of Australia and how this government is dealing with our primary producers, what we seem to be seeing is that they talk about lots of things. They talk about things like the national food plan. They talk about Australia being the food bowl of the world. They talk about the Asian century and the opportunities that this all gives to our farmers and to our country. But at the exact same time as they are out there trying to convince people that they are the party looking after rural and regional Australia they are enacting other policy mechanisms and instruments that are destroying our agricultural and farming sectors. We have heard time and time again about the impacts of the knee-jerk reaction of the government to the live exports situation. We have heard time and time again about the implications on the sovereign risk of this country from the reaction to the Margiris, the ship that had legitimately collected fishing quotas—but, no, the government decided on a knee-jerk reaction from a GetUp! campaign that this particular thing could not go ahead.

The government talk about cost recovery. This is another example of the government saying, on one hand, 'Yes, we're going to do all these wonderful things to assist our farming and agricultural sectors,' but on the other hand taking the money back. They are clawing back and putting things in place that are detrimental to or an encumbrance on our farming sector. The AQIS cost-recovery situation and charges we have been talking about in this place recently is a classic example. When we went to cost recovery there was supposed to be a suite of cost-saving measures that went with it, but we have gone to cost recovery and have not seen any of the cost-saving measures.

I say to the government: if you are going to announce these sorts of policies and talk about how you are supporting rural and regional Australia, you cannot just say it; you have to do it, too. Talking the talk does not pass muster; you have to be able to walk the walk. Unfortunately, this suite of packages to which the questions are referring today is just another classic example of talking the talk and not putting the things in place that will enable these sorts of projects to be implemented.

Back to the states: the states have been asked to implement these projects, but none of the states, apart from Queensland, had in place a mechanism by which they could deliver the money to the farmers. Now we have big brother, the federal government, smacking the state governments because they have not done something that the government thought was a great idea, but the government did not give the states the time and did not consult with them. The states had no capacity whatsoever to deliver this package because they did not have the things in place.

This is a real outrage. I also take offence at concessional loans on the basis that they are just bandaids on the cuts that have been inflicted on the rural sector by this government. Let us stop sticking bandaids on things. Let us stop making the cuts in the first place. Let us address rural and regional policy so that we can give the opportunity to our rural sector to be successful, instead of just propping it up by these pathetic means.

Question agreed to.