Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Agriculture, Fisheries and Forestry. Will the minister update the House on the impact of the global financial crisis on Australian farmers and the latest developments affecting rural finance?

Mr Tony Burke (Watson, Australian Labor Party, Minister for Agriculture, Fisheries and Forestry) Share this | Link to this | Hansard source

I want to thank the member for Flynn for the question. The member for Flynn is well in touch with the farmers in his electorate. Only recently, the Prime Minister and I visited the Burnett family in Emerald, an area which had been affected by the prolonged drought that ended, in the way it so often does in the Australian landscape, with devastating floods over summer. During the period that we have had the drought, there has been an extraordinary increase in farm debt. Indeed, only six years ago the average farm debt was $238,000; last year that figure had risen to $702,000 for the average farm debt. In that way there is an understandable sensitivity to interest rates among Australia’s farmers.

An emergency meeting was held last Friday which I convened with the four major banks as well as other major lenders such as Rabobank and Landmark. The National Farmers Federation were in attendance, as was Keith Perrett, the head of the National Rural Advisory Council, and representatives from the accounting professions. A presentation was made by ABARE, and the banks were able to give their assessment as well, which accorded with ABARE’s assessment, that the mood in the room for the immediate term was one of cautious optimism for the sector, but there was strong optimism in the medium to long term for Australian agriculture.

The issue was squarely put on the table of the government’s expectation that, just as the cut in the cash rate needed to be passed on to the bank’s residential customers, the cut would be passed on to farming customers of banks as well. It is recognised that farmers often have quite different loan products to the products that residential customers will have. Already, prior to the meeting, Westpac had cut their farm based products by 80 basis points, and I am pleased to advise the House that, during the course of today, we have seen significant movement. The NAB yesterday announced it would reduce its business lending rates by 20 basis points, including the agricultural products. Rabobank announced that, effective today, they will cut their rural loans by 80 basis points. The Commonwealth Bank has announced that it has dropped interest rates on a range of products, within the range of 53 to 65 basis points on the products that are tied to the cash rate. I received advice after coming into the chamber that, in the period immediately before question time, ANZ have confirmed that they have reduced their business interest rates, including agribusiness rates, by 60 basis points and that will be effective from 27 October. While these are still difficult times, and we should not underestimate the difficulty that many of our primary producers are going through, this news is certainly welcome relief for Australia’s farm sector.