Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

My question is to the Minister for Agriculture, Fisheries and Forestry. Whilst the Australian people, particularly those 70,000 employed in the beef industry, appreciated yesterday’s stand by the government to protect Australia from mad cow disease, the government’s decision, however, to abolish EC drought funding could only be logical if agricultural development banks still existed. Since the Commonwealth Development Bank, the Commonwealth Bank, the Primary Industry Bank of Australia, the AIDC, the state banks, the QIDC and the Rural Bank of New South Wales have all been sold off, could the minister advise how our agriculturalists are expected to ride future trade and interest rate cycles and the perennial drought and flood cycles when there are now no financial mechanisms left to facilitate survival? The minister would be aware that Australia’s commercial banks in adverse circumstances invariably apply punitive interest rates, often exceeding 20 per cent. In light of this, can the minister advise how the government can justify farmers currently being charged 8.5 per cent whilst Reserve Bank interest rates are only 3.5 per cent, particularly when American and European competitors, who are enjoying a 42 per cent subsidy tariff assistance, are being charged only a 4.9 per cent interest rate?

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

I thank the member for Kennedy for his question. There are a few issues and I will go through them in turn. First of all, I will clarify what was contained in the question concerning any future abolition of the interest rate subsidy. The government has consistently said that any reform of drought policy is about how we deal with the next drought. It remains extremely important that people currently on assistance know that the work the government is doing on reform of drought policy is not about a change in how we would deal with people who are currently going through the toughest period of their lives. That guarantee, which has been given previously by the Prime Minister and myself, is important to keep in the framework on anything about how future drought policy should go forward.

Secondly, the member for Kennedy refers to the banks and the best way to help farmers. Certainly, since the experience some years ago in both Victoria and South Australia, there is not a great appetite for government-run banks and the agricultural development banks. I am aware of the work that the member for Kennedy is very proud of during his time in the Queensland government and the legacy that was there, but it is not a pathway that the government is currently looking at. The pathway that has been adopted to date has been one of allowing lending decisions to be made by commercial banks and an interest rate subsidy then being paid. I want to point out a couple of challenges we have had with that. First of all, 30 per cent have been accessing the EC and 70 per cent have not. The vast majority of farmers have either not been eligible or have not been able to benefit because they have not had sufficient debt. One of the drivers of the current policy is the farmer who during good times makes some very tough decisions, who is not in a situation of large debt when a drought hits and who therefore actually receives no government assistance at all. That is one of the inequities in the way the current system works and the government is trying to find a way forward. The second of the two challenges regarding the way the system currently works is with declarations, as the member for Kennedy knows all too well with the experience of trying to get a declaration in the Gulf. The declaration process takes a very long time and hardship goes for a long period before anyone, even those 30 per cent, get any assistance under the current rules.

The other thing is there are many areas of real hardship that are not covered, and the trade cycles that the member for Kennedy refers to are not reasons that someone is currently able to access EC. It simply does not become available to them, even though it may be a hardship completely beyond their planning or control.

The way forward that the government is working its way through involves looking at how the government can have an engagement when people are in good times which will then lead to fewer people ever hitting a crisis. It is a harder point of policy to drive at because there is no pressure on government to do anything during good times, but that is the process that the government is trying to work through—to see how we can have a level of engagement during the good times so that, rather than waiting for the crisis and just holding people in that period of crisis for the duration of the hardship, we can actually work with farmers in the good times and fewer people will hit that hardship in the first place.

On the final point raised by the member for Kennedy, where he referred to the high subsidies in the United States and Europe, I have to say that one of the outcomes of the highly subsidised farming systems in those parts of the world has been massive inefficiency. I would rate an Australian farmer against any United States or European farmer any day, because we farm smarter and we farm more effectively. A subsidy system runs completely counter to that.