FARM FINANCE PACKAGE

The Hon. R.L. BROKENSHIRE (15:21): I seek leave to make a brief explanation before asking the Minister for Agriculture a question regarding the federal government's new $420 million national farm loan scheme.

Leave granted.

The Hon. R.L. BROKENSHIRE: The federal government announced yesterday that it would be introducing a concessional loan program that now lifts the off-farm income threshold to $100,000 from $65,000. The Victorian Farmers Federation welcomed the package, saying farmers across the nation are struggling due to market failure, drought and the impact of the high Australian dollar. Each state is eligible to receive up to $60 million in funding from the loan scheme. The PIRSA website lists in its history on the Rural Assistance Branch of the Department of Agriculture the history of state-based loans to farmers in the 1970s, 1980s and then in more limited ways in the 1990s. My questions are:

1. Has the minister received and read, if received, a letter from minister Ludwig outlining this program, given that Mr Ludwig was encouraging all state ministers and governments to get behind this program this morning?

2. When was this first raised with the minister, to her knowledge, and who raised it?

3. Will the South Australian government push for the full $60 million entitlement for South Australia?

4. How will the South Australian government administer its $60 million component of the scheme and can the minister assure the house that there will be no siphoning off of that money as cost recovery back to the agency?

5. Can the minister assure the farming community that the government will ensure that $60 million is mobilised as early as possible within the two-year period and not held up due to bureaucratic nitpicking?

The Hon. G.E. GAGO (Minister for Agriculture, Food and Fisheries, Minister for Forests, Minister for Regional Development, Minister for the Status of Women, Minister for State/Local Government Relations) (15:23): On 26 April the Australian government announced the Farm Finance package, which builds on the ongoing financial resilience of farmers, who obviously are currently struggling with, amongst other things, high levels of debt. As part of a drought program reform, the Australian state and territory primary industry ministers agreed to the framework for a new package to better support farmers and their families to prepare for future challenges. That was back on 22 October 2012. The focus is on helping farmers to prepare for and manage business risks. The Australian state and territory primary industry ministers have agreed that the new package will support farmers without the need for exceptional circumstances declaration.

The South Australian government supports initiatives that focus on building preparedness of the farm sector to manage businesses through droughts and other adverse periods. The Australian government's Farm Finance package has the following four measures:

short-term assistance in the form of concessional loans for productivity enhancement projects or debt restructuring;

funding for up to 16 additional full-time counsellors with the Rural Financial Counselling Service;

increasing the non-primary production income threshold for farm management deposits (FMDs) from $65,000 to $100,000 and allowing consolidation of existing FMD accounts; and

establishing a nationally consistent approach to farm debt mediation.

The other component involves concessional loans. The Australian government is committing up to $30 million each year for the next two years to each state and, obviously, the Northern Territory to provide concessional loans to farmers in need, so each state receives that, I have been advised.

The Australian government will work with each state and territory wishing to participate in the loans measure on delivery mechanisms, and we are currently in discussions with the federal government around those delivery mechanisms. Concessional loans of up to $650,000 will be available to eligible farm businesses in need of short-term financial assistance.

In relation to the rural financial counsellors, Farm Finance will provide an additional $5.6 million over the next two years to fund around 16 additional full-time rural financial counsellors in regions experiencing acute debt stress and where recent natural disasters have had a heavy impact on farm businesses. South Australia currently has 10 financial counsellors located across our regions, and the Australian and Northern Territory governments have agreed to provide additional funding to Rural Financial Counselling Service South Australia to deliver a 12-month trial of services in the Northern Territory under the Rural Financial Counselling Service program.

In relation to the farm management deposits (FMDs), the FMD scheme is designed to assist primary producers to become more self-reliant, deal more effectively with fluctuations in cash flow and manage financial risk. Approximately $550 million is currently held in farm management deposits by South Australian farmers. The scheme's non-primary production income threshold will be increased from $65,000 to $100,000.

The Hon. R.L. Brokenshire: How much, sorry?

The Hon. G.E. GAGO: The threshold will be increased from $65,000 to $100,000, and I think that's been generally fairly well received. Primary producers will be able to consolidate their FMD accounts that have been held for 12 months. So, that's the non-primary production income threshold that's been increased.

The Hon. R.L. Brokenshire: That's a good move.

The Hon. G.E. GAGO: It is a good move. There are some really good elements in this. One of the real challenges in putting assistance packages together is not to impact in the marketplace in such a way that all it does is instantly increase the cost of everything so that the benefits are absorbed almost overnight through increased costs. We can see that the federal government have thought through this very carefully and chosen targets and measures that minimise that adverse impact.

Continuing on, primary producers will be able to consolidate their FMD accounts that have been held for 12 months. The National Rural Advisory Council (NRAC) report on the effectiveness of the FMD schemes was released on 26 April 2013. Amongst its findings, the NRAC recommended that the threshold on non-primary production income should be phased out by 2020.

In relation to farm debt mediation, the Farm Finance measures include pursuing a nationally consistent approach to farm debt mediation. This will help farmers and their bankers access a simpler, more consistent system that delivers results for all involved. The government will work with the banking and agriculture sectors as well as the states and territories to progress a consistent approach to this much-needed service.

The commonwealth is obviously working very diligently to negotiate the details of this with each state, and those negotiations are well underway. With respect to the low interest loans scheme, the Australian government has stated that it will work with state and territory governments to make these loan products available across the country via appropriate delivery agencies. We are currently working through what the most suitable agency would be here in South Australia, so that detail is yet to be finalised.

The South Australian Dairyfarmers Association obviously wants governments to act quickly to ensure that low interest loan schemes are rolled out as soon as possible so that many farmers who have made a loss this year because of low global milk prices and suchlike can actually access these funds as soon as possible. They are in need now. The South Australian government is working with the Australian government this week to ascertain the details of this measure, including implementation arrangements, so that we can support specific needs of resilient South Australian farm businesses in a really timely way.

I agree with the Hon. Robert Brokenshire that it is important to expedite this, and we are doing everything we can to do that. Just to put in a plug for the Rural Financial Counselling Service, it provides a free service. It is a very important service and it can often assist primary producers early in the piece. I would urge those businesses that are in trouble to avail themselves of that service. Early intervention just might be able to ward off significant disaster. This service is free. Whilst the Australian government has not initially provided any additional resourcing, it is obviously a very important area.

The FMD scheme is a valuable tool for farmers in managing fluctuations in their income. It allows greater access to the scheme by raising the non-primary income threshold, which I have spoken about. This is a wonderful package of assistance that has been released. I believe it was announced on 26 April, and I was advised of that announcement and provided with the details of that. I think I was advised via text or email. I will have to check that but it was electronically, anyway.

I note that the Hon. Robert Brokenshire in his urgency to gain detail about this package forgot to acknowledge his gratitude to the federal government for providing this assistance package to our primary producers. I agree with him that it is a wonderful initiative, and we are very pleased that the federal government has assisted in this timely way.