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Legislative Council - Fifty-Second Parliament, Second Session (52-2)
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Question Time

FARM FINANCE PACKAGE

The Hon. D.W. RIDGWAY (Leader of the Opposition) (14:18): I seek leave to make a brief explanation before asking the minister responsible for primary industries a question regarding the Farm Finance package.

Leave granted.

The Hon. D.W. RIDGWAY: Well before South Australia's farmers put in this season's crop—in fact, the autumn rains had barely come—the state government announced it had 'joined the other states in signing a new national drought program reform agreement with the commonwealth'. The government also announced it was 'working with the Australian government to explore the details of the recently-announced federal government's Farm Finance initiative'.

The package provides: concessional loans to help restructure debt and invest in productivity; extra rural finance counsellors to work directly with farm businesses; progressing to a nationally consistent approach to debt mediation across the country; and enhancing the Farm Management Deposits Scheme. My questions to the minister are:

1. How much of the $60 million in concessional loans provided under the farm package has at this moment or, to help the minister, from this morning, been made available to South Australian primary producers?

2. How many of the farmers have benefited from the loans, which provide up to $650,000 for farming businesses at interest rates of about 2 per cent less than the commercial lending rates, to restructure their debt?

3. South Australia has secured an additional rural finance counsellor under the package. Does the minister know whether that counsellor has been appointed? If so, when? If not, why not?

4. Who is paying for the administration of this package: the commonwealth or the state?

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) (14:20): I thank the honourable member for his most important questions. Indeed, the federal government has provided significant assistance in its last budget to assist farms. In fact, for farmers nationally, a most significant amount of $99.4 million was announced over four years for new farm household allowance under the National Drought Program Reform.

The National Drought Program Reform, as I have spoken about in this place before, will be delivered in cooperation with the state and territory governments documented in an intergovernmental agreement which was signed on 3 May, and South Australia signed up to that. The reform aims to assist farm families in financial hardship; improve farm preparedness for future challenges, including droughts and other variable climatic and business conditions; and help farmers to become more self-reliant to manage their risks.

In the past, when droughts were impacting on farmers, a line was drawn on the map and those farmers on one side of the map received assistance and those on the other side didn't. This is a far more equitable system that ensures that any farmer in need is able to access these provisions. So, it is a fabulous initiative of our federal Labor government.

Continuation of farm management deposits and taxation measures, such as current primary producer taxation concessions, that support and assist farmer risk management are part of the reforms, as well as a national approach to the provision of farm business training through the standardised vocational education and training accredited skill set developed by AgriFood Skills Australia and key members of the farming and training sector, delivered through the vocational education and training system by registered training organisations. And of course, and I have spoken in this place before about the farm household support payments to assist farm families in hardship, these will no longer need to be reliant on a declaration of drought.

The reforms also include a coordinated collaborative approach to the provision of social support services, which aims to ensure that people receive support before reaching a crisis point, and tools and technologies to inform farmers' risk management decision-making, including examining ways to improve the provision of information to farmers.

With the Farm Finance initiative, the government will provide a package of measures to support and assist farmers experiencing acute levels of debt and help improve their ongoing financial resilience. It includes a provision of up to $420 million over two years in concessional loans to eligible primary production businesses for the purposes of productivity enhancements and also debt refinancing from 1 July 2013. Each state and territory will be able to access $60 million in capital, to be reimbursed to the Australian government plus any interest. That comes into place, as I said, on 1 July 2013.

Changes to the Farm Management Deposits Scheme, which I have spoken about in this place before, allow FMD holders to consolidate their existing accounts that have been held for longer than 12 months without triggering tax liabilities, along with other initiatives. Also, South Australia has been very successful in negotiating with the Australian government to secure the additional rural financial counsellor for South Australia. If members looked at the initial announcement, South Australia was not included in the first round of announcements. We were not included because we most recently received an additional counsellor.

We assist with Northern Territory as well and we were given additional resources to be administered from South Australia to assist in Northern Territory, and so that was considered South Australia's contribution which was awarded to South Australia not very long ago. However, I was able to successfully lobby the minister, Joe Ludwig, and I was able to successfully gain an additional rural financial counsellor for South Australia. That position has been confirmed by the federal government. I do not know the exact date of it being made available. I assume it is also 1 July, but I am happy to double-check that. It has certainly been verified by the federal government that we will be receiving that additional counsellor.

In relation to the concessional loan arrangements, the South Australian government is currently in negotiations to establish a fund administrator. There is quite a lot of work. Some other jurisdictions already have an administrative system in place. South Australia does not, so we will need to establish this provision within government. It is obviously going to be a fairly rigorous system. These are loans that can go out over 20 years, so we need to make sure that we have administrative systems in place that are able to deal with that adequately.

In relation to the administrative costs, South Australia is still negotiating with the federal government about the payment of those administrative costs. They are significant, as you can imagine, and obviously South Australia is very keen, as are other jurisdictions, to make sure that those administrative costs are not additional financial imposts that the state has to pick up. We believe that it is fair and reasonable that it come out of the interest.

The Hon. R.L. Brokenshire interjecting:

The Hon. G.E. GAGO: It can come out of the interest.

The Hon. R.L. Brokenshire: Well, it shouldn't.

The Hon. G.E. GAGO: Why wouldn't it? It is a cost of the fund. This is a federal government initiative and it is passing on part of its cost to South Australians. Why should South Australian taxpayers pick up those additional burdens? We are arguing very strongly that it is a federal government initiative. It should be picking up the full cost of it and there is no reason why those administrative costs could not come out of the interest accrued through those loan payments. That would not create an impost on anyone.

Those negotiations are still underway. They have yet to be finalised. In terms of the commencement here in South Australia, we would hope that it would be ready on 1 July. There are still a number of outstanding matters that have to be finalised and, as I said, we would hope for it to be ready by 1 July, but we need to resolve those outstanding issues.

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