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Legislative Council - Fifty-Fifth Parliament, First Session (55-1)
2025-09-03 Daily Xml
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Cashflow in Drought

Adjourned debate on motion of Hon. N.J. Centofanti:

That this council—

1. Recognises that access to cashflow remains a critical issue for regional businesses during this prolonged drought, as identified by the opposition, industry and the drought commissioner;

2. Agrees with South Australian farmers that the current Regional Investment Corporation (RIC) loan rate of 5.18 per cent is not 'low interest' as is the organisation's primary function;

3. Calls out the RIC for not fulfilling its obligated vision and purpose of supporting a strong and sustainable agricultural sector in Australia—which includes South Australian farmers doing it tough; and

4. Urges the state government to ensure that our farmers and regional businesses have access to genuine low and no-interest concessional loans during this continued period of hardship.

(Continued from 20 August 2025.)

The Hon. S.L. GAME (17:55): I rise to support the motion of the Hon. Nicola Centofanti regarding cashflow in drought. This motion recognises the crucial role cashflow plays in the survival of drought-impacted regions and rural businesses across our state. It also notes that the current 5.187 per cent interest rate offered by the federal government's Regional Investment Corporation is not low and, as such, fails to allow RIC to carry out its primary function.

The motion urges the state government to take action to give farmers and regional businesses access to genuine low interest and no interest loans during this difficult period. My office's recent dealings with rural South Australians, particularly across the South-East and the Riverland, have reinforced the dire straits many food and wine producers currently find themselves in. Rain over the past few weeks has been welcome but, as mentioned, has not suddenly transformed disastrous seasons and situations into prosperity and positive outlooks.

Naturally, any funding to assist farmers facing financial disaster is welcome, but again I question the government's targeting of taxpayer resources. In our recent discussions with South-East farmers, the continued focus on financial counselling was questioned. We were told that producers instead need immediate and more tangible help. That view was supported by veteran southern grazier Richard Howard, who told the ABC recently that interest rate subsidies and interest rate relief would be the biggest and best benefit.

Unfortunately, the Prime Minister seems to share the same tin ear that afflicts our state government. He widened eligibility of RIC funding, without seemingly realising that current RIC loans are basically the same product as commercial bank loans.

In that same ABC article I referenced, farmer Emily Morgan said a two to 3 per cent low-interest loan would help her family operation get through this difficult period. That would seem a simple enough request, given that lowering the interest currently offered by RIC would cost taxpayers nothing. It is not just another South Australian government handout. Mrs Morgan told our office that she supports the motion we are discussing today.

In recent weeks, my office has spent many hours working on a bill with Riverland grapegrowers that aims to help them survive the current crisis gripping their industry of unsustainably low prices for their grapes and have delayed pricing forecasts preventing them from making informed input and management decisions. They, too, could also benefit from low or no interest rate loans, although for many their debt levels are already problematic. National Farmers' Federation President, David Jochinke, told the ABC about the urgent need to get RIC funding on the ground. Addressing this interest rate anomaly would seem a sensible way to achieve this goal and to start helping farmers and producers more effectively.

The Hon. T.T. NGO (17:58): I move the amendment standing in my name:

Paragraph 1:

Leave out 'as identified by the opposition, industry and the drought commissioner'

Leave out paragraphs 2 to 4 and insert new paragraphs as follows:

2. Agrees that lowering the current Regional Investment Corporation (RIC) loan rate of 5.18 per cent would be helpful to some South Australian farmers;

3. Acknowledges that the RIC supports a strong and sustainable agricultural sector in Australia, including South Australian farmers doing it tough; and

4. Acknowledges that the state government's $73 million Drought Support Package has provided assistance to thousands of farmers during this continued period of hardship.

As the honourable member's motion recognises, the prolonged drought is creating major challenges for both farmers and regional communities across the state. The state government is aware that significant parts of the state are still living in drought conditions, experiencing either the lowest rainfall on record or severe rainfall deficiencies over the last 18 months.

The good news is that in recent months we have seen some rain across South Australia, with many regions receiving above average rainfall for the month of July. Although some regions are close to receiving their average six-month rainfall, we know that drought has long-lasting impacts, and we are aware that, even when the drought does break, the consequences will be ongoing.

One of those long-term impacts is cashflow. After a failed season it is difficult to meet the high input costs required for the next season. This is why the Regional Investment Corporation (RIC) drought loans exist. The RIC is a commonwealth government-funded loans specialist designed for the purpose of supporting farm businesses and farm-related small businesses. The RIC provides various loans to help farm businesses, whether they are just starting up or well established.

One of the loans available is a drought loan. This is specifically for drought preparedness, management, recovery activities and refinancing existing debts. We can now have peace of mind regarding the continuation of the RIC after 30 June next year in view of the recent announcement from the federal agriculture minister, the Hon. Julie Collins MP and the Prime Minister, who have confirmed an additional $1 billion in funding for the RIC.

It is difficult to determine the average interest rate charged to farmers by banks because rates vary significantly. Factors such as the bank, the type of loan and the borrower's risk profile significantly influence the interest rates charged. According to the advice I received, interest rates charged by banks to farmers are between 7 per cent and 10 per cent; however, anecdotal evidence from conversations with farmers suggests that some farmers with low risk profiles may be provided low interest rates of around 6 per cent.

The state government has written to the federal Minister for Agriculture, the Hon. Julie Collins MP, on various occasions in respect of commonwealth government drought support. In July we sent correspondence advocating on several issues relating to drought support, including lower interest rates to be applied by the Regional Investment Corporation.

Although a lower interest rate would be preferable, it is incorrect to say that 5.18 per cent is not low interest, as it is lower than commercial rates charged by banks. It is also incorrect to say that the RIC does not fulfil its obligation to support a strong and sustainable agricultural sector in Australia and South Australia. I have been told that to date 3,400 loans have been supported through the RIC. This is more than $3.6 billion in funds that has been provided to support farmers across Australia.

The state government's support has been carefully designed to complement existing support provided by the commonwealth, including the Regional Investment Corporation loans. In respect of the state government's drought support a $73 million drought support package has been rolled out, providing support to thousands of farmers across the state, which includes:

over 3,100 producers being approved for funding to help them purchase equipment and other infrastructure to assist with drought management and preparedness on their farms;

the Connecting Communities Events grant being approved for funding for 147 community events, with 100 events already held across the state;

595 people receiving financial assistance through the Rural Business Support Relief Fund grant for essential costs like council rates, utility bills, vehicle bills and school fees;

1,473 farms receiving over 13,000 tonnes of donated fodder through the government's Donated Fodder Transport Drought Assistance Scheme;

the Active Club Program Regional Drought Relief supporting 630 regional sport and recreation clubs to date, helping to deliver accessible and affordable opportunities for their communities to stay active; and

6,390 students from 111 schools receiving funding to attend school camps and excursions.

The state government continues to work closely with the industry and the commonwealth government to ensure that support for South Australian farmers is tailored and effective. I commend the amendments to the chamber and hope honourable members support them.

The Hon. T.A. FRANKS (18:05): I rise to support the principle of this motion, and I thank the Hon. Nicola Centofanti for her ongoing commitment to ensuring that during this drought, through which people are really struggling and suffering, we do the best that we can. Ensuring that there is real access to assistance through low or no-interest loans is surely something this government should be making sure is happening. Currently, that is not the situation, so the principle of this motion is sound.

I gather that the Labor Party has circulated this morning—this morning—some amendments to this motion. I will be supporting the first of the Labor Party amendments, but I will not be supporting amendment No. 4 to the fourth part of the Hon. Nicola Centofanti's motion, which urges the state government to ensure that our farmers and regional businesses have access to genuine low and no-interest concessional loans during this continued period of hardship, which are the words that the government seeks to strike out, and is the very point of this motion and the very thing that we should at the very least be doing for those struggling through the drought.

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (18:06): I thank all honourable members for their contributions to this motion today, the Hons Sarah Game, Tammy Franks and Tung Ngo. I note amendments put by the Hon. Tung Ngo that were emailed out this morning. We on this side of the chamber are happy to support his changes to paragraph 1, but that is where that support promptly stops.

I am disappointed in the majority of the government's amendments, and I want to place on the record once again my empathy for the Hon. Tung Ngo for having to draw the short straw again on standing up and presenting such a weak set of amendments to this motion, which is aimed at a sector doing it, can I say, incredibly tough.

To say it would be helpful if the RIC rates were lower is a gross understatement and undervaluing the reality on the ground for regional communities currently facing this drought. If this is the level of advocacy coming out of the minister's office, and indeed the Malinauskas Labor government, to federal agencies that could and should be doing better to support our farmers, then I am unsurprised that nothing has been done. I am disappointed, but not at all surprised.

This motion is about one simple truth: our farmers and regional businesses cannot survive without cashflow. They are not looking for handouts, they are asking for a fair go, a hand up and for access to genuine low and no-interest concessional loans so that they can keep their businesses, their communities and their futures alive. The RIC is not currently fulfilling its purpose, offering rates that are no different to a bank. Meanwhile, families are desperate for relief and South Australians cannot afford more delay. Other states have acted and our farmers deserve no less. I commend the motion to the chamber.

The PRESIDENT: The first question I put is that the amendment to paragraph 1 in the name of the Hon. T.T. Ngo be agreed to.

Question agreed to.

The PRESIDENT: I put that the next group of amendments in the name of the Hon. Mr Ngo be agreed to.

Question resolved in the negative; motion as amended carried.

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