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Wednesday, 9 March 2005
Page: 35

Senator McGAURAN (12:00 PM) —I support my colleague Senator Ferris on the Farm Household Support Amendment Bill 2005, which is designed to reinforce the structural adjustment focus of the government’s Farm Help Supporting Families Through Change program. The objective of Farm Help is to provide short-term income support to low-income farm families who are experiencing financial hardship and are unable to borrow further against their assets. It allows them to take action to improve their long-term financial situation by improving the financial performance of their farm, finding alternative sources of income or re-establishing themselves outside the farming world, as difficult a decision as that may well be.

Farm Help is administered by Centrelink and provides a package of measures delivering assistance worth up to about $55,500 per farm. In the second reading speech, the minister noted that the commencement of Farm Help has provided income support to over 9,000 farmers, assisted nearly 8,000 farmers with advice and training and provided re-establishment assistance to over 1,000 farmers. Total expenditure to date is estimated at $178 million, with $8.7 million so far spent in 2004-05. The government expects total Farm Help expenditure in 2004-05 to be $28.8 million. This compares to $34.4 million in the previous year, 2003-04, which is a reduction due to the lower than initially expected uptake amongst farmers.

The bill that we are discussing today extends the Farm Help program by another four years to 2008 and extends the closing date for applications for income support and re-establishment grants to 30 June 2007. The bill also increases the maximum re-establishment grant from $45,000 to $50,000. The bill requires applicants to undertake an initial advice session to establish their farm’s financial situation and develop a pathway plan before claiming income support—a necessary accountability—and requires the initial advice session to be undertaken by a prescribed adviser and include an assessment of their ability to access further finance. The bill also provides immediate access to income support if applicants meet the program’s hardship provisions, strengthens mutual obligation provisions through quarterly reviews of pathway plans and stops farmers from suspending Farm Help income support in order to access the exceptional circumstances relief payment before returning to Farm Help income support. These things introduce some accountability measures and focus more tightly on the main purpose of the program. They are welcomed by the rural industry.

This is part of a 1997 program introduced by this government, the AAA package, which is designed to help rural businesses face the challenges of the future by becoming more competitive, sustainable and profitable. There are several programs within the AAA package, and the Farm Household Support is but one. Another program, mentioned by my colleague Senator Ferris, is FarmBis, which provides grants for organisations to develop business management education and training initiatives for Australia’s agricultural, horticultural, aquacultural, commercial fishing and apicultural industries. As a national program, it funds projects that benefit two or more states and have a wide industry application or target women or young people in the rural industries. This is one of the most successful areas of the AAA package, so much so that the Victorian government recently announced that it has signed on to a dollar for dollar agreement for several more years to come.

The minister’s press release of 9 February states that the Victorian government and the Australian government are each contributing $6 million for FarmBis activities in the state of Victoria. Minister Truss said:

That means a healthy $12 million will be available over the next three years to help the State’s primary producers and rural land managers improve their business management skills and access other high-quality training opportunities ...

The minister also said:

With 35,000 FarmBis participants already in Victoria, the program represents a significant long-term boost to the State’s farm sector and wider economy.

Another very successful program within the AAA package is the Farm Management Deposit Scheme. This program enables farmers to set aside pretax income in good years as cash reserves to help meet costs in low-income years. Further information is available on the government web site. The Farm Management Deposit Scheme was first introduced in 1999 and was gobbled up by the farming community. As I said, it is designed to provide eligible primary producers with a consistent cash flow—one of their main complaints, given that they are subject to droughts, floods and market variations like no other industry. This Farm Management Deposit Scheme brings a great support and safety net to farmers. The scheme is run through commercially available deposit accounts offered by authorised banks, credit unions and building societies.

As of June 2004, over $2.62 billion had been invested. Nationally, over 43,000 farmers use the scheme, which has a total holding, as I say, of some $2.6 billion. This represents an average of $60,000 per deposit holder. A wide variety of rural industries utilise the FMD Scheme, the biggest being the grain producers with over $663 million invested. Then there are the broadacre farmers with $542 million, beef producers with $352 million and horticulturists with $264 million. So just about every industry takes advantage of the Farm Management Deposit Scheme.

The government fully supports the AAA package and, according to its needs, is constantly reviewing, changing and tightening it and, if necessary, introducing accountability. I can inform the Senate that the government has no intention whatsoever of abolishing it. It is one of the most successful schemes that this government has ever introduced for the farm sector. It is a part of, if not a key part of, our support of the rural sector.

But I did note that in the contribution today from Senator O’Brien, the opposition shadow minister for this portfolio, he raised the question of the economy: that farmers are suffering under the economic conditions brought about—as of course he would say—by this government. I will make two points. He raised the issue of interest rates. First of all, nothing seared the businesses, if not the souls, of the rural sector than the previous Hawke-Keating governments’ interest rate regime, which reached beyond the 17 per cent level that we so frequently quote in this chamber. The 17 per cent figure that we quote was the interest rate on household borrowings. But for the farmers it was more than that. For their overdrafts, it was a ridiculous 24-plus per cent—unsustainable. Of course, many of them went to the wall and those that have survived and have remained on their farms today have never forgotten that interest rate regime, particularly when they compare it with today’s.

Let me give the chamber, including Senator O’Brien, some information about today’s interest rates. In the time since this government was elected, interest rates have had some 10 moves upwards and 12 moves downwards. Interest rates in this country are deregulated, which means that they move up and down. Of course, the moves down have been of a greater margin than the upward moves. But no-one should think that interest rates in this country will not fluctuate. Just recently they fluctuated only 0.25 per cent—a very small percentage. Interest rates have moved some 22 times while we have been in government. Blind Freddy—and even Senator O’Brien, if he cared to admit it—knows that the moves down from the rates under the previous government have been enormous. In fact, there have been no movements in interest rates for 14 months.

But the most important thing is the band into which interest rates move. Under the previous government, the rural sector for their overdrafts faced an interest rate move to a band between 12 and 24 per cent; for home loans, it was 10 and 17 per cent. To take a benchmark, under this government, the low point for home loans has been six per cent and the high point has been eight per cent. At the moment it is 7.3 per cent—right in the middle. That is the band on which all sectors, including the farm sector and households, can make their judgments and plan for and around. And Senator O’Brien has the gall to say in this debate that interest rates are a burden.

The second point he made concerned the high value of the Australian dollar. Of course, the rural sector, given that it exports 80 per cent of its product, is sensitive to the value of the deregulated Australian dollar—the lower, the better. We would like it lower, but it is subject to forces beyond our control. It is a commodity dollar. The minerals and energy sector is now starting to grow, if not boom, overseas, which has an effect on our dollar, and there is the weaker American dollar. All these influences have an effect on the Australian dollar, to which we know the rural sector is very sensitive.

But I would say to Senator O’Brien that, whilst we would like to see a lower Australian dollar for the sake of the rural sector, it is more important that this sector, which so relies on exports, gets its exports off the docks and is able to export. I see Senator O’Brien smiling because he knows exactly what I am leading into. If you support the rural sector—you have had that portfolio basically for the last nine years; you have certainly been the spokesman in this chamber for nine years—you would support this government’s industrial relations reforms. You did not support the old ones, and I see you nodding your head that you are not going to support the new ones. It is crucial to the rural sector that you support our industrial relations reform package. You did not support the waterfront reforms. Because of your union affiliation, you did not mind that the rural sector had its exports locked up in containers on the waterfront.

Senator O’Brien interjecting—

Senator McGAURAN —You are denying it. What a joke that is! To this day, you cannot even see the improvements that have occurred. You stood against this government’s industrial relations reforms, which brought great improvements. We had to tough it out with the union and the opposition, and the result has been a record number of container lifts and a record low number of strikes. We have not heard boo from the waterfront since the reforms were put in place. In fact, the farm sector led the charge. It knew that its main problem was the waterfront. It is no use getting your economic fundamentals right—that is, interest rates and the Australian dollar—if you cannot get your exports off the waterfront. The NFF—which you seem so keen to quote in this chamber; I suspect you will support every one of their policies, which will be written into your document—were the ones that led one of the great reforms of this nation.

We see the benefits of it today. The effects have cascaded right through to the farm gate in a better income result. The farm sector is subject to drought, flood and fire but it is not subject to strikes, corruption or obstruction on the waterfront anymore. At least it can get its product through the farm gate and onto the waterfront and off to whatever country it is exporting it to.

That brings me to another objection that those opposite made which was detrimental to the rural sector: their long-time objection to the US-Australia Free Trade Agreement. They held it up, they delayed it, they found nitpicking reasons to not support it and they sought change until finally the politics of it brought them to the point where they had to support it. We know they did it begrudgingly and we know that if they had been in government they would never have supported it. Yet this agreement brings the greatest benefit to the farm gate since probably the waterfront reforms.

Senator O’Brien —You said that without sugar it was not worth doing; it was un-Australian. Now it is a great thing, according to the National Party.

Senator McGAURAN —It is a great thing. We regret that we could not include the sugar industry in the body of the agreement. But they are no worse off and do not try to paint it that they are. Every industry is better off under this agreement. Even the smallest industries—like the avocado industry, which has never had the competitive opportunity to export to America—benefit. They now have that opportunity because of the fall in the rate of tariffs. The fall in the rate of tariffs immediately benefits the citrus industry. With the beef industry, we would have liked a shorter time line but we were unable to get one. The dairy industry will within five years basically have free trade with the United States.

You objected to a trade agreement with the largest economy in the world. How foolish was that? What concern can you say you have for the rural sector? Senator O’Brien, I should say, works hard for his party. No-one asks more questions in committees than Senator O’Brien. But the truth of the matter is that he is in a party that the rural sector will never support because they know the form that it has. They know from the history of the Labor Party that it ignores the rural and farming sector. It really is an embarrassment for Senator O’Brien to have to come in here and try to mount some sort of support and defence of the Labor Party. You had to quote the NFF policies. You will not even claim them as your own. You laboriously quoted the NFF policies but we have not heard you quote your own policies in here.

Senator O’Brien —Yes, you have.

Senator McGAURAN —No, I have not.

Senator O’Brien —Yes, you have.

Senator McGAURAN —Well, I would like to know what they are. The rural sector would like to know what they are. Do you support the IR reforms? Will you support our budget in May, which will be a sound, tight, solid budget that will put downward pressure on interest rates? That is the bottom line on the budget.

Senator O’Brien —We will not block supply.

Senator McGAURAN —Senator O’Bri-en, I will not get into a tit for tat with you. My time is now up. I should add that both sides of the house support this bill. Even the Labor Party, which is quite often brought kicking and screaming to the table in support of our legislation, knows that this is a fine program.