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Wednesday, 13 October 1971
Page: 2314

Mr SPEAKER -Order! The honourable member for Kennedy will cease interjecting.

Mr GRASSBY - I make the point that an unreal situation has developed. A straightjacket is restricting the operations of rural reconstruction because of inadequate finance. A further constraint is applied because of the increased interest rates which the Commonwealth Government has insisted upon. A third factor in the unreality is represented by the provisions themselves. I repeat what I said earlier: In order to qualify for build-up finance it is necessary to show a return on capital of 9 per cent or 10 per cent. I hope honourable members opposite will not defend that situation.

I turn to some of the associated problems. As the rural reconstruction scheme is rapidly coming to a halt through lack of money, applicants for assistance are finding that they are taking part in a lottery. Only one or two fortunate applicants are accepted because of the shortage of funds. The overall credit situation is worse now than it has been at any time since the crisis began. The banking system has virtually turned off the tap of rural advances. This applies in my own area and in many other areas. There has been a closing down on credit, irrespective of whether reasonable propositions are put up. Although a proposition may be judged to be sound by an outside analysis, bank managers have refused to give credit almost as a matter of policy. Rural activity and rural enterprises are not good things to engage in at present. I appreciate that the decisions are not really those of individual district bank managers. A considered policy has been adopted by all banks. They have said very bluntly to the Government: 'We are not going to put any more money into the rural sector.' This is creating just as much a crisis as any other single factor, because people who normally would have been able to obtain overdraft accommodation for their operations are now being told: 'No more; we are sorry'. The tap of credit has been turned off. When we review this, we must ask ourselves one question. Members of the Opposition reviewed and debated this matter and pointed out in this House the difficulties and inadequacies of the present rural reconstruction scheme. All the things that we pointed out at that time are now being demonstrated.

The time has come not to look at the scheme at the end of this financial year, as the Minister indicated today, but to examine the scheme now and to review it urgently with all the Ministers of all States concerned. The Minister should say to the State Ministers: 'How are you getting on? Have you really come to a stop? Is it really a lottery? What must we do to fix the present situation in a better way?' This is the challenge of the moment and I hope that the Minister will recognise the reality of the situation and take that initiative.

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