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Wednesday, 18 March 1987
Page: 1022

Mr HUNT —My question, which is directed to the Minister for Primary Industry, relates to the rural adjustment scheme. I refer to the Minister's meeting on Friday with the State Ministers responsible for rural adjustment. Did the State Ministers seek an immediate and substantial injection of funds into the rural adjustment scheme? When can the Ministers and farmers expect an answer in view of the record debt, which is now estimated in some areas to be of the order of $15 billion, and devastating interest rates imposed on farmers by this Government, many of whom are having their tools of trade, their farm machinery, repossessed and are facing bankruptcy? To what extent will the eligibility guidelines be made more flexible?

Mr KERIN —The answer to the first part of the honourable gentleman's question-I do not know which National Party he is in--

Mr Miles —Get on with it.

Mr KERIN —Come on, it is like another day in Beirut; factional fighting all the time. The answer to the first part of the honourable gentleman's question is that there was no call for immediate additional funding for the rural adjustment scheme. The discussion certainly focused on various elements of flexibility. When the new scheme came into place, it centred on a 50 per cent interest subsidy for the first part of the scheme, the second part already being 50-50 between the Commonwealth and the States, again focusing on interest subsidy. When that new scheme came into place the Commonwealth Government advised the States that it would share the risk up to only seven years. If States wanted to take the funding beyond seven years that was up to them but the Commonwealth would not share the risk. The States have a fair amount of flexibility in interpreting the guidelines. For example, New South Wales is putting forward various propositions on being able to take out funding, I understand, up to $210,000 for debt restructuring for some farms. However, that is all on the basis of viability. The rural adjustment scheme is not an interest subsidy scheme. When the drought was on the rural adjustment scheme was not a drought relief scheme. It really centres on viability.

For the information of honourable members, this year the rural adjustment scheme is funding about 10 times as much of the rural adjustment as it ever has. If one adds to that the adjustment funds available for the sugar industry and the dairy industry, the rural adjustment scheme has never operated better.

The honourable gentleman made several other comments in passing but I will not go into a detailed debate on them. However, I point out that most of the problem is in the wheat industry, which is particularly affected in New South Wales and Western Australia. The very big problem is that 2 per cent of wheat farmers owe more than $1m and that represents 20 per cent of the total wheat industry debt at this time. Although there is enormous vested interest in helping those people there is simply no way that the rural adjustment scheme can deal with that problem and the farmers have to find ways and means of coming to an accommodation with the banks or the people who are financing them. By and large that is what is happening. If we can get this whole debate into some proportion-I am not for one moment saying that there is not a big problem-there were only 100 foreclosures last year out of 174,000 rural holdings. At present the dimensions of the problem are a little blown up by the media, which has centred on individuals who have been in an impossible situation for quite a long time.