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Thursday, 6 May 1993
Page: 257

Senator COOK —Yesterday I was asked a question by Senator Boswell relating to the rural adjustment scheme. I now have a detailed answer to that question. It might suit the processes of the Senate for me to seek leave to incorporate this rather long answer in Hansard.

  Leave granted.

  The answer read as follows

I refer to the question on notice from Senator Boswell regarding the level of access to RAS in Queensland

Support for farmers under the Rural Adjustment Scheme takes account of the realities of operating a rural business in Australia. Over time there will be movement of producers into and out of the industry and the RAS is aimed at smoothing this processes so that the competitiveness and efficiency of the industry is not reduced.

Consequently RAS support is targeted at those farmers who have long-term prospects for profitability, but who require some short-term support to improve their productivity.

Under the exceptional circumstances provisions, support is available for carry-on purposes when a farmer is facing difficulty due to certain exceptional circumstances. The recent national allocation of $50.6m is directed at producers suffering hardship from the exceptional circumstances of the prolonged drought in parts of Australia and by the depressed prices for wool.

In Queensland, under the exceptional circumstances provisions, additional Commonwealth funds of $11.3m have been provided under the RAS to provide interest subsidies of up to 100% for farmers

this $11.3m consists of $6.3m for specialist wool growers and $5.0m for drought. This is in addition to a further $9.5m provided to Qld for drought since Sept last year.

In answer to the Senator's specific questions, I can advise him as follows:

  1. I have been advised by the RAS administrators in Qld that for the period 1 July 1992 to 31 March 1993, the approval rate for all RAS applications is close to 65%, whilst the approval rate under the existing Special Drought Assistance is 95%

clearly this indicates that the assistance is meeting its target because the majority of applicants are being assessed as eligible.

  2. The Senator's question assumes that if 40% of producers are not receiving assistance, then they will all leave the industry. I should point out that people are assessed as ineligible for RAS for two principal reasons.

One is that they have the capacity to support their debts and operations out of their own income or assets—a situation in which it is inappropriate for the Commonwealth to be providing subsidies.

The other is that they are found not to be profitable in the long-term. In this case, farmers may be eligible for Farm Household Support, which provides support to farmers either while they arrange the sale of their property, or supports those farmers who believe they have a future in the industry but are unable to obtain further commercial support. Farmers who move out of farming may also be eligible for the increased re-establishment grant of up to $45 000.

  3 & 4. The number of producers who will be assisted under the package will depend on the number of applicants who are assessed as eligible and the level of interest rate subsidy offered to each successful applicant. Funding was provided to each State Government on the basis of an independent assessment of need by the independent RAS Advisory Council after consultation between the Commonwealth and each State Government.

  5. Producers who are assessed as eligible for Farm Household Support will not also be eligible for RAS support. However any producer who has previously received RAS support may be eligible for Farm Household Support if they cease to be eligible for RAS.

  6. It is difficult to forecast just how many producers will actually receive interest rate subsidies for the first time under the exceptional circumstances provisions. However, Queensland report that an increased number of producers received assistance last year for the first time and they expect this trend to continue.