A $280 million scheme for concessional loans enabling farmers to borrow up to $1 million is a centrepiece of the government’s drought relief announced today.
The $320 million package includes more generous criteria for accessing income support available to farmers from March 3 – a bring-forward of a change initiated by Labor that had been due to start on July 1.
There will also be $12 million extra for emergency water infrastructure schemes; $10 million for dealing with feral animals, and $10.7 million to increase access to social and mental health services.
Prime minister Tony Abbott said thousands of farmers would be assisted by the income support and hundreds of businesses by the loans scheme.
He was anxious to distinguish the drought help from the sort of corporate welfare the government is opposed to in cases such as SPC Ardmona. This was not a special deal for farmers because drought was akin to a natural disaster.
Nor was it a super favourable social security regime for farmers because farmers in trouble were in a different situation. “You can’t sell, you can’t borrow, you can’t leave, but you’ve got no money,” he said.
“I think that people everywhere understand that you can’t have cities without a countryside to sustain them.”
Abbott said that to qualify for the loans assistance, farms would have to be viable businesses. “These loans are not to prop up unviable businesses,” he said. “This is not a handout as such. It is a hand up.”
He said while the cash rate was currently very low, the rate at which farms had to borrow “is not necessarily at historical lows”.
Farmers will be able to access five year concessional loans of up to $1 million, or 50% of the farm business’s debt, whichever is lower, at an interest rate of 4%.
Agriculture minister Barnaby Joyce said he had come across many farmers borrowing money “at best 7% or up to 8% and into 9%. So let’s say 8%, and we’re offering them a million dollars at 4%”.
“If they just use it for the purpose of restructuring, that’s going to be a $40,000 a year advantage to them and over five years that’s $200,000. And I tell you what, if you drop $200,000 in the pub on a Friday night, you’ll bend down and pick it up.”
The income assistance, equivalent of Newstart allowance, will have a more liberal assets test than earlier arrangements so more farmers will be able to access help - they will be able to have up to $2.55 million in net farm assets.
Asked whether there would be more money if conditions got worse, Abbott said: “This is a response to the current drought at the current time. If circumstances dramatically change, obviously the government will respond further.”
The white paper on agriculture, due by the end of the year, would consider what improvements might be made to drought assistance over the very long term.
Opposition agriculture spokesman Joel Fitzgibbon welcomed the package but said it was a month late.