Interview with Marcus Paul, 2SM

1 July 2020

MARCUS PAUL: Well this is great news. Regional Australia is set to benefit today as the government gets on with the job of building national-wide drought resilience. The Australian Government has invested $3.9 billion which will grow to around $5 billion in the forward thinking Future Drought Fund.

The Minister for Agriculture, Drought, and Emergency Management, David Littleproud, joins us on the program. Good morning, Minister.

DAVID LITTLEPROUD: Hey, good morning. Good to be with you.

MARCUS PAUL: Thank you very much for your time. Now you say, and I agree, drought is an enduring feature of our landscape and the economic environmental and social impacts on farmer's communities and the landscape is, well look, it's almost unbearable in some cases, David.

DAVID LITTLEPROUD: It is. And look, as someone that's grown up in western Queensland, still lives in western Queensland, it's been part of my life for the last 43 years, and this one, but I don't think any governments necessarily got totally right and we're continuing to make sure that we evolve with that. And that's what the future fund is about, it's about the future, it's about understanding that your very next drought starts the very first day after it stops raining. And there's a mutual obligation, not just on the federal government, but state government, and also the farmer themselves, to make sure that we equip them with the tools, but they undertake the measures required of them before they come asking the Australian taxpayer for any support.

So the Future Fund forms part of an $8 billion commitment we've made during this drought in a number of programs through our Three Pillared strategy of the here and now, putting money in their pockets to keep bread and butter on the table. And the Second Pillar is about supporting the communities that support the farmers, because you got to understand the drought extends pass the farm gate, it goes into those towns that support them, in the bricks and mortar shops in the main street, we need to support them. And then the Third Pillar is about the future, which is the Future Drought Fund which goes live today, which is fantastic achievement and had bipartisan support in the end.

MARCUS PAUL: Alright, well tell me about these programs, the $20 million Farm Business Resilience Program. What will that provide?

DAVID LITTLEPROUD: So this is about helping farmers and equip them with some of the financial tools. So not necessarily just doing your business plan up, but most of them sit around the kitchen table with their bank manager every year, in fact, I used to do that, that was my former occupation, doing cash flows with farmers. This is more intricate, gets into more the tin tacks and around what are the drivers of their business, and the risk management tools, and that might be around hedging commodities, understanding some of the financial markets that they can better hedge their products in. But it's equipped also, and going to be tied in with some of the more climatic guides that we're going to give, regional guides around weather information that they'll be able to tap in and make real time decisions and that's important because, when you go into a drought, it's very hard to get the decision right, whether you offload your stock now, or you hold on trying to feed them through, and invariably you never get it right. So this is about giving them the tools to do that.

MARCUS PAUL: And there'll be $10 million set aside for this Climate Services for Agricultural Program and, as you say, it'll be interactive, it'll give some, well better perhaps foresight. I mean, we can't predict the weather sadly, if we could we wouldn't have a drought, David, or certainly we could put measures in place to stop it. What about the Drought Resilience Assessment Tool? The self-assessment tool? What's this about? This is online, is that right?

DAVID LITTLEPROUD: Yeah. So we're going to create an online tool that the farmers can actually self assess where they are with respect to where climatic conditions are getting to, and what are the decisions, the financial decisions, that can flow into that that they can make and make a better prediction as best they can. As you say if we knew what the weather is doing, sadly I wouldn't be talking to you, I'd be a very wealthy man. But the reality is you've got to try and give them the best information that they can make that real time decision, more informed decision, and so that they get it right more times. And they'll feed, it's interactive, they'll feed the weather information in, a lot of their management decisions in, and help them get to a determination, given comfort about the decisions they're making around the drought would be more informed.

MARCUS PAUL: We need to learn a lot more about drought itself to become more resilient. There needs to be funding for research. Tell me about the program for this.

DAVID LITTLEPROUD: Look there's over $20 million going into the research and development, and there'll be two drought resilience adoption hubs, and they'll be in regional Australia. And this is an important thing, the extension work of region, research and development is very important. Extension work is about how do we get the farmers to take up and understand what the new technologies are? So we want to put them out where the drought is, so far more farmers take them up, and understand what the new technology is, what the tools are to help them adapt, what the new research and developing of new varieties, of whether that be grains, or genetics, or animals are, so there's a greater uptake and greater resilience in terms of understanding decisions they can make. And make sure that it's real, that they can feel, that it's something tactile. Because that's the thing, you see it on a computer and you think, oh that's great. But unless you can feel, and touch it, and it changes your bank balance sometimes it's very hard for a farmer take it up. So that's why you want to put them out in the regions, the ultimate drought areas, letting farmers touch and feel and be able to take a lot of the new technology that's built agriculture to what it is today.

MARCUS PAUL: Alright. There are a couple of other things but we won't go through all of the details here, but I will put up some detail for my listeners in regional Australia listening to us this morning, David. I'll pull up the list there, and your press release so people can then find out the information and go online to see what this is all about. But a couple of questions that some listeners have messaged into us this morning on the program when we said that we were going to talk to you. A gentleman rang and said that: as a part of perhaps future proofing drought, if that's at all possible here in Australia, a way certainly of giving farmers a bit of a helping hand in order to feed their stock in times of extreme drought, has the government ever perhaps considered storage silos and putting feed grain and other goods that can be used by farmers, a stockpile if you like, in silos around regional Australia? Is that something perhaps that can be looked at in the future, Minister?

DAVID LITTLEPROUD: Yeah, and that's a great question, and in fact we've already started that by giving instant asset tax write offs for infrastructure. And that's been an important part, particularly up here in Queensland where we've had prolonged and severe drought for many years, where you go and build silos or you go and build hay sheds then we'll give you an instant asset write off because inevitably you buy or build that when you have a good year. So what we want to do is try and get you to build the infrastructure to make sure that you're more drought prepared. So when you go and build that shed or that silo, it comes off your tax fully in that year. We've seen a big uptake of that here in the last 12 months, and we've lifted that amount to $150,000 as well for any other assets. So we're really encouraging farmers to take the bull by the horns, for want of a better term, with respect to that.

MARCUS PAUL: Yes, they'll get that, they'll get that. Alright. And the other question out of the, I think, the most pertinent ones that we've received was: we know the Government's offered farmers and those struggling with drought in regional Australia a loan, concessional loans, and many of them have been under, have been taken up, of course. One farmer who called the program this morning said he was very grateful for it, but in the future they think perhaps the loan should be extended. So in other words, the farmer's given an opportunity to repay the loan, if you like. We know it's, I guess, never been cheaper for governments to borrow money, but they'd like to pay it off over a longer term because, it places, from what they've been telling me, David, in a number of calls, it places a lot of pressure on them to meet the repayments on time, the big lump sums that they have to pay particularly during an ongoing drought. So would there be perhaps, some scope to extend the loan scheme over a longer period in the future?

DAVID LITTLEPROUD: Yeah. And that's another good question. In fact, what we've done is we've had interest free repayment free periods for two years. So, effectively a farmer with $2 million could refinance that to the Regional Investment Corporation and pay nothing, absolutely nothing for two years. So, that's about $120,000 a year just in interest for someone on 6 per cent.

So, what we're saying is we're not there to take over from commercial institutions, the banks, but what we're trying to say to them is if people come to the Regional Investment Corporation we'll give them some breathing space and then obviously there'll be opportunity for them to refinance back to their commercial institution over the longer term.

So, that's what the banks, invariably, are able to provide more than the Regional Investment Corporation, the banks do that. So, we're a stopgap measure to try and ease that interest burden, take away the repayment burden, and give them some breathing space to get through the drought.

MARCUS PAUL: One of the most concerning issues for farming communities is water; access to it, I mean, I don't want to go into detail of the Murray-Darling scheme and everything, but water. What I'm hearing overall, David, is that essentially mum and dad operators, those smaller farmers that have been doing it tough in drought, they believe that's an unfair playing field still when it comes to accessing water. They believe that, in some cases, some of the bigger farms that have been bought by multinational corporations are getting more than the lion's share. Is there something we can continue to look at to improve access to water for smaller mum and dad operators who don't want to leave the land?

DAVID LITTLEPROUD: No, exactly. And look, that was, when I was Water Minister I got the ACCC, in fact, the ACCC just handed the initial report to the Water Minister this week around how the water market has evolved, what happened with state governments back in the 90s to remove water from the land and allowed it to become a tradeable entity.

Now unfortunately I think what's happened, my personal belief, is that the market has moved to a part that wasn't the original intent of separating the land and water. Because when they did that, state governments did it, they believed that other farmers would buy it. Well, other farmers have bought it but some of them have been international multinationals that have come in and paid big money.

Now, you've got to understand the Government didn't sell the water to those big multinationals, farmers sell them to these people and they put that in their pocket. But is that really where we think that a commodity like water, and I don't believe it's like a normal commodity like gold or coal; this is a source of all life…

MARCUS PAUL: No, of course not. Absolutely.

DAVID LITTLEPROUD: … and I think there'd be an opportunity in this ACCC report to get a real appreciation that if you are not using it for agricultural production in this country, and you're simply trading it, then I think that was the original intent back in the 90s of the state governments, we would have to get the states to agree, but I think they'll agree with that, that was the original intent of what they did when they separated land and water and I think there should be a way in which we can get back to that. And I know Keith Pitt will look to ways in which he can achieve that if he gets the consensus of the states.

MARCUS PAUL: Alright. So, with this report that you say that's been handed down this week in response to water. When's that likely to go public, Minister?

DAVID LITTLEPROUD: Well, as an interim report it's been handed to the Water Minister who will obviously work with the Treasury, the ACCC is a product of the Treasurer.

MARCUS PAUL: Yes, of course.

DAVID LITTLEPROUD: So, I understand that it'll be released in the coming couple of weeks.

MARCUS PAUL: Okay.

DAVID LITTLEPROUD: So that then if there was any initial findings that could be acted on then he, the Water Minister and the state water ministers, you'd understand water, under the constitution of our forefathers who put in place federation, gave ownership and management of water to the states, so we have no powers at all federally but what we try and do is get a national approach. So, hopefully out of this we'll get a better lens and that the states will work with us, and that there's a mechanism that lets family farmers get on with the job, because they're invariably the ones that keep regional and rural Australia alive. Corporates come and go, but mum and dad farmers they're there for the for the long haul, and bring on the next generation for us.

MARCUS PAUL: Absolutely. Look, you've been very generous with your time, I know you need to hop on the road. Thank you very much.

DAVID LITTLEPROUD: No, happy to be with you anytime. Thanks for having me.

MARCUS PAUL: Alright. There he is, the Honorable David Littleproud, Minister for Agriculture, Drought and Emergency Management. And of course he is the Deputy Leader of the Nationals.