AMY PHILLIPS: First up, huge interest in a Commonwealth-funded drought loan has forced the Agriculture Minister to top it up by $2 billion and employ more people to help farmers fill out the application form. Agriculture Minister David Littleproud admits when the Regional Investment Corporation was created two years ago, no one dreamed that up to 600 farm businesses would be applying for a loan monthly. He explains the changes to the no interest and low interest loans where drought impacted farmers can borrow up to $2 million and small businesses, half a million dollars.
DAVID LITTLEPROUD: This $2 billion dollars is additional. This is coming straight out of the budget. Effectively, we are making a significant commitment. The RIC has been a victim of its own success. I mean, when it was first started, it was expected that concessional drought loans and support through concessional loans would only get around 300 applications a year. We're getting around 600 a month. So that's really meant that the RIC has been successful, that it's popular, but there's more work to be done around getting the timeframes down, getting the applications out and making sure that we work collaboratively with banks. While we want to create competitive tension, we also want to work collaboratively with them to make sure that we not only drive interest rates down and make them competitive, but actually work within the business plan of farmers to reduce interest rates.
AMY PHILLIPS: So how many farm businesses and small businesses wanting to refinance have been approved?
DAVID LITTLEPROUD: So, there's well over, just in June, May, there was over 750 that were approved alone. As of June, we've had 2491 applications that have been sent through, and the RIC was only really set up, because we had difficulty getting it through the Senate, it's only really been standing up for about 12 months.
AMY PHILLIPS: Can you explain to me why the interest free period is going to seize? Why at 30 September?
DAVID LITTLEPROUD: Well we wanted to give farmers enough heads up that if they wanted to apply for the $2 million drought loans and pay no interest and no repayments, that they needed to get their applications in. We just didn't want to cut it off and they not know. We're giving them time to be able to come forward. But this is a cost and a burden to the Australian taxpayer. It's been a very generous program in which the taxpayers provided to the Australian farming community, and it's been a good one and well-earned and well needed, but there comes a time where we as a country have got to pay the bills and effectively, we're saying that that period of no interest and no repayments has to end, but we're going to give you a concessional rate of 1.92 per cent in its replacement after 30 September, which is still, still very generous. As I said, save you close to $100,000 over a five-year period is still significant support from the Australian taxpayer.
AMY PHILLIPS: And which region of Australia do you reckon will be most interested in these loans? Who is in the most severe drought or hardship, do you think?
DAVID LITTLEPROUD: Well, look, I think obviously Queensland's still doing it pretty tough and my electorate of Maranoa is testament to that. These are not just for drought, they're also about replanting and restocking. So it's important to understand that where those regions have had rain, they can actually take advantage of this, and that's a huge boost to your cash flow. If you're getting interest-free repayment-free loans to restock or to replant, that gives you time to get your cash flow up and going again, to get progeny on the ground or to get a crop off. It gives you plenty of breathing space. On $2 million, paying nothing is a significant amount of support. And I would say it's not just for drought affected communities, those that have come out of it, to give them the opportunity to get back up on their feet quicker.
AMY PHILLIPS: And just finally, in January, ABC Rural reported that it was taking up to a year for people to be approved for the RIC loan because of the huge amount of interest. Are people going to have to wait that long?
DAVID LITTLEPROUD: We've pulled that down into around- into the low 100 days and…
AMY PHILLIPS: Three months?
DAVID LITTLEPROUD: Yeah. So they're still taking time. But the $50 million will give us more leverage to be able to reduce that.
AMY PHILLIPS: Does your government have any sunset over the RIC program and the loans? Obviously, by introducing the two-year interest free period ceasing by 30 September, is this an indication of more restrictions to come?
DAVID LITTLEPROUD: No. Definitely not. And we're still giving a concessional rate of 1.92 per cent, which is pretty darn good. The RIC is here to stay. I know the Opposition made a commitment before the last election that they were probably going to get rid of the RIC, but the RIC now has become integral part, not just of supporting farmers through drought but through other natural hazards and even through bushfires. So, I think it's become a very integral part to our response to natural disasters in this country and it's here to stay. And we're going to expand it, in fact, to help young people get in to agriculture, and agri starter loans will start as of 1 January and it's been delayed because of the sheer demand that we've had during this drought and a number of applications. But the product has been created and we're now working with financial institutions to make sure that we can get as many young people as we possibly can into agriculture as well.
AMY PHILLIPS: David Littleproud, Federal Agriculture Minister. So, RIC is here to stay. The drought loans that RIC offer are here to stay, but they're becoming less competitive with the no interest period ceasing on 30 September.