SABRA LANE: Good morning and welcome to the programme.
DAVID LITTLEPROUD: Good morning, Sabra, great to be with you.
SABRA LANE: The loans component of the package for farmers, they're cheap loans — no repayments and interest for two years. Even still, you'll concede this: that farmers are pretty reluctant to take on more debt in these circumstances.
DAVID LITTLEPROUD: Well, this is an acknowledgement that they actually can refinance some of their debt to this component, up to $2 million, no interest, no repayments for two years, then interest only for another three, and then repayment over the balance.
And what that is, is an understanding that they need to cover costs in the here-and-now — the fodder, the water — but also gives them an opportunity for recovery. So we made a commitment before the election of replanting and restocking loans of $200,000.
We said, look, we can do better than that — let's roll this into the existing drought loans, make it $2 million so that they would be able to restock quicker, replant, and also those that are already on these drought loans will have the ability to change the structure, that are currently on principal interest, to this new structure to give them that breathing space.
Nothing to pay for 24 months and then interest only after that. That's an understanding that it takes time to rebuild cash flows and that's an important component, as well as small business. We're extending to small business as well.
SABRA LANE: We'll get to that in a tick. On the substantive point, though, you know that in times like this, a really severe drought, people are reluctant to take on more debt.
DAVID LITTLEPROUD: Well, that's why there's a suite of measures, Sabra, not only around making sure we understand the impacts that that debt has and the interest.
This saves farmers tens of thousands of dollars’ worth of interest, complemented with Farm Household Allowance, so that we’re putting money in their pockets to be able to put bread and butter on the table, along with other measures around desilting dams, building out bores, putting pests and weeds out there, building stock fences, dog fences, to make sure that we attack these problems from a multi-faceted approach. So it's just not one way of attacking this drought. You'd understand that a drought's different to other natural disasters, where you can just rebuild a house or a road.
You have attack this from different parts, because it's not just the farm gate; the drought extends into the community as well, and that's why we've got to look at different measures, a suite of measures.
SABRA LANE: How confident are you that you're not simply enabling more marginal farming operations to keep going, and in a sense giving those producers false hope?
DAVID LITTLEPROUD: Well, there's a viability test. Simply, you have to be able to prove that in a normal year when it rains, and in normal circumstances, you repay that debt on your business model.
We're not going to put people into debt that can't afford it. That's the reality of the situation; that's the remit of the RIC. They have a responsibility, a responsible lending responsibility, to make sure that these people can afford these loans.
SABRA LANE: What about exit packages? The National Farmers Federation said that they wanted the Government to look at introducing those packages. Will you?
DAVID LITTLEPROUD: No, we won't. Look, our responsibility is to keep farmers on their properties, to get them through this drought. We're giving them hope. This is what we want to do today, is give them hope in sustaining their operations, but also stimulating them. And in fact, the data doesn't prove it, Sabra.
In fact, there's been five years of consecutive increases in valuations of agricultural land, and in fact last year...
SABRA LANE: Sure, but not all businesses are viable; you will acknowledge that. So if farmers don't get these loans, they should take that as: the Government thinks you're not viable and perhaps you should get out.
DAVID LITTLEPROUD: No, Sabra, I think you'll find — and having been an agribusiness manager myself that sat around farmers' kitchen tables — those conversations are organically happening between banks and farmers and their accountants. And there's a responsible way — and in fact, there's a mediation process that's been put in place with the banks and the states to make sure that farmers are given the respect and dignity that they deserve in making sure that they transition. And part of the piece around farmhouse allowance is to have somebody, a real financial counsellor, to help them make those decisions, to put an environment around them to make those decisions in a calm environment. And so that's been an important part of it. So I think you'll find that organically, conversations are happening.
But as we've — the Treasurer and I continually meet with the banks. The banks are saying that there is considerable resilience there; there's a lot of equity and equity in farms haven't been as high as this ever. So there's a lot of wriggle room there and the banks, I have to say, have done a good job in supporting our agricultural sector.
SABRA LANE: For the first time, the Government's now extending help to small businesses who depend on farming, and also nearly half a billion extra in stimulus programs for local councils. What difference is this going to make?
DAVID LITTLEPROUD: Well, this is putting new money into these economies. And you've got to understand, they are very finely tuned, some of these small towns, and if you lose one part of it, it has a flow-on effect. So, stimulating this through a lot of the infrastructure programs, building the roads, getting new people into town, new money into town, is so important.
And then, it's also a legacy piece: the building better regions portion of the $200 million is about building infrastructure that diversifies the economic base and builds new jobs, creates new jobs. So, we're thinking about the recovery. And then obviously, the loans to small businesses is to appreciate those small businesses that support, provide services and products to agricultural producers are supported as well, because their cash flows are being dented because obviously, they even sometimes invariably become the bank of some of these producers. And if we put money back into their pockets, that invariably flows back through the economy as well. So, we understand how these local towns operate, their local economies, their microcosms that we have to work with, and make sure we understand.
SABRA LANE: This isn't the entire package; you've got something else up your sleeve that we'll find out about later. But what if this drought is the new normal — that Australia's going to experience severe, prolonged droughts? What's the long-term policy?
DAVID LITTLEPROUD: We'll be also announcing today our long-term strategy. It builds on the one that we already have had and Major General Day has obviously fed into that, and we'll make sure that that's put out there, but…
SABRA LANE: Do you worry that this is our new normal?
DAVID LITTLEPROUD: Well, it's not our first rodeo and it won't be our last. I've grown up in Western Queensland all my life and I've seen it. We’ve become more resilient. In fact, we have come a long way as agricultural producers and as communities. But what we've said — we're the first Government that said, you know, we're not just going to look after people in the here and now; we're looking for the next drought, because your next drought comes the first day after it stops raining.
And so, we've looked to building water infrastructure — dams, $3.2 billion, plus another $500 million with New South Wales. But we've also got the future drought fund that's going to pay $100 million a year in the good and bad to go toward programs to build that resilience, the research and development, the extension work, but also, we already started over $500 million a year through farm management deposits and tax concessions to build infrastructure for fodder. 500…
SABRA LANE: David Littleproud, I'm afraid we're out of time. We're going to have to leave it there. But thank you very much for joining AM this morning.
DAVID LITTLEPROUD: Thanks, Sabra.