Joyce commits to rural debt 're-tweaks'

24 Sep, 2014 11:09 AM
The rural debt 'roundtable' in Canberra this week.
I do have a hesitancy about saying we’re going to guarantee a whole range of peoples’ debts
The rural debt 'roundtable' in Canberra this week.

THREE key resolutions have been agreed on at the rural debt roundtable meeting held in Canberra this week, including restarting the national rural debt mediation process.

The meeting was chaired by federal Agriculture Minister Barnaby Joyce and involved 40 key stakeholders, including rural banks, farm groups and government departments.

Queensland LNP Senator Matthew Canavan attended the meeting and said problems with farm viability had been growing for a decade in rural areas, particularly in north Queensland, and would not be solved in an afternoon.

“But there were some resolutions from the meeting,” he said.

Data requirements identified

The first agreed resolution was ascertaining more accurate and factual data on the size and scale of the rural debt problem.

Senator Canavan said a rural debt survey had not been conducted in Queensland since 2011, partly due to banks having not co-operated, “for their own reasons”.

Mr Joyce said it was difficult to create a policy solution without having accurate data at the government’s disposal to clearly identify the problem areas.

Senator Canavan said the national rural debt mediation process had been in place until last year but had now “fallen off the radar”.

“Different States have different processes that handle the mediation of debt and some of them are working better than others,” he said.

“It seems right and proper while we have this debt issue that we try to harmonise those and come up with the best model across the country.”

Mr Joyce also agreed to adjust the eligibility criteria for the government’s $700 million farm finance and drought loan packages to better target assistance.

“If we have to change the settings of those [loans], then so be it, and if they’re more appropriate then I’m willing to go down that path and do it,” he said.

Senator Canavan said issues remained about getting the loan money out to those people who needed it most.

“It is a difficult issue because while the Commonwealth government provides the funds, State government agencies are actually responsible for lending the money,” he said.

Gulf Cattlemen's Association sees 'incremental shift'

The meeting was sparked by intense lobbying from the Gulf Cattlemen's Association last month in Canberra, warning the dire social and economic consequences confronting their industry were worsening due to persistent drought conditions and other economic factors.

Those factors include lingering price impacts of the former Labor government’s temporary suspension of live cattle exports to Indonesia in June 2011.

Association spokesperson Noeline Ikin said the roundtable meeting was always a difficult proposition, given the number of different stakeholder groups seeking to “defend their own positions”.

But she was buoyed by the agreed resolutions and pledged to “keep the momentum up for the northern beef industry”.

“There was definitely an incremental shift and steps were taken in the right direction,” she said.

“We now have to make sure we keep up that momentum and follow through on the resolutions agreed to at the meeting and keep pushing for solutions.”

Joyce looking to 're-tweak' loans

Mr Joyce said collecting factual data to ascertain the scale of the debt problem - from the gulf of Queensland down to northern NSW - would be handled by the Australian Bankers Association, National Farmers Federation and the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES), with input from the Gulf Cattlemen's Association.

His commitment to “re-tweak” the $700 million drought and farm viability loans will be given his “best endeavours … knowing full well that approval doesn’t just rest with me”.

“I will now go about trying to change those [loans] so they’re more appropriately suited for people who require those facilities,” he said.

The Gulf Cattlemen's Association had also asked the government to guarantee current bank loans under duress, due to the live cattle export suspension’s impacts, for a period of five years.

But Mr Joyce said the government was “already in that space” through the drought assistance loans announced earlier this year, meaning the proposition was unlikely.

“I do have a hesitancy about saying we’re going to guarantee a whole range of peoples’ debts because just as sure as God made little green apples another group will turn up with a just as viable reason to say ‘well guarantee us as well’ and then [other] businesses will turn up and say ‘guarantee us as well’,” he said.

Mr Joyce said the government would now work with the Australian Bankers Association (ABA) and rural financial councillors to develop a standard form of national terms for the debt mediation process.

ABA responds

ABA CEO Steven Munchenberg said the roundtable provided progress but didn’t answer all of the problems or offer a universal solution.

“These are complex issues but we have made real progress and this is going to be the first of a number of discussions we’re going to see between the banks, the farmers and the government about what we can do to help,” he said.

Mr Munchenberg agreed better data was needed to provide clarity on the problems facing the northern beef cattle industry before any solutions can be developed.

He said there were different views about the level of rural debt and what that debt means, while stating the actual rural debt level was $61 billion.

On the request for a government guarantee on stressed loans, he said it was ultimately a government decision whether they would guarantee loans to farmers.

“We actually see the majority of debt in agricultural sector as a positive thing,” he said.

“It is investment (and) farmers are using that debt to improve productivity, which we’ve seen happen, to build scale.

“All of that’s necessary to make sure the agricultural sector can capture the opportunities that are going to come its way in future.

“The banking industry thinks the agricultural industry in Australia has a very bright future ahead of it – we’ve got a big investment in farming in Australia and we want to see that prosper.

“It doesn’t mean that everyone’s doing well and we understand there are some real issues [but] we’ve been able to target down on those issues today,” he said.

“Things like national farm debt mediation legislation are an important step forward to make sure that both farmers and their bankers have got the opportunity to work through issues when they arise.”

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Rob Moore
24/09/2014 1:30:38 PM

If Mr Joyce and the other politicians present had a brain in their heads- they would have addressed the suffocating returns @farmgate as surely this is at the core of EVERYONE"S debt servicing ability!Joyce and the other pollies there would have told the banks that since they have all just posted RECORD profits - they bloody well better put a freeze on any foreclosures for 12 months!This would give time to get a PPP up and running and profitability would return to producers. This is a pathetic charade and to think that Agfarce has muscled in the day before this event?
Rob Moore
24/09/2014 4:34:13 PM

Let us not forget that this was a Govt inspired collapse and this has lead to 3 years of record BANK and PROCESSOR profits. Never mind offering exit and shrink packages - how about a bit of resolve to give us a fair trading environment. How can anyone survive with half the going world price with twice the going cost of production that everyone else has. Greed has killed production for the next two years at least. Let's see some dramatic results like Scott Morrison has managed to do. Every week is a longtime to sit on your hands!WE DON"T want MORE DEBT!
24/09/2014 5:42:30 PM

What a disappointing damp squid of a result!! I despair for my fellow distressed producers!!
Bushie Bill
24/09/2014 7:12:25 PM

Off with the pixies again, Robbie I see; sufficiently so to imagine any Australian government could or would ever dare to tell a bank it could not exercise its part of a legal contract. What are you blokes ingesting up there, Robbie? Is it all home-grown? Btw, whose greed are you referring to, Robbie? Surely not your fellow growers? And what is this rubbish of "half the going world price with twice the going cost of production that everyone else has". Where does that crap come from? If it were true, you should not be there, should you? Even a mug RARA should be able to see that, surely?
25/09/2014 6:35:15 AM

Immediately place a moratorium on all bank force sales/repossessions/receiverships , whilst the govt is working with banks. Cattle prices are lifting and rain is around the corner. Give us a chance please.
Rob Moore
25/09/2014 9:17:24 AM

Your right Bushie - we should not be here and mine will all die if it doesn't rain soon. I would rather that than give them away to the theives again. You can't just step off the roundabout that one has worked on for the last 36 years. I'll do it on my terms. The Govt wrecked cattle Ind(live ex) and the Govt guaranteed Banks in GFC which wiped out any second tier comp and they have never been more predatory for profit. Of course the Govt could tell them to pull their heads in-if they wanted to.There is no one with the slightest light on in govt- that's the issue!BB my facts are 100%
Frank Blunt
25/09/2014 10:10:08 AM

Easier on the dole isn't it Bushie , your income is assured.
Ann Lawler
25/09/2014 12:59:45 PM

Support the Citizens Electoral Council political party ( if you really want a solution for farmers. The biggest multiplier of the economy is agriculture, and any sane government would immediately put a moratorium on farm foreclosures; set up a public bank to buy out farmer debt to private banks and then restructure that debt to what can be realistically repaid with low-interest long-term loans.
Ann Lawler
25/09/2014 1:01:18 PM

Of little consolation to debt burdened farmers is that the banks are in more trouble than you are, and instead of the government acting to protect you, they’re being courted by the banking industry to prop them up. The housing bubble is more profitable for the banks because they’re required to hold far less capital reserves than for lending to agriculture or business. Government decisions like the Murray Darling Basin Plan and banning of live cattle exports creates uncertainty and, banks can then exercise the “adverse event clause” thus restructuring debt or calling in loans.
Ann Lawler
25/09/2014 1:02:19 PM

The banks have to be put through bankruptcy re-organising, under a Glass-Steagall bank separation because predominantly they depend on the housing debt to on-sell as securities (derivatives). Australia’s banking system has in excess of $24 trillion dollars of derivatives being pumped up by an over inflated housing bubble encouraged by low interest rates and government negative gearing incentives. Now, the banks want legislation passed to ‘bail-in’ (seize) bank balances of bond and account holders to feed their addiction.
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