LIKE the political fate of its name-sake, the ‘Barnaby Bank’ remains delicately poised with its empowering legislation being hotly debated in the Upper House ahead of a potentially knife-edge vote this week.
Agriculture and Water Resources Minister Barnaby Joyce announced the Regional Investment Corporation (RIC) as a core agricultural election policy promise during last year’s federal campaign.
The federal agency is to be based within Mr Joyce’s department and aims to remove state bureaucracies to streamline the delivery of billions of dollars in drought support loans to struggling farmers and administer water infrastructure funding.
Shortly after the May federal budget where the new $4 billion facility was allocated $28.5 million for its set-up coasts, Mr Joyce also announced the RIC would be based at Orange in regional NSW by mid-2018, as per the Coalition’s decentralisation agenda.
The enabling legislation passed the Lower House in mid-August with amendments and is now being considered in the Upper House, as Mr Joyce also anxiously awaits the outcome of the High Court’s decision on his dual citizenship, eligibility question.
Labor and the Greens oppose the legislation along with two key conservative crossbenchers in Liberal Democrat Senator David Leyonhjelm and former Liberal and now Australian Conservatives Senator Cory Bernardi.
The Nick Xenophon Team (NXT) has expressed the support of its three Senators for the bill’s second reading stage.
Bt One Nation’s four members are still considering their position on the RIC in a party room meeting today which could potentially tip the balance against the empowering legislation.
Australian Greens Senator and agriculture spokesperson Janet Rice said the RIC would be nothing short of a “National party slush fund”, which would give “unfettered” power to the minister “without parliamentary or even cabinet oversight”.
“The Greens know how important it is for farmers struggling with drought to be able to access finance, and for critical, well planned and sustainable water projects to be able to be funded,” she said.
“If that’s what this bill achieved, the Greens would be able to support it - but alarmingly the RIC would be undemocratic and unaccountable, giving the minister complete discretion to create new classes of loans and even determine what the objectives of the Corporation should be.
“What’s more, the minister would be able to direct the RIC Board to fund specific water infrastructure projects without needing a cost/benefit analysis, any environmental impact statement or undergoing any conflict of interest considerations.”
Senator Rice said giving so much power to a minister who already had a history of pork barrelling and “poor governance” wasn’t in the national interest or the interests of struggling farmers.
“Whether it is the Australian Pesticides and Veterinary Medicines Authority (APVMA), the Murray-Darling Basin or in his new responsibilities overseeing the Northern Australia Infrastructure Facility, we know Minister Joyce has form,” she said.
“We see Minister Joyce’s announcement that he intends to locate the RIC in Orange, an electorate the Nationals lost in a bruising by-election last year, as an indication of how the minister intends to use the Corporation.
“It will be nothing short of a facility to pork barrel resources to the electorates that suit the political objectives of the Nationals rather than the needs of Australian farmers.”
But NXT leader Nick Xenophon said he supported the bill’s second reading stage and there was “real scope and real benefit” in having a regional investment corporation.
“I have long advocated that we ought to have a revival of the Commonwealth Development Bank, something that was established in 1960 by the Menzies government,” he said.
“It was a mechanism to prevent the feast-and-famine cycle for farmers - the boom-bust cycle of agricultural communities where a drought, adverse crop conditions or adverse weather could hit the cash flow of a farmer.
“The Commonwealth Development Bank was there for a number of years to actually provide some certainty and stability for rural communities.
“There are agricultural businesses that can't get finance through conventional means but can still turn a profit and be a good investment, but commercial banks, for whatever reason, won't provide finance because of the boom-bust nature of regional businesses of agricultural endeavour.
“That bank was wound down - I think by the Keating government in the early 1990s -which was a mistake.”
Senator Xenophon said the benefit of the RIC, given the difficulty agriculture businesses had in getting finance, “will be considerable” but “appropriate” transparency and accountability mechanisms were needed, within the bill.
Senator Bernardi said the RIC bill was being discussed just weeks ahead of the Select Committee’s Lending to Primary Production Customers report being tabled on November 29, which was an inquiry initiated by One Nation which he supported, along with the Coalition; ALP; and NXT.
He said there was “no doubt the major banks struggle to understand farmers” and the stress they come under, during periods of drought and other unforeseen climatic events that affect agricultural production.
“The big banks struggle to extend the grace to farmers that they need due to the sporadic nature of their cash flow,” he said.
But he said competition in the banking sector which was occurring including for rural finance was an answer to the problem being debated, rather than more government intervention.
“When confronted with every single market problem, even if government created the problem in the first place, the answer for these people is to expand the role of government to fix the problem that the government created originally,” he said.
“It was Ronald Reagan, I think, who said that there is nothing as like perpetual life as a government program because they're constantly trying to fix their previous mistakes rather than admit it was a complete disaster, move along and start something else.
“This Regional Investment Corporation Bill is no different to that.
“This is effectively a federal takeover of the distribution of drought relief and financing.
“In some respects it is back to the future, because we're going back 43 years and reinstating what is in effect the Commonwealth Development Bank.”
Senator Bernardi said the RIC was not a small-government measure or one designed to reduce the size, scope and reach of government and in fact was “quite the opposite”.
“It's engorging government,” he said.
“It's providing even greater authority to the Commonwealth government at the expense of the principle of federation and also at the expense of this whole notion that those closer to the action are better placed to make decisions on that.
“So it's not a decentralisation measure; it's a centralisation measure.
“It has all the hallmarks of socialist politics and Keynesian economics - it is, perhaps, also a potential breach of our Constitution.
“This regime may indeed get through.
“I, and on behalf of the Australian Conservatives, have severe concerns about it.
“I'm not convinced it is the right approach to the age-old challenge of farm financing.”