Subjects: Drought; mid-year economic review; Exceptional Circumstances; property rights
E&OE...........
PRIME MINISTER:
[tape begins] Farm Management Deposits. The book is never closed when you are dealing with a drought of this magnitude and one of the things that we do need to do is to make certain that when the drought does end people have a capacity to recover. And that';s something that requires further consideration and further thought. One of the advantages of having a Deputy Prime Minister, if I can put it that way, who is so familiar with these issues is that one has first hand Cabinet advice on what needs to be done and I';ve had an opportunity today to talk to people and to get some assessment of some of the recovery challenges that they see.
JOURNALIST:
Was it worse than you expected to actually come out and see it for yourself?
PRIME MINISTER:
Well I have seen droughts before and it was every bit as bleak and despairing as I expected it to be.
JOURNALIST:
Is it true that you helped pull a sheep out of a dam in Cobar?
PRIME MINISTER:
That was handled by Mr Anderson and Mr Cobb. I was there in a sort of a superintendent's role.
JOURNALIST:
Are you surprised at the impact of the drought on the mid-year economic outlook?
PRIME MINISTER:
No, I expected that it would take half to three-quarters of a percent. I indicated some weeks ago that I expected growth to be closer to three percent, or come out at three percent. The good thing about the mid-year economic review is that it shows that the rest of the economy is holding up very strongly.
JOURNALIST:
Mr Howard a lot of people are seeing that people can';t afford to feed themselves, let alone animals. What sort of assistance can the Government provide?
PRIME MINISTER:
Well we';re providing a lot of assistance through Exceptional Circumstances. That is estimated conservatively to involve this year and next year a total of about $370 million, and if there are more areas declared than we expect, then that figure will automatically rise. So that is no mean sum. We';re not putting a cap on it. There is no cap on the cost of Exceptional Circumstances. I want that understood. Whatever is needed to fund Exceptional Circumstances in any areas of Australia that are declared, whatever is needed will be made available. So it is a completely uncapped commitment in that sense. Now as to the longer term issues – the recovery, the preservation of breeding stock, which is so very important for the recovery – they are some of the issues that Mr Anderson and I and our other senior colleagues will be addressing over the coming weeks.
JOURNALIST:
So the $4 million that Mr Costello announced in extra drought relief today – you';re saying that that';s not the end, there could be more before the end of the year?
PRIME MINISTER:
Well that presumably relates to the announcement that I made and that obviously is not the end of the matter.
ANDERSON:
Just on this area, following from Peter';s question, it would be useful I think for your listeners to be aware that Exceptional Circumstances applications for quite a few of these Shires are going to come forward collectively in a matter of days, but will cover Coonabarabran, Narrabri, Moree, Gunnedah which is part of Tamworth, and Yalleroi which is the Warialda area. And we';ve said that we will certainly seek to deal with those as expeditiously as possible.
JOURNALIST:
[inaudible] fast tracking of EC so you can make sure that it goes ahead as well in other drought declared States?
PRIME MINISTER:
Yes. What we';ve done to [inaudible], we';ve said in September that when the application comes in, if on the face of it it';s a genuine application we will commence the income support assistance six months from that date and then if it';s declared Exceptional Circumstances after proper investigation, well the other entitlements kick in. Now that is a huge acceleration of the process. But under present arrangements we have to wait until the States put in applications. But I can assure people that as soon as applications come in, they will be dealt with quickly and Mr Anderson and I have signed off on some further administrative arrangements to ensure that if any come in over the Christmas/New Year period, they will be dealt with expeditiously and there won';t be any delay because people might be away on leave or any of that business.
JOURNALIST:
How have you felt about – I mean Bob Carr and Co., they';ve been playing a bit of politics with the Federal Government over drought relief and who is paying more and what is going on. Is it really frustrating for you?
PRIME MINISTER:
Well I think people who play politics between the State and the Commonwealth on this sort of issue are being contemptible. Farmers don';t want the game of political ping pong between Governments on this issue. They want people to help them. And that';s what we';re endeavouring to do.
JOURNALIST:
Will you look at changing the EC criteria so it doesn';t involve State Governments and you';re able to…
PRIME MINISTER:
Well that is one of the things that I will look at, yes. My experience has been that anything the processes of two Governments, inevitably you get delays and difficulties. It';s far better to have total control over something or for another level of Government to have total responsibility for it. Whenever you get a mixture there is a tendency, and particularly because States like to say the Federal Government has got all the money, for those politics to be played. But the last thing drought-affected farmers want from their political leaders at the present time is name-calling, blame shiftings. They want help. They want it genuinely and compassionately and speedily.
JOURNALIST:
[inaudible] you can';t make it rain, but what can be done in the longer term to help the economic plight of rural communities suffering from the drought?
PRIME MINISTER:
Well the best thing you can do is to give them a world-class competitive economy, which we have done. One of the things that is really working for farmers in this drought is that interest rates are dramatically lower than what they were 10, 15 years ago. And that means that when it does rain and people go into a bit of debt to rebuild, they won';t have to pay ferociously high interest rates of 18, 19 and 20 percent – which was the norm in the 1980s. So that';s the first and most important thing we can do as a Government. I think we have to provide a program to help farmers rebuild. I think you do have to have an effective support mechanism when the drought comes along. You won';t be able to help everybody. No matter what the circumstances are, there will always be some people who will find it difficult to survive and difficult to move on. But providing people with a strong economy is very important. The other thing we have to do in this country is to solve the very important challenge of water allocation. And the key to water allocation in Australia is that people should have an enforceable, nationally acceptable property right. This is a modern version, the 21st Century version of the old rail gauge problem in Australia. You had different property rights in different parts of the country. And what I want to see is a property right regime that is nationally consistent. You don';t have to call it the same thing but as long as a property right in Queensland is given full faith and credit in South Australia or Western Australia, then you';ve got a suitable… and when you do that, and providing you recognise that if people have water rights taken from them they';re entitled to compensation and they are – I mean you say to a farmer, we';re going to cut your water allocation by 60 percent, we';re not going to compensate you, and you';re doing that in the teeth of a very severe drought, I think you';re kicking that farmer in the teeth.
ANDERSON:
Can I just add, if I may, following that BBC question – I made the point in there that we don';t believe in subsidising for the benefit of your European listeners. We really don';t. And as a farmer in this area, we don';t. I';m a mixed producer in this very district. I can say that in all honesty the various reforms, the benefits of Government policy, expanding markets, a genuinely free floating currency, all of those things has resulted in a good average (inaudible) last year in our best farm performance ever in my 45 years and then however when you get a reality like this we will probably produce our worst ever, but that is no fault of government, no fault of the government. But I just make the general point that I made in there that in an Australian economy doing very well it makes neither economic nor social sense to leave a sector like this somehow dragging while the rest of the economy is doing very well. And that';s why I think in an economy like ours my view is very strong, we ought not to go down the subsidy, the handout road, the European, the American, the Asian road, it';s the wrong road, it doesn';t work, you are (inaudible) losing more farmers than we are but…
PRIME MINISTER:
And you';re paying much more for your food.
ANDERSON:
Much more for your food. But I do make the point that we have to be flexible enough in this country, if for no other reason than in the interests of social cohesion, to make certain that a strong economy doesn';t leave part of the community like the relatively small part that is now rural Australia but you know that $7 billion that's going to be stripped out of the economy, guess where it comes from? You';ve got to put a bit of it back?
JOURNALIST:
Being a farmer, do you sometimes think that maybe other farmers might need help in education or how to better prepare themselves economically for drought…
ANDERSON:
Well that';s a very good point. In 1997 the Prime Minister and I launched a package called Agriculture: Advancing Australia. It was basically designed for self-help, farm management deposits which have been an outstanding success, 44,500 farmers have taken the opportunity to sock away some money and at a tough time like this they';re now pulling it out and drawing on them. That was part of it. another big part of that package though was FarmBiz which was to give farmers access to the very sort of professional and constant skills operating programmes that other professionals take for granted. If you';re a lawyer you';re constantly upgraded your skills, if you';re a medico you';re doing the same. And that';s precisely where we';ve gone and a lot of farmers tell me that';s been very very valuable and that';s at the heart of what I say, we want to move away from any sort of subsidisation base like the way other western countries do, it doesn';t work anyway, but in a country with a hugely variable climate like ours it is right for us to recognise Exceptional Circumstances and to ensure that a helping hand is provided. And just remember that in relation to every one of those breeding animals out there, a cow or a sheep or whatever it is, it';s a little factory - and it might be technically owned by the farmer and seen as the farmers possession but they actually are little factories that produce wealth for the entire community - it's just that the farmer is foundational owner offer.
JOURNALIST:
… talked about funding drought relief for local businesses and rural businesses affected by the drought. Will you provide drought assistance for them?
PRIME MINISTER:
Well that';s one of the things we have to examine and that';s very relevant to the recovery part because what happens in a drought is the businesses really get hit and hurt later on because the purchasing power is drained out of the farmer (inaudible) and they can't buy things, they run out of funds, or go past the point at which they can even put it on the (inaudible) and that is a really big problem and that';s one of the issues we have to examine.
JOURNALIST:
Prime Minister, the farmers are united in their call cash grants to actually get money into the community [inaudible] referred to. The other is, I guess, the most crucial crisis facing farmers at the moment is getting feed or money to their breeding core. Will there be any assistance coming forward to assist with the breeding core?
PRIME MINISTER:
Well, [inaudible] I said a moment ago, that is one of the issues that we need to examine…
JOURNALIST:
[inaudible]
PRIME MINISTER:
We're going to examine that and I'm not going to make an announcement about it now. In relation to the cash grants - Exceptional Circumstances involve cash and that involves income support and income support is the most valuable form of assistance that people in very difficult circumstances can have. And that income support is used by people to buy the necessities of life, which in turn provides income for small business operators.
JOURNALIST:
But cash grants to help with their business because that's what hurting now.
ANDERSON:
Well, they do get grants on their [inaudible].
PRIME MINISTER:
They do get…
JOURNALIST:
[inaudible]… they get low interest rate loans…
PRIME MINISTER:
… that's very valuable.
JOURNALIST:
But they go to the bank.
PRIME MINISTER:
No, no. I'm sorry… but it goes off their liabilities. And you know, I'll just go back to what I said earlier - if you get income support and you use that to buy groceries and to buy other things that is going to the community.
JOURNALIST:
Rural people are very proud people. How would you encourage them to apply for funding for assistance?
PRIME MINISTER:
Well, I think they've done it very well…
JOURNALIST:
[inaudible]
PRIME MINISTER:
…when you say… I don't think they had any difficulty putting their case. I think they put their case very well. They put their case very well to me today, they put their case very well to Mr Anderson and I have a very good idea based on what Mr Anderson has said to me and it's confirmed by all that I experienced today and on other occasions when I've met people who've come to drought afflicted areas of some of the things that they would want. It's a question of us making a proper assessment of the best way to assist. The best way to assist at the moment is to let the exceptional circumstances system operate.
JOURNALIST:
Sure.
PRIME MINISTER:
And then to give some thought, as we're going to do, to some of these long term issues in which I've spoke…
JOURNALIST:
Being proud people some are reluctant to ask for assistance. Last week I heard of a story where these people were actually going to sell their breeding stock prior to asking for assistance, that they'd rather go and sell everything they've got rather than come to you guys for help, really it should be the other way around because in 20 years time or in five years time our breeding stock won't be around and you know we're going to have to start from scratch.
PRIME MINISTER:
Well there will always be some people who will be reluctant no matter what the circumstances are to either ask or accept the assistance of the Government and that's in their nature, there's always going to be people like that. What we need to do is to have a range of measures that help people cope with the drought as it affects them, also provides the basis for the recovery of the economy and the community when the drought as ended. They're the things that I've been talking about for the last 10 minutes.
JOURNALIST:
[inaudible]
PRIME MINISTER:
Oh, yes… but my position is clear. I'm not attacking the state government. I'm not interested in having a fight with the State governments over this. I don't creally are what they do or say. I mean, we have our responsibility and we will meet them and if we can make the exceptional circumstances system work better by eliminating the role of one level of government, then I'm interested in looking at that. But you've got to make the present system work as best you can. We have shortened the consideration period by saying that as soon as you get the application, its prima facie okay, money starts to flow and as soon as we get the application, we'll consider it. There won't be any delay as far as we're concerned.
JOURNALIST:
Prime Minister, the …Trader's Association, will see you this afternoon… if they don't get assistance by Christmas…
PRIME MINISTER:
Will they?
JOURNALIST:
Apparently…[inaudible]
PRIME MINISTER:
Well, I think I'd better [inaudible] myself rather than to…
JOURNALIST:
But isn't that option…?
PRIME MINISTER:
No, I'm not going to anticipate what they're going to tell me. Thank you.
[ends]