Subjects: Drought relief measures.
E&OE……………………………………………………………………………………
PRIME MINISTER:
Well ladies and gentlemen, I have called this news conference with my colleagues the Deputy Prime Minister and Warren Truss, the Minister for Agriculture, to announce some new drought relief measures which are estimated to cost $368 million over a three year period, and this is on top of the estimated $360 million for covering likely declarations of Exceptional Circumstances up until the decisions that I am about to announce.
What I’m announcing today is that in addition to current arrangements, we will provide six months income support – that is what is colloquially called now the interim assistance – when a prima facie case of Exceptional Circumstances is established for all eligible farmers in areas anywhere in Australia suffering a rainfall deficiency of one in 20 years over the period March 2002 to November 2002, and the cost of that proposal is $134 million.
As more than 80 per cent of all farmers in New South Wales are in areas that meet this criterion, eligible farmers in the whole State will be entitled to immediate income support on this interim basis. And should the proportion of farmers in other States reach 80 per cent, the same declaration in relation to the entire State will operate.
In relation to the other entitlements where Exceptional Circumstances are declared, they will continue to be governed by whether or not, on a case by case basis, Exceptional Circumstances are declared in various parts of Australia. In addition, we are going to provide an interest rate subsidy on new and additional commercial loans up to an aggregate of $100,000 for the loan for the purposes of stock support and drought recovery for eligible farmers in the areas receiving drought interim or Exceptional Circumstances income assistance. In other words that additional support will be available for any farmer currently receiving interim assistance or Exceptional Circumstances assistance, or who under the expanded criteria I’m announcing today become eligible for that help. The rationale for that is very much bound up with giving people the capacity to maintain their breeding stocks and to prepare themselves for recovery from the drought.
We’re also going to provide, in recognition of the severe impact of the drought on small businesses, we’re going to provide that where a small business is in an area which is declared as being entitled to Exceptional Circumstances, that small business will be entitled to an interest rate subsidy, once again on existing or new commercial loans of up to $100,000. Those subsidies for small business will be subject to eligibility criteria which will need to demonstrate that the business has been severely undermined by the drought.
We’re establishing Drought Force, which is a Work for the Dole type programme, in drought affected areas to develop and carry out activities that have a skill retention and drought mitigation flavour. The full press release with all the details of the eligibility criteria will be made available.
Can I say that these new measures are recognising the prolonged and widespread character of this drought. They also recognise that when a drought of this severity affects Australia, we must not only provide income support for people who are left without income, but we must also provide them with the wherewithal to maintain their breeding stock and also lay the basis for recovery. It is equally the case that a drought of this severity robs country towns and their businesses of the liquidity and purchasing power that is in the hands of farmers when they are enjoying better times, and it is therefore very important that small businesses in areas that are declared as being in Exceptional Circumstances receive some kind of support to assist their liquidity position.
This is a very comprehensive and valuable addition. It recognises the crucial importance of maintaining the capacity of Australia’s farmers to recover when the drought ends. The current advice we have from the experts is that the drought may not break until March or April of next year, and then of course there is no guarantee of that. It is already the case that in many areas of New South Wales, this is the worst drought in 100 years. Seventy-five per cent of Australia, or very close to it, is suffering either a severe or major rainfall deficiency and on any criteria this is an abnormally severe drought and one that therefore requires abnormally strong and supportive measures.
And I want to thank Warren Truss in particular on behalf of the Deputy Prime Minister and myself for the work that he has done in representing the interests of people in drought affected areas. I found the visit to different parts of New South Wales several weeks ago as a valuable further understanding of the severity of the situation.
JOURNALIST:
Prime Minister, do these measures presume drought to break in March or will it cost more [inaudible] ?
PRIME MINISTER:
We all hope the drought breaks as soon as possible, and sooner than March. We think they are a reasonable and appropriate response to the current situation. I don’t think I would make so bold as to say they’re posited upon the drought breaking at a particular time, and you obviously do have to keep all of these things under review and obviously if it rained tomorrow and there was an extraordinary improvement, then one might have a different view. But there is no indication of that. It’s probably not likely according to the advice I have about the Southern Oscillation Index and all of those other things that describe these, and I am very wary of using such expressions. But the bottom line is that this is an incredibly severe drought and yesterday when I was going around the fire stricken areas with the New South Wales Fire Commissioner Mr Koperberg he said everything is just so damn dry because of the wretched drought that has affected Sydney and most of New South Wales, and people have just not experienced anything like it in the past. And what we face is even if it did rain tomorrow, that doesn’t end the farmers’ problems. I mean I’ve got a couple of people here who know a lot more about that than I, but they will testify to the fact that even if it poured tomorrow and the heavens opened and the rivers flowed again, it would be quite a while before people were able to get out of it. And the crucial challenge is to hang on to your breeding herds, and in other droughts people have been able to agist their stock, but there’s so little of that now. I met one lady who said that she’s spending $1,000 a week to keep her stock alive, a $1,000 a week, now that’s $52,000 a year, I mean that’s just horrendous and if those breeding herds are lost then even if its rains for the next six months it’ll be a tragic loss to the country, to the people and to the economy.
JOURNALIST:
Mr Anderson would you have liked this package to go further?
MINISTER ANDERSON:
No I think it’s an appropriate measure at this point in time. We’re all hoping as the PM has said that it breaks sooner rather than later. It is based, and Warren can add on this, it’s based around what we believe it coming forward. The reality is that if it doesn’t break until March there will be new areas coming forward. I make the point that exceptional circumstances is driven by, what is the term, entitlement, so it’s not as if we’re putting that on the table and saying no matter how bad it gets that’s it, it’s entitlement driven, and we will continue to meet the circumstances as they arise. We all hope they break.
JOURNALIST:
There are eligibility limits on personal assets. What level are they are and are they designed to stop Pitt Street farmers getting drought relief?
MINISTER ANDERSON:
Well the answer to the second part is yes and they’ve been consistent now for some years. For memory it’s somewhere around about $180,000 in all farm assets excluding superannuation for a partner in a business and we think that’s fair and reasonable. Can I just remind people though that I believe that the essential approach the government has taken in recent years has been in fact the most positive, not withstanding what we’ve done today, contribution to people’s capacity to cope of all. Lower interest rates, if I can put it this way, we never comment on the currency for the genuine free float of the dollar, and of course the measures contained in Agriculture Advance Australia, particularly but not only farm management deposits which has allowed farmers in areas where they’ve been able to sock some money away to do just that, those measures are extraordinary valuable and are creating a buffer for many farmers of a sort that hasn’t been there before. Unfortunately in the areas for example we went to, we’ve all been to in recent times in western New South Wales, wool growing areas, they just haven’t had a chance to build up any reserves at all and they’re in diabolical circumstances.
JOURNALIST:
The Prime Minister talked about the woman who's paying $1000 per week to maintain stock. How would these measures assist her?
PRIME MINISTER:
It depends a bit on the financial arrangements.
MINISTER ANDERSON:
Very much so. And we didn’t go into that, we didn’t ask her, and I think she was a very component, it was a very competent family, the stock looked to be in good order but they’re obviously paying through the nose to keep it that way for fear of losing genetics they’ve built up for a long time. But in essence assuming that they had no off farm assets and are eligible for all assistance, that would certainly make them available for the family support which is between $12, $14, $15,000 depending on how many children you’ve got, that sort of thing. Assuming they had say a $300,000 debt they’d be eligible for the interest rate subsidies that you’d normally get under exceptional circumstances once that is tripped and under this package they would also of course be able to take out a commercial loan of up to another $100,000 and on those figures that would carry them for a long time and we carry the interest essentially on that, for that two years during the recovery period. So it’s a generous burden sharing arrangement designed to give people practical help, and may I say it in these circumstances some encouragement and some hope because I think to a large extent knowing that the broader community’s drawing alongside both through the personal side, the farm help and the rain train and so forth programmes that have been out there, I think that’s helpful, now knowing that the Government is there as well is a big morale boost and that should not be underestimated. It is important to people who day in, day out are struggling with the emotional strain and the physical strain of trying to keep their stock alive, keep their families intact and so forth.
PRIME MINISTER:
I think we better go, we’re still having a Cabinet meeting, one more question.
JOURNALIST:
The government throwing the farmers a financial lifeline. What about the banks…are you happy with them?…(inaudible)
MINISTER ANDERSON:
Ah no, I’m glad you asked that because I spoke with the Prime Minister about it over the weekend. I’m going to call them in all with Warren, probably next week when we’re in Sydney and have a talk to them because making this work will be dependent upon their good will, if I can use that expression in relation to the banks, I believe the bank and their shareholders have a real interest I helping us secure the viability of this important part of the Australian economy. Every one of breeding calves we can save, even one of those youths that we save is a little factory that generates wealth for the entire community. And the banks do have a role to play here and I’ve spoken to many of them and Warren has as well, they’ve assured us of their good intent but we will want to sit down and talk to them about this package and we will most certainly be putting very strongly the view that they should be helping us as I believe their shareholders and the broader community would to cooperate in producing the best possible outcomes and nothing would make me angrier than to have a recurrence of some of those stories about the very nasty spiking of margins for people in difficult circumstances that we got a few years ago. I sincerely hope we’re not going to hear those again.
PRIME MINISTER:
Thank you.
[ends]