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Government Announces $320 Million Drought Assistance Package

The federal government has announced a drought assistance package worth $320 million.

The package includes more generous income support arrangements, $280 million of concessional loans, $12 million for water infrastructure, $10 million for pest management and $10.7 million for social and mental health services.

The package was announced by Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce at a joint press conference.

The National Farmers’ Federation Matt Linnegar welcomed the drought relief, as did the ALP, although the Shadow Agriculture Minister, Joel Fitzgibbon, said it should have been announced earlier.

Joint press release from Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce.


Australian farmers suffering through the crippling drought will be able to access greater government assistance sooner as part of a $320 million comprehensive drought support package.

The Government will bring forward more generous income support arrangements for farmers and their families; extend concessional loans to eligible drought affected farm businesses; provide funds for water infrastructure and pest eradication; as well as funds for counselling support services for farmers.

Farming is a very significant part of our economy and will play a critical role in our economic future. This is a government determined to stand by the people of Australia in good times and bad.

As part of the package:

  • More generous criteria for accessing income support will be made available to farmers from 3 March 2014 instead of 1 July 2014.
  • Drought Concessional Loans totalling $280 million will be allocated to give eligible farm businesses the resources to recover from the effects of drought.
  • To assist drought affected farms to access water, $12 million will be added to existing emergency water infrastructure schemes, including supplementing those in NSW and Queensland.
  • $10 million in assistance will be available for pest management in drought affected areas.
  • $10.7 million will help increase access to social and mental health services in communities affected by this drought.

Farm businesses and farm families across Australia are suffering financially and emotionally as a result of the prolonged drought.

This drought assistance package is to support farm businesses, families and communities that are experiencing hardship and to help them recover when the current drought ends.

Transcript of joint press conference held by Prime Minister Tony Abbott and Agriculture Minister Barnaby Joyce.

ABBOTT: It’s good to be here with Barnaby Joyce to announce the Government’s response to the drought which is currently so severely affecting many famers in Australia, but particularly in western Queensland and western New South Wales.

As most of you would know, Barnaby and I were out in western New South Wales and western Queensland about ten days ago and the package that we announce today has been refined in response to what we learnt from that particular visit.

Essentially, what we announce today involves five elements: much easier access to income support for drought hit farmers, it involves a greater quantum of money available in concessional loans to drought hit farmers, it involves additional federal assistance to the states in their feral animal eradication programmes, additional federal assistance to the states for water infrastructure grants for drought hit farmers and additional funding for existing programmes to help people in personal crisis in drought affected areas.

The determination of this Government is to stand by Australians in good times and in bad.

We can’t work miracles – there are no magic wands – but we will do what we can to help in difficult times and plainly, for quite a large number of farmers right now, these are very difficult times.

Some areas are experiencing historically low rainfall levels and while the best thing we can do is hope and pray for rain, obviously it’s important for government to do what it can in the interim.

The great thing about this particular package is that it is building, largely building, on existing programmes, but it’s making them more responsive to the particular needs of farmers that are hit by drought.

I want to thank the Minister, Barnaby Joyce, for the work that he’s been doing. Basically, Barnaby has been looking at this issue since late last year. Almost the first acts that Barnaby took as the Agriculture Minister were to begin additional Commonwealth assistance for water infrastructure grants, in conjunction with the states and to begin the process of making the concessional loan programme more useable to farmers in trouble.

I should just finish on this point. Some you might be inclined to say, well, this is a special deal for farmers. No, no – this is akin to a natural disaster and state and federal governments have always stood by people, wherever they are, who have been hit by natural disaster.

Some of you might be inclined to say this is a relaxed or super-favourable social security regime for farmers. No – it’s recognising that a farmer in trouble is in a very difficult situation and in a rather different situation to most of us when we’re in trouble because if your farm is in dire drought, you can’t sell, you can’t borrow, you can’t leave, but you’ve got no money and that’s why it’s right and proper that you should have access to income support under slightly different arrangements to those that apply to the rest of us. I think that the Australian public get that. I think that people everywhere understand that you can’t have cities without a countryside to sustain them; you don’t grow food in your backyard, by and large. You need the countryside to grow our food, to supply our cities and we appreciate that that’s the great gift that country Australia gives to all of us.

JOYCE: Well thank you very much, Prime Minister and I’d like to thank you from the start. As you all know in this room, you’re lucky if you can get the Prime Minister for five minutes and to have him on the road for two days was great and it gave us the capacity to show you first-hand the people who we are dealing with.

We are dealing with people who are mums and dads and this is why it’s so humbling when we hear the vox pop that was taken around Central Station in Sydney, when people say, ‘We get it. We understand it’. These are mums and dads, these are people who have done their very best for as long as they can to deal with the issues form their own resources, but there comes a time in every person’s – basically their business or their life – where you get to the end of your resources. What we’re looking at with these people, is that we’re getting towards two years – two years without income – and I don’t think any reasonable person would say, ‘Well two years without incomes is just something that is par for the course’; it’s not.

We’re not dealing with people who are basically in an unviable business. The agricultural sector has a great future in front of it and we can see that expressed in the price for live cattle as they move from the port of Darwin at $2.30 a kilogram, for the price of wheat, which is in excess of $300 a tonne, for the price of cotton, in excess of $500 a bale. What this clearly shows is it’s an industry with a great future, but a government cares for its people and it cares for its people but it always, always relies on its people to look after themselves as much as they possibly can.

This package has three essential parts: obviously the concessional loans at $280 million, at 4 per cent over a period of five years where you can borrow $1 million or half of what you owe to the bank, whatever is the lesser, and the reason we do that is so that we are in partnership with the banks and so we have proper credit control and so that there is a sense that the Commonwealth is looking after the asset that it holds. It will be administered – those loans – with the state entities that are already doing a good job on this and one of the advantages of this package is that we use the facilities are already at our disposal – Queensland Rural Adjustment Authority, New South Wales Rural Adjustment Authority, Victorian Finance Corporation. They are already in this space and they are already dealing with these issues.

The next part is to make sure we maintain the dignity of the house – the dignity of the house so that people can pay their chemist bill, keep their power on, keep their phone on. What we noted with the settings and the Transitional Farm Family Payment is that so many people were removed from that. We went and I visited
houses where they had no income at all – nothing – nor were they entitled to any income. That’s something that we should do our very best, to make sure that we keep the dignity of those households that are so far removed from the side of the cities.

The next part – and it was great to discuss these with the Prime Minister – is dealing with such issues as wild dogs. There’s not much point in feeding out sheep if onto the line come the sheep, and the wild dogs, and the dogs eat the sheep. Now, some people might think that’s perverse or that’s not the reality; well it is the reality. It’s an absolute reality for so many people in these areas. So, issues such as that have to be dealt with.

Water infrastructure, so you can get greater coverage of pasture, is also vitally important and it’s been in a programme that in our first iteration of that, which was one of the first things that our Government did, was so well received that people say this is an issue that is so important, because it gives us the capacity to properly cover the area so we don’t have all the stock congregating around one watering point and therefore not getting the proper coverage.

And also mental health, and even myself last night, I take calls all the time from people who feel that their position is dire. They are looking for someone to talk to and if there’s anything you do in this job it’s one of always remembering that you’re a servant of the people and when people ask for help, you do your very best to try and help them.

QUESTION: On concessional loans, you’re dealing with quite big amounts here and the drought in some of the areas affected by the drought are pretty marginal country areas. Is there a danger that that sort of help, in fact, stops structural adjustment that’s going to be necessary in the long term, that people prop-up themselves in the short-term but in the end, it’s going to have to change?

ABBOTT: Michelle, there’s always a danger – there’s always a danger – but we’re doing our best to avoid it. In order to qualify for these loans, yes, they will have to be drought hit, but they also have to be viable businesses. These loans are not to prop up unviable businesses; they are to help viable businesses to adjust to the drought.

QUESTION: Prime Minister, why is there a need for concessional loans when you’ve got the cash rate at historical lows? I mean, it seems that it’s slightly absurd.

ABBOTT: Sure, the cash rate is at historical lows, but the rate that you can get from the bank is not necessarily at historical lows. At 4 per cent is very, very good. If you’re a business that goes to the bank for a normal loan, you’ll certainly be paying maybe double, maybe more. So, these are valuable assistance to farmers in trouble, farmers who need to restock, who need to replant because of the drought. Now, they won’t be for everyone. This is not a handout as such. It is a hand-up. So, it is rather different from previous drought assistance that has been offered by the Commonwealth. I think it’s both fair and fiscally responsible.

JOYCE: To give you an example, I have not come across farmers who are getting money at 4 per cent. I have not met farmers who are getting money at 4 per cent. I bet you if they are getting money at 4 per cent they will not meet the criteria for us assisting them.

I have come across many farmers getting money at best 7 per cent or up to 8 per cent and into 9 per cent. So, let’s say 8 per cent and we’re offering them a million dollars at 4 per cent and if they just use it for the purpose merely of restructuring – that’s going to be a $40,000 a year advantage to them and over five years that’s $200,000. I tell you what; if you drop $200,000 in the pub on a Friday night you’ll bend down and pick it up. What I can be absolutely certain about is this is a real benefit to them. What’s more, and the beauty of this, is that obviously the Commonwealth borrows the money cheaper than 4 per cent – so, it’s not the cost to us.

QUESTION: Prime Minister, obviously many of these farmers are in terribly dire circumstances. What happens if at the end of the five years they can’t make good on their loans?

ABBOTT: If they can’t make good on this loan, almost certainly they won’t be able to make good on other loans and they will be unviable. So, we’ll have to have the normal consequences but these concessional loans are going to be administered by the adjustment authorities that the states have, invariably in conjunction with the banks. That’s why I think this is economically responsible, very economically responsible, as well as a fair go for drought-hit farmers.

QUESTION: The weather bureau’s predicting a dry autumn, particularly across central and western Queensland. Are you prepared to dip into the Budget, yet again, to fund another drought package if it extends longer? And just related to that, what is the quantum of money in terms of the extra spending out of the Budget from this $300 million package?

ABBOTT: It’s a $320 million package at one level because there’s an extra $280 million worth of loans in the capital account and there’s $40 million of spend in the current account. Look, this is a response to the current drought at the current time. If circumstances dramatically change, obviously the Government will respond further. We think this is a significant and timely response to the existing crisis. If we get new difficulties, well, obviously we’ll adjust them because the job of Government is to respond intelligently to the developments of the day and that’s what I would hope to do at all times.

QUESTION: Isn’t that a Band-Aid approach?

ABBOTT: It’s the best approach that we can have. I should also remind people that there is an agriculture white paper – the preparation has begun. We’ll have that white paper by the end of the year and one of the issues that will be considered by that white paper is what improvements might be made to drought assistance over the very long-term.

JOYCE: Let’s not confuse the two issues of the here and now with what our Government is also doing which is long-term planning for the agricultural sector in the white paper.

Really, once we start talk about the hypothetical of what happens if it doesn’t rain, well what happens if it rains too much – we are to govern for the here and now. Our first iteration was a drought package, that was the first thing I brought into the Cabinet. This is the next iteration. We’re dealing with the circumstances that are before us and I think it is a bridge too far to say what if another event may occur.

QUESTION: Prime Minister, how many people do you think this package is going to help? Just getting back to Michelle’s point – there is real consternation in the farming community that some farmers who have adjusted their businesses before the drought are doing ok might be propping up those farmers who were in economic trouble before the drought hit. You would have, in effect, become the ATM of last resort for those farmers.

ABBOTT: There’s a sense in which those of us who are doing well are always helping those of us who are doing less well. The whole principle of a social security system, the whole principle of a progressive tax system relies on those who can afford it helping those who can’t afford it. So, this is inevitable in any needs-based system. In terms of the greater access to income support, it’s a demand-driven system but our anticipation is that this will help thousands. In terms of the concessional loans, our anticipation is that will help hundreds of businesses.

QUESTION: Prime Minister, on the interim farm household allowance, you say it will be subject to a different asset test than say, Newstart, for example. Are you waiving any asset test whatsoever? Can you explain how that works?

ABBOTT: No, we’re not. There will be the normal income and assets test except for this, you can have up to $2.55 million in net farm assets and still access income support.

QUESTION: Prime Minister, just to clarify, the $280 million of concessional loans, is that, over time, actually going to be revenue neutral for the Budget? Secondly, if a business in a position such as SPC were to come to you and request a concessional loan at 4 per cent, would the Government consider that request?

ABBOTT: It’s on the capital account in the same way, I guess, on a much larger scale the NBN was on the capital account and whether it ever comes on to the income account depends upon how it goes and if this scheme is well administered, as I expect it will be, it should stay on the capital account. The fundamental difference, if I may say so, James, between what SPC came to us with and, well, there are two fundamental differences between SPC and this. The first is that SPC came to us asking us for $25 million in the normal course of business. Drought of this severity is not the normal course of business. This is not just a once-in-a-decade drought. It’s a once-in-a-quarter-century drought in many places. In some places, it’s a once-in-a-century drought. That’s the first difference. The other difference is – and I don’t really want to harp on this – but SPC’s parent company was one of the most profitable companies in our country. I mean, SPC’s parent, Coca-Cola Amatil, made $215 million in after-tax profit in the last six months. So, if I may say so, there was a certain amount of cheek in coming to the Government and saying, “give us 25 million bucks,” when the parent company’s balance sheet is stronger than that of the Commonwealth of Australia – given what the former government did to the Commonwealth’s balance sheet.

JOYCE: Can I add something to that, because it’s really important? The administering agencies do this on a needs basis and I’m sure that if you presented and said, “I’m worth about $7 billion and I made a half-billion profit last year,” I don’t think you’re going to tick the box on the needs basis.

QUESTION: Mr Abbott, is this response an admission that the Coalition failed to take adequate drought policy to the election? Are you concerned by that given the warnings that were delivered to Canberra about the drought as far back as May last year with Queensland cattlemen? And Minister Joyce, just another question for you, in terms of the states, what contact have you had with the states because Minister Ludwig failed to do that when he originally announced this farm finance package.

ABBOTT: Well, if I could begin, what we’ve done is we have brought forward – well, there’s five elements to this package, but one of the elements, a very significant element, is the bringing forward of the arrangements that were agreed by the former government and the states early last year and they were essentially bipartisan arrangements. So, given the circumstances that applied in the middle of last year, we thought that was a good arrangement. Given the circumstance that now applies, we think it was necessary to bring it forward and that’s why these new income support arrangements will be available to people from Monday. Now, Barnaby is nothing if not a vigorous and active Minister and as soon as this matter was concluded by Cabinet last night he was in touch with the states and Barnaby has been having preliminary discussions with different people in different states for some time now.

JOYCE: Thank you very much.

As soon as this got through Cabinet I informed Minister McVeigh in Queensland and Minister Katrina Hodgkinson. I also was in discussions with the NFF. It’s about the process of making sure this mechanism hits the ground running and we have the capacity to do that. As far as a drought policy goes, we can’t be responsible for what the other government didn’t do. We can only do what we’re doing. Might I say that the first thing we did as soon as we came to Government was to deal with the issue of drought, and to hope and pray for rain. We started moving tens of millions of dollars into the drought affected areas through the farm finance scheme and also got a water package out. Now, this is the next iteration of that. It shows that we are actively managing the issue as it goes.

QUESTION: Will the money be distributed amongst the States like you did last time with more in Queensland and New South Wales, less in other States?

JOYCE: Colin, it will be distributed on a needs basis and quite obviously where the need is is where the drought is and we have seen both New South Wales, Queensland also in Southern Cross in Western Australia, around that area, we also have it down in South Australia in the northeast of South Australia, this is not a scheme that abides by lines on a map; it abides by needs and how those needs are addressed.

QUESTION: Why is it only in Queensland and New South Wales that are eligible for the funding for the water infrastructure?

JOYCE: We have nominally allocated money to these areas, but we have also had money in reserve that can be allocated to other States.

ABBOTT: Ok, Phil, other subjects?

QUESTION: Yeah on Qantas, Prime Minister, if I may. Ministers Truss and Hockey have confirmed you’re looking to amend the Sale Act. Do you see it as an inevitable consequence of that Qantas would probably offshore, you know, 10,000 or so maintenance workers so they can compete?

ABBOTT: Phil, what Qantas does has got to be a decision for Qantas management. Government does not run airlines. It’s a long, long time since government has run airlines and I don’t believe that government should airlines. The Labor Party used to believe that government shouldn’t run airlines. I don’t know what their current belief is, but certainly they used to believe that governments shouldn’t run airlines so what Qantas does is a matter for Qantas management and we want to ensure that Qantas management, as far as is humanly possible, don’t have any government-imposed ball and chain around their ankles and that’s the problem with the Sale Act: it is a significant restriction on Qantas’ freedom of manoeuvre and that’s why the Government is considering legislation to establish a level playing field in this area. Mark?

QUESTION: A couple of questions about this situation with Senator Nash. You told the House of Representatives that her Chief of Staff had been dilatory, I think was your word. She said today he did nothing wrong and that he’d offered his resignation. She also wouldn’t say whether she had offered her resignation to you or anyone in your office. Can you just clear up for us – was he dilatory? And did Senator Nash offer her resignation to you or anyone in your office?

ABBOTT: Mark, look, I know whenever there’s any suggestion of someone doing something that maybe they shouldn’t have, or someone having a role that maybe they shouldn’t have, everyone hyperventilates about who said what to whom and when and who knew what and when. If I may say so, this is a fairly minor case. All the decisions that Senator Nash has made are eminently justifiable and I support them and whatever the issues in respect of the staffer in question, they have been resolved by his resignation and the matter is now at an end.

Did she offer her resignation, Prime Minister?

ABBOTT: Look, the short answer is I had no such conversation with her, and this matter is at an end. I know that the Labor Party is huffing and puffing in the Senate today and I absolutely accept that the conflict of interest rules are important and they need to be adhered to and within a couple of days of the slightest suspicion that there was a problem or that there might have been a problem, the gentleman in question resigned and was gone and without wanting to make too much of a meal of this, I’d ask you to compare the way this Government has dealt with this, with the way the former government dealt with the scandal involving the former Member for Dobell who was – let’s face it – protected for three years.

QUESTION: Prime Minister, on Qantas, you’ve said you don’t want to put another ball and chain on the airline, but if the airline gets some sort of support from the Government, perhaps a debt guarantee or whatever you may do down the track, is it then fair, if you’ve given them a help up, for the Government to impose conditions, perhaps around jobs that you can’t move jobs overseas, and what do you say to some people in your own party who believe Qantas has been mismanaged and they should have a management change? Do you have confidence in Qantas management?

ABBOTT: Phil, it’s not for me to express a view about the management of a company. It’s up to the shareholders to be confident in the management of a company. Now I know that the Labor Party is trying to say that there’s a secret deal between the Government and Qantas under which we’ll do something in return for Qantas doing something. Well, there is no such deal. We would never enter into any such arrangement and whatever Qantas does is entirely a matter for the management of Qantas.

QUESTION: When you say, then, that you expect Qantas say to get its house in order, it sounds like you’re saying they should do that before the Government makes changes. What do you mean by that? And just on one other subject, we heard that Prime Minister O’Neill of Papua New Guinea had said to you he was still committed to resettling asylum seekers there. Can you tell us did he say that he was still committed to resettling all of the people found to be refugees on Manus Island and did he give you any explanation of how or where?

ABBOTT: Well, you’re asking two lengthy questions and the danger is that I will forget the first question in the process of answering the second question…

QUESTION: The first one was about Qantas.

ABBOTT: Yes, and I think I’ve already forgotten it! Just on the O’Neill question – Prime Minister O’Neill, whose friendship and cooperation I appreciate and Australia appreciates, has told me that he is fully committed to the arrangement that was made between PNG and Australia in the time of the former government. Now just repeat that Qantas question, Lenore?

QUESTION: When you say “get their house in order,” what do you mean?

ABBOTT: Yes, I was making a general observation which I would make of any company which is facing a difficult market environment. It’s up to the management of the company to deal with the company’s situation. It is not the business of government to make management decisions for companies. It is the business of management to make management decisions for companies. It is the business of government to try to ensure that companies are operating in the best possible environment and in the case of Qantas we can start by scrapping the carbon tax because, as all of you, I hope, know, the Qantas carbon tax bill was $106 million. Now, ok, in a business like Qantas $106 million is only one element of the environment in which it faces, but I tell you what, to have $106 million extra in your pocket is a pretty, pretty important benefit in tough times and again I say to the Leader of the Opposition, if he’s fair dinkum about wanting to look after Qantas, he can start with letting the carbon tax repeal bill go through.

QUESTION: Prime Minister, do you think that the national attachment to Qantas, the sentimental attachment as both the national carrier and a national symbol, has diminished significantly since the Sale Act was passed? I mean, are Australians more prepared to see greater foreign ownership of the airline now?

ABBOTT: Well, look, I don’t want to speculate on what’s going on inside people’s heads and inside their hearts, but we know that something like 25 per cent of Australians travel overseas on Qantas and that means that something like 75 per cent of us travel overseas on other airlines. We know that the percentage of Australians buying cars made in Australia has dropped and dropped and dropped, despite the fact that many of us remain sentimentally attached to Holden or to Ford. So, look, in the end, the job of government is to do what we can to enable all Australian businesses – iconic or not so iconic, as the case may be – to flourish. That’s our business: to make it easier for business to do its business and, look, sometimes iconic businesses get into trouble. Our hope is that over the years we’ll keep our old icons, sure, but over the years we might gain some new ones as well.

Thanks so much.

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Malcolm Farnsworth
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