Senate Rural and Regional Affairs and Transport Legislation Committee, , 6:01:52 to 6:06:07
Discussion on the eligibility, interest rates, and historical context of drought loans provided by the Regional Investment Corporation to farmers in need.
Topics: Regional Investment Corporation, Drought and disaster support
Speakers: Speaker 28, Speaker 34, Speaker 29, Speaker 12
>> in in terms of different programs? So in terms of our Commonwealth programs, so things like farmhouse allowance, there is only you have to meet kind of the eligibility criteria for that which is in relation to an asset test and an
income test. >> Yeah. No, but I'm talking about in terms of the actual drought itself.
So our programs um generally don't there is some requirements under the rural investment corporation loans where you um have had to have shown you've had some financial impact and in financial need but we don't have drought triggers
as such under our commonwealth programs. Okay. So just as an example um the so so when we South Australia and southeastern Australia is pretty much been in drought for um at least 2 years when was the first um well say in the case of the Rick when was when was the first um Rick loan um available to those farmers?
>> So you was going to say Senator so our Rick loans are available all the time to our stakeholders. There are a number of different Rick loans in place already. >> Okay. >> Drought support >> that for drought support. So we have uh at the moment we have the drought loan which is in place and has been in place since the commencement of the Rick in
2019. >> Okay. So can you talk me through so the these drought loans um that are available. Um so is is there a a cap on the num the amount of money that that a a single entity farmer can
>> Yes. >> seek? >> Yes, there is. So the for the drought loan that's been in place. So it's a maximum amount of $2 million that you can borrow. >> 2 million. Yep. >> And it's a 10year loan.
>> 10 years. And the conditions of that is it um are farmers required to pay
interest on it? >> Yes. So this one is uh 5 years interest
only and it's at 5.18%. >> 5.18% for five years. So now, correct me if I'm wrong, and I mean maybe Senator Cananan might actually um be able to help me here. Um when the Rick was first put in place um and drought loans and and hardship loans were made available, was it the intention for those loans to be interest free in circumstances?
>> So when the Rick was first established, um the loans were not interest free. They did have interest. >> Mhm. >> With the same methodology as currently.
>> Have they have loans ever been under any situation been made available without interest for a period of time?
>> Yes, there was a period of time where there were interest free loans made
available and the basis of the of the decision for those loans to be interest
free. >> Um I believe it was around in 2019 and it was part of um the drought support package of the government at the time.
And how long did those interest free loans um were they available for?
>> I'd have to get the exact time period. I think my colleagues have it, but um they were it was for a set period of time and then it reverted back to the um original settings.
>> Okay. Cuz I I just sort of keen to understand like if if there was a decision made in 2019 that loans should be interest free, what were the conditions that sparked the decision to do that? um and what would be required now for a situation to warrant provide the provision of of interest free loans for a period of time because I got to tell you listening to um drought impacted the farmers they don't want a handout they're quite happy to pay the money back but cash flow is a really big challenge on the way through so it it'd be very I'd be interested to know what the what the triggers were for the loans to first of all become dr um interest free for a period of time and what triggered them going back to requiring interest. And I mean 5.1% is not I mean it's not a high interest rate but it's it's the market isn't it? >> Yeah. So >> it's a concession. >> Yeah. But it's not it's not a massive concession is it? >> Beg you pardon?
>> It's not a massive concession. >> It's what does it represent? About 2% >> um from commercial interest rates.
>> Okay. Um, Senator,