PRESENTER:
As the drought drags on in Queensland and New South Wales, farmers are again warning of a debt crisis.
For northern Australia's beef industry, the problems began with the live export ban to Indonesia. And graziers say the months of parched conditions since have emptied their bank accounts.
The Assistant Treasurer, Arthur Sinodinos, has called a meeting in Charters Towers in north Queensland and told our reporter Stephanie Smail that he's planning to act, not just talk.
ARTHUR SINODINOS:
How do we have a strategy which goes just beyond dealing with short-term issues and provides a basis for evaluating their prospects over a longer cycle than maybe sometimes is the case in dealing with banks? How do we get these innovative financing solutions addressed by the banks and everybody else?
And part of the reason for having the banks here of course: they talk about their perspective on farm debt: what they look for, why they foreclose, when they foreclose. And really, you know, until you get people together, across the table as it were, eyeballing each other, you won't get, I think, a genuine dialogue. And I'm after a genuine dialogue. I'm not after grandstanding.
I can't promise them more money on top of the Barnaby Joyce drought package recently, but I can promise them I'll look at what further measures we can take in concert with other stakeholders like the banks.
STEPHANIE SMAIL:
What role do you see the big banks playing in tackling farm debt?
ARTHUR SINODINOS:
Unless people are prepared to sit around the table, look each other in the eye and realistically discuss what each wants out of the situation, you won't get any sort of real outcome.
So I'm calling the banks to account and sitting down with the communities that are affected and saying, well, okay, if there are more innovative ways to provide finance in ways which better recognise the volatility of commodity prices, the volatility of the weather, actions beyond people's own control that cause them to be in a difficult situation: how do we help them out those circumstances?
STEPHANIE SMAIL:
How could the banks actually change their business model to help these farmers?
ARTHUR SINODINOS:
Well, what we're asking them to do is look at, for example, the timeframe over which they provide funding and how they link that funding to their concerns about particular conditions impacting on the industry, so there's a greater understanding when things go wrong: that if something is beyond the control of the farmer, what can the bank do to help them get through that difficult period and get them back towards viability?
We're not talking about a situation where you try and sort of take an enterprise which is not ultimately commercially viable and sort of try and resuscitate. You're looking at situations where farms may be in trouble but they have good long-term prospects because of the sector they're in.
For example, beef in Australia will go through an upturn. Prices are starting to go up. We've got free trade agreements coming through. But how do we make sure the farm sector is in a position to take advantage of that and, in particular, the community farm sector? Not the corporates in the farm sector but the family farms which are the backbone of the industry.
STEPHANIE SMAIL:
What have you heard about how many properties banks are foreclosing on up in that region?
ARTHUR SINODINOS:
Look, I don't have all the stats at my fingertips. But because these are small communities, whenever one family gets sold up or one farm gets sold up, it ripples through the whole community.
I've been dealing with family sort of counsellors and financial counsellors who'll tell you stories about families that have had to leave, break-up of families, even people suiciding because they can't face up to the difficulties.
STEPHANIE SMAIL:
The Federal Government, as you mentioned before, has already offered financial help for graziers. What more can you do?
ARTHUR SINODINOS:
Well, look, this is why we're talking with the banks and other stakeholders: because, really, we need everybody to contribute. It's not just a matter for Government.
Government will do whatever it can, but we can't endlessly promise funding and all the rest of it. We really need to find others to bring to the table so everybody makes a contribution.
STEPHANIE SMAIL:
Beef prices have sunk to record lows in recent times. Isn't that the real solution to these problems: to get cash flow into these businesses? And isn't it the case that the market needs to do that for itself?
ARTHUR SINODINOS:
You're right. Cash is king. At the end of the day, beef prices going up will take some of the pressure off.
But we're also saying, let's take this opportunity to look at how financing is provided to the sector. Are there more innovative ways of doing it? So that when people are going through cash difficulties, they have mechanisms to help them cope better than maybe has been the case in the past.
PRESENTER:
That's the Assistant Treasurer, Arthur Sinodinos, speaking to Stephanie Smail.