Banks must 'back human capital'

01 Sep, 2014 02:00 AM
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6
 
The banks at the moment are putting enormous pressure on these families

QUEENSLAND MP Bruce Scott has called for investment in “human capital” to help resolve the drought crisis faced by cattle graziers in northern Australia.

Earlier this month Mr Scott called for urgent changes to the government’s drought package to relieve bureaucratic pressures faced by drought stricken farmers and their families.

The veteran Nationals MP continued his push for support last week as parliament resumed after the extended winter break.

In a speech in the House of Representatives on Tuesday, he said the severity of the drought’s financial and emotional toll wasn’t being exaggerated.

“Having grown up on the land, I understand the situation that is confronting so many out there at the moment and it really does disturb me,” he said.

“I know that we as a government have certainly got a package in place, as do State governments. But I do not believe it is going to be enough to address the situation of the human tragedy that is confronting so many farming families, particularly across the central western parts of my electorate, and the northern cattle industry.”

Mr Scott said many young farming families entered the beef cattle industry, “full of energy and full of experience - backed by a bank”.

He said that backing was provided due to the solid prospects of selling cattle into the Indonesian market.

“There was a product they could produce and there was a market to be had: the market for the export of live cattle to Indonesia,” he said.

He said there were over 700,000 head of cattle being exported to Indonesia but the temporary ban on trade by the former Labor government in June 2011 had exacerbated current drought impacts, in particular debt and farm viability.

“The banks said: 'Here's a proposition. This looks good. We can back this, and we will borrow and we will back the human capital' - that is, the families that have a lifetime of experience,” he said.

“The next generation is wanting to take up the same challenge out there on the land, and to take up the challenge of producing these cattle for Indonesia, through these feedlots, which would create jobs but also a food line for the people of Indonesia.

“Overnight, with one decision, the previous Labor government banned those people who had bred a product not for Australia, not for our domestic market, but to go into Indonesia.

“They were cut off from their supply line.

“Imagine shutting down a factory that a company had built up, had borrowed for, had workers employed in, with skills, and that it was for an export market, and that overnight the government said, 'You can no longer do that’.”

Mr Scott said the capital value of assets had been lost as a direct result of the live cattle export ban and ongoing drought.

He said livestock have been lost through the central western Queensland areas of his Maranoa electorate due to destocking.

He said producers in most cases had no revenue at the moment.

“There is no cash out there,” he said.

“These are pastoral properties with bills still to pay and a limited capacity to continue to borrow.

“And I know the banks at the moment are putting enormous pressure on these families.

“The entire electorate of Maranoa, which covers 42 per cent of the land mass of Queensland, is now drought declared, and has been for the best part of this year—some of it, since late last year.

“All 17 council regions in Maranoa are drought declared, as is 75.5 per cent of the land mass of Queensland.

“We have an exceptional drought out there that perhaps many producers would have been able to cope with.

“But they could not cope with the bad decision of a bad government which was the banning of the opportunity for the export of live cattle to Indonesia.

“It is about time that the banks got off the backs of these landholders and started to back human capital, because we will need these farming families into the future and we have got to make sure we can keep on the land.”

Mr Scott said a forum of CEOs held at Longreach this month brainstormed ways of dealing with the debt crisis and restocking plans, “given that the banks are very reluctant to add any further debt to these pastoral properties today”.

He said one key proposition raised at the forum was the tax loss credit swap which the Coalition modelled when it first come into government after last year’s election.

He said the modelling looked at the total debt of rural Australia but he said the northern cattle industry needed to be looked at in isolation, along with large areas of western Queensland where properties have also suffered extended drought impacts.

“The people there (at the Longreach forum) were CEOs from Melbourne, heads of industry, and they saw this as a proposition that should be explored, and I am hoping that we will be able to explore it,” he said.

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FarmOnline
Colin Bettles

Colin Bettles

is the national political writer for Fairfax Agricultural Media
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READER COMMENTS

wtf
1/09/2014 5:18:48 AM

The govt is directly to blame for this move and makes me wonder if it was not an offering to someone, not unlike the sanctions affecting European farmers at the moment. The wider debt crisis (only affecting some) is due to the fundamental flaws of our banking system and the existence of the RBA. Good properties in my area have risen 300% in 14 years, have returns matched that? The revisions to Basel lending standards has exposed the whole of our country to a debt binge. OUR economists who are trained at OUR universities have failed us, they should have pointed out the flaws long before now.
Jacky
1/09/2014 7:01:11 AM

So Bruce doesn't offer any real solutions. Again.
dunart
1/09/2014 7:18:21 AM

how about bringing fairness back to agriculture and globalise the costs of farmers as well already had and have a globalised income. This would change to debt crises as with much lower costs, farm budgets would be a lot better. Keeping the policy of “highly regulated artificial cost of production” policy on farmers is the biggest fraud ever put on any community in Australia. A blight on our history it will be looked at in the future.
Victor
1/09/2014 12:29:49 PM

I think Mr Scott it is about time that there was a national inquiry into Australian agriculture. Short term subsidies are merely death by a thousand cuts for many farmers whose enterprises are not viable. But Mr Scott rather than possibly hearing the bad news for some of his constituents blames the banks and the Labor Party. An objective apolitical inquiry may help develop a coherent long term strategy but politicians won't be re-elected if they are bearers of bad news. And yes there is an industry virtually closed overnight by Coalition policy - renewables, but Scott is a climate sceptic.
James Walker
1/09/2014 9:18:08 PM

As part of the Business Summit Video Series from Longreach; Farm online we will be showcasing the Tax Loss Credit Scheme by Mark West from Mcculough Robertson. It has created interest across sectors as a worthy solution for the current situation. With Roger Stones and BOM's Climatic Forecasts combined with the recent Rural Debt Survey; 30% of respondents will be wiped out before Christmas. The Kidworth Case study shows current crisis, Rob and Marg Kidworth in the case study have been proven so far as well above average producers, Farm Online's Friday forum 12/9 will be profiling the case study
Bushie Bill
6/09/2014 2:14:13 PM

dunart, you should know by now that the concept of fairness has no place in economics and commerce, and rightly so. All it leads to is some industries believing they are "special" and demanding special attention at the expense of all other taxpayers and consumers. We wouldn't want that, would we?

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