ABC 24 CAPITAL HILL
WEDNESDAY, 25 MAY 2016
SUBJECT/S: Murray Goulburn milk crisis.
GREG JENNETT: Joel Fitzgibbon, this is a substantial package at about half a billion dollars. It's been made in caretaker mode. Take us back to when you became aware of the details and when you ticked off on this package.
JOEL FITZGIBBON, SHADOW MINISTER FOR AGRICULTURE, FISHERIES AND FORESTRY, SHADOW MINISTER FOR RURAL AFFAIRS: Ive only seen media reports basically. I have been able to secure a briefing from the Department this afternoon where Ill learn more about what Barnaby Joyce has done this morning. But it is very disappointing because a week ago now, 3 weeks into the crisis, Barnaby Joyce declared to the world that hes not able to do anything because we are in election mode. Then 25 hours later he wrote to me formally and said - look I want you to jump onboard. I thought, great, because anything we promise as a package could be implemented in six weeks time if we are elected. The Government can do something now. So I welcomed his hand of bipartisanship but sadly he never came - and I indicated and I said you have my authority to just progress this package as long as its meaningful and appro priate, we will support it, but keep me in the loop - sadly, hes never got back to me.
JENNETT: And when do you say that was? How long ago?
FITZGIBBON: That was Friday
JENNETT: Right because he said today weve been in correspondence with Joel hes been very decent about this, its a bipartisan position Joel said yep lets get cracking. But thats not on the specifics of the package your saying that was in the broad about doing something.
FITZGIBBON: Thats right. He wrote to me embellishing the things that he claimed he had already done which was nil basically, and then spent a little bit of time giving me a vague idea of the sort of things that he had in mind including concessional loans. I just said look, a bit disappointed in his letter - 60% of it is giving yourself a wrap for things that you havent done and you havent told me anything meaningful. Notwithstanding that Labor will not do anything that could delay a Government package so just do it, but I expect to be consulted along the way. I used the words appropriate and meaningful package, and there is a big question mark over the word meaningful in terms of what he released this morning.
JENNETT: Alright well lets get to those specifics it has come out now under a Turnbull Coalition Team letterhead but it is as we understand it a caretaker government announcement. What is wrong with it?
FITZGIBBON: Well the headline figure is what?
JENNETT: $555 million is the big concessional loans
FITZGIBBON: Well Barnaby Joyce has done there is what he always does he did it in his White Paper. He takes the total headline figure of a loan or loans over a number of years and then quotes that figure as the Governments contribution to this package. If I lend you $100 on interest Im getting the money back Im not spending $100. Im making money on the interest and in fact these concessional loans are lent out at an interest rate higher than the Governments borrowing costs.
JENNETT: 2.66%, but its cheaper than money they could currently access isnt it?
FITZGIBBON: Yeah, you know the operative word or the important words that Barnaby Joyce uttered this morning were these if you can prove you are eligible. Now these concessional loans have been a failure in the past. We had the Australian National Audit Office report only a fortnight ago saying that they had been badly designed and administered by the Government. But look I welcome the concessional loans as part of a package, but on their own they are not enough. We have to focus on cash flow. Farmers need cash in their pockets so they can pay the bills and keep the banks from the front gate thats what they need.
JENNETT: What does that entail, a grant of some sort?
FITZGIBBON: Well I think concessional loans can be part of the mix but I did a rough back of an envelope calculation on what the concessional loan might be worth in cash flow terms to a farmer, and Barnaby Joyce says theyre interest only; well of course the bank loans are interest only too, because these are tax deductible loans. Now a smart farmer doesnt pay down the capital on a loan which is tax deductible, so of course they are going to be interest only but the thing is
JENNETT: So youve crunched some numbers on cash flow. What do you see?
FITZGIBBON: Being generous, taking averages and what the bank rate might be that farmers already have, a farmer might save between $100 and $150 a week if they were able to access these loans. Access is a big question because Barnaby Joyce opened drought loans in Victoria belatedly in about October 2015 and guess how many now have them 13!
JENNETT: This has been the subject of audit office reports
FITZGIBBON: Absolutely so he hasnt outlined the criteria other than to say - well if you can prove that you are eligible. Now, I dont know what the eligibility criteria is but those words have alarm bells ringing in my ears because I suspect that nothing has changed and people arent going to get access to these loans and in the past the processes have been very slow. These people need help, how long is this going to take?
JENNETT: So if you were able to shape those eligibility criteria and you may in 6 weeks from now what would you do? Set the bar very low would you?
FITZGIBBON: Well Im not announcing policy because I need a briefing from the Department. We dont have the resources to assess what sort of demand - how many farmers would take up the offer etc. But on eligibility, I would have thought it would have been reasonable to suggest, that anyone whos had a contract with Murray Goulburn-Fonterra and therefore has been affected retrospectively, and now has a huge debt to those companies would be eligible for the loan.
FITZGIBBON: Automatically - if youve been affected retrospectively youre eligible for the loan. But you need suite of packages Greg, and now look Barnaby Joyce has taken credit for tidying up Farm Household Allowance. Now Farm Household Allowance is unemployment benefit for farmers, and thats a good thing and thats always been around and has a more generous income and assets test so people dont have to worry about a big farm assets denying them. Weve been telling Barnaby Joyce for months now that people who are eligible just can t secure these allowances, now hes taking credit today for saying that hes going to fix that. Well Greg, we dont give him an award or prizes for fixing something he should have fixed 6 months ago.
JENNETT: Alright, now other individual elements; any problems with the $20 million to fast track the irrigation hardware in the Macalister Irrigation district, extra financial counselling support, whats the attitude towards some of those?
FITZGIBBON: We support everything thats in this package, as a contribution to the needs of farmers. But I think farmers will be very disappointed, it falls short. And everything beyond the concessional loans, the Farm Household Allowance - which was there anyway, and arguably additional rural financial councillors, which are important, but the States and stumping up there, everything beyond those is medium to long term. The Dairy Australias program for helping farmers work through planning and restructure issues - that might help a farmer in a years time or two years time, we all hope that this crisis will over by then. So really its only the concessional loans, a few extra councillors the States are doing that anyway, and fixing Farm Household Allowance, that he should have fixed a long time ago. Now if he embraced my proposition to force the Murray-Goulburn board to change the profit sharing mechanism so that the investors from whom Murray-Goulburn raised capital took a bit of a hit and transferred that money back in the form of high milk price for co-operative members, that would have an immediate cash flow effect for farmers. And of course because Fonterra links its milk price to Murray Goulburn-Fonterra, farmers would get some benefit as well.
JENNETT: Well I think as some people have pointed out your suggestion on that front ignores the fact that some of the investors were co-op members themselves
FITZGIBBON: Yes but we are talking about the non- farming investors. Were talking about the Collins and Pitt Street investors who count this as a part of bigger portfolios. Now theyve already taken a bit of a hit because the value of their unit has dropped, but Greg, theyre not going to miss out on a meal, or have the bank move in because they forgo a dividend for a couple of years. But that same amount of money can make the world of difference to a farmer. Its amazing, its been revealed that the Murray- Goulburn board considered this option, they knew it was legally available to them and they decided to put the Collins Street investors in front of the struggling farmers, I find that inconceivable
JENNETT: Yes, well thats one to be argued out elsewhere. I suppose just finally, tonight youre off to a debate, that will be televised on ABC News 24, you reckon you present more of an opponent to Barnaby Joyce than Johnny Depp, hes still engaged in hand to hand in combat with the Hollywood Star.
FITZGIBBON: Well Johnny Depp is doing a pretty good job, weve got to remember that that business about the dogs was already being handled by the authorities, I mean when something is wrong Barnaby Joyce just goes missing, when he sees an opportunity for some publicity he runs out to the cameras, but tonight, yes Im looking forward to it. It will be gloves off between me and Barnaby you can be sure about that and I reckon its compulsory viewing.
JENNETT: Lets see if you can make him as red as a tomato, which is Johnny Depps observation. Joel Fitzgibbon thanks so much.
FITZGIBBON: Its a pleasure.