Media Release

KATTER’S Australian Party has thrown a lifeline to primary producers in the grip of the deepening rural debt crisis, introducing laws to establish within the Reserve Bank a rural reconstruction and development board to take over bad debt and ensure the sustainability of Aussie agriculture.

KAP Federal Leader and Member for Kennedy Bob Katter this week introduced to the House of Representatives the Reserve Bank Amendment (Australian Reconstruction and Development Board) Bill 2013.

The legislation is the result of the recent Rural Finance Roundtable and North West Cattlemen’s Crisis Summit spearheaded by Mr Katter, with leaders from the roundtable working group joining Mr Katter in Canberra this week to discuss the laws with both sides of Parliament.

The laws are contingent on the commercial banks writing off up to half of existing debt (for which half that value becomes a tax concession), enabling the ARDB to buy the bad debt at the discounted value and offer farmers refinancing at interest rates lower than commercial lenders.

Mr Katter said that that the ARDB helped both banks and farmers – and would make money for taxpayers just like the QIDC, overseen by Mr Katter as a Qld Government Minister, which was later sold by the Borbidge Government for about $1 billion.

“A reconstruction board is like a bank – it borrows money and it loans money. All the farmers have to do is apply to have their loans taken over. The banks then take a write-down of the at-risk debt and negotiate with the ARDB about what level of debt they will take on,” he said.

“Under this arrangement, the banks offload the bad debt and have a reduced loss. They offload the troublesome client, get a 5 per cent better outcome, and they don’t have to foreclose. So it’s good for the farmer, who will only need to pay 2.5 per cent interest instead of 6.5-7.5 per cent and no repayments for three years.”

“Meanwhile, the ARDB possesses the same asset at lower debt. For farmers, this means if they owe $1 million to the banks, after the ARDB absorbs the debt, the farmer will only owe $500,000.”

However, the legislation was “no magic pudding”, warned Mr Katter.

“This is not designed to save everybody. It is likely that 7 per cent of farms are still going to close,” he said.

Rural Finance Roundtable working group chairman Rowell Walton, who led this week’s delegation to Canberra, dubbed the legislation “a simple way to solve a problem”.

Mr Walton said rural debt in Australia stood at $66 billion and rising, with inescapable bad debt estimated at $5 billion.

“Debt has got out of hand and needs to be reconstructed to a long-term profitable and sustainable level that matches business capacity,” he said.

“Under the ARDB, farmers will be making a profit and repaying their debts while rural communities will be stable and rural industries are readjusted.

“And the banks, who are making pretty reasonable profits at the moment, will use their losses to offset their profits.

“So everybody is happy.”

Mr Katter said the ARDB solidified long-term sustainability in Australian agriculture and protected hundreds of years of knowledge built by our nation’s food-producing men and women.

“To lose the technology and the know-how of these people is the loss of an asset that will take 30 years to rebuild,” Mr Katter warned.