QUEENSLAND conservative think tank the Australian Institute for Progress has locked horns with the Katter's Australia Party's calls for a so-called farmers' bank.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
AIP executive director Graham Young said the notion of taxpayers propping up failing rural businesses was a tried and proven failure.
"We've been here before with the Queensland Industry Development Corporation which had to be euthanased and wrapped up in the privatisation which created Suncorp in 1999," Mr Young said.
"While agriculture faces unique challenges, so do all industries, and there is no evidence debt is a bigger problem for it. According to recent studies only 6 per cent of Australian farms are at serious risk of financial distress, this has remained reasonably constant, and is centred in certain types of enterprises, like dairying."
The idea of a farmers bank was again floated an emotionally charged crisis rally organised by KAP in Charters Towers recently.
That meeting resolved that current interest rates were excessive and incompatible with sustainable production, industry profitability, and international competitiveness. The meeting demanded the federal government work toward lower interest rates.
It also called for a board to stabilise, reconstruct and provide development finance for Queensland agriculture and associated rural industries.
Mr Young said under the KAP plan some of the least creditworthy farmers would have a portion of their debt forgiven, and then refinanced by the state at 2pc without any allowance for administration costs, or a margin to cover defaults.
"Essentially this is a subsidy from taxpayers and depositors to a minority of farmers," Mr Young said.
"The need for the state to borrow to finance the scheme would also break the Palaszczuk government's commitment to reduce state debt."
Mr Young said the scheme would be bad for the industry as a whole.
"It will tend to inflate property prices, making rural industry less efficient and handicapping efficient well-capitalised farmers trying to expand their businesses. I can understand the desperation of a lot of farmers and their families, and it is shared by a lot of metropolitan businesses who have also hit trouble. But that is the nature of business," he said.
Mr Young said the Palaszczuk government needed to concentrate on shoring up its fiscal position in the face of a deteriorating financial climate and setting economic conditions increasing the viability of all businesses.
