“Barnaby Bank” caught in architectural dispute

The RIC initiative was revealed by Nationals leader Barnaby Joyce during last year’s federal election campaign as the centrepiece of the Coalition’s $240 million farm policy.

It aims to curtail ongoing bureaucratic bickering between the commonwealth and state and territory government agencies, to help expedite relief funding delivery; especially to drought stricken farmers.

The RIC has been affectionately coined the “Barnaby Bank” after the Agriculture and Water Resources Minister who also wants it to administer federal lending for water infrastructure projects, including $2 billion in the National Water Infrastructure Loan Facility, giving it a total estimated potency of $4.5b

“We’re going through a process now of how we set this thing up,” Mr Joyce said while keeping some of his powder dry on its potential structure.

“It was an election promise so it has to happen.

“My preference is for it to reside in the Department of Agriculture and Water Resources and that becomes a mechanism which allows future ministers to work very quickly in responsiveness to getting out loans and targeting the issues they think can assist people in regional areas.”

Mr Joyce is using the expertise of Queensland Nationals Senator Barry O’Sullivan to assist with designing the RIC’s structure and future operations.

But the minister reacted strongly to suggestions Liberal forces were potentially sabotaging its implementation, amid lingering fears it could use used as a Trojan Horse to implement an Australian Reconstruction and Development Board (ARDB) in future, to help manage rural debt-loads.

The ARDB has been previously backed by farming communities and some political figures like Mr Joyce, Queensland independent MP Bob Katter and South Australian Senator Nick Xenophon who has also raised implementing legislation in the Senate.

But the concept was firmly rejected in the Agricultural Competitiveness White Paper delivered in mid-2015 after meeting staunch resistance from economic dries within Liberal ranks.

Asked about the RIC’s future, Mr Joyce said, “There are key policies that the National party takes forward as part of the Coalition and this is one of them”.

“They can read into that what they like,” he said of any opposing forces.

“We’re formulating the process of which entity structure works the best and obviously in that industry structure you’ve got to find the key people to go into it and that’s where Barry (O’Sullivan) comes into it.”

Senator O’Sullivan has long championed policy reforms to help farmers manage bank-debt driven by compound impacts of droughts - but his office declined to comment on the specifics of his role establishing the RIC, for the time-being.

However, it’s understood Treasury officials and some Liberals are pushing back against the RIC being structured within Mr Joyce’s Department which would allow its administration mechanisms to bypass the Finance Department.

A shortfall of that design would be the Department’s current lack of financial expertise, while hefty costs associated with adhering to Australian Prudential Regulation Authority rules and administration is another consideration in play, on structural limitations.

Establishing an independent entity is another option that’s been ventilated in behind the scenes talks, but some believe structuring the RIC within the Agriculture Department would give the government agency greater long-term purpose.

Other talks on ways to design the federal delivery of farm-related infrastructure and drought support loans involve enhancing the flexibility and potential farmer benefits of funds stored away in Farm Management Deposits (FMDs).

FMDs are currently valued at $4.28b as per the Department of Agriculture’s latest statistics from December 2016, via 46,500 farmer accounts nationwide, while the fund peaked at $5.07b in June 2016.

One potential scenario involves using tax off-set accounts linked to FMDs to try and pressure the banks into providing better interest rate offerings to farmers, against their current loans, and provide greater returns to farmers from the scheme, by funding rural infrastructure loans.

South Australian rural Liberal MP and chair of the Coalition’s agricultural backbench committee Tony Pasin said the federal government was continuing towards establishing the RIC, by July 1 this year.

“As someone who hails from South Australia and has seen first-hand the inconsistency of application with respect to the drought concessional loans across state borders, I welcome the introduction of a national administration of this and other programs,” he said.

But any move to implement an RIC would also need to be backed up by the passing of new legislation, in the federal parliament which could also prove problematic given the need for support from the 12-member Senate cross-bench.

However, Mr Pasin said it was “cruel” to watch farmers farming less than 30 kilometres from the Victorian border in South Australia being denied access to concessional loans when those on the Victorian side of the state border, living within precisely the same circumstances, gained access to the government support.

“I thought the election commitment was exciting news, if only for fairness, because those inconsistencies are one of the reasons why people are sick and tired of class politics which inevitably leads to infighting between state and federal governments,” he said.

“That frustrates farmers in financial distress but it also leaves a really sour taste in the mouths of communities who see it play out in the pages of their newspapers.

“We end up squabbling over which bureaucracy is to blame for failing to support farmers in real financial distress.”

National Farmers’ Federation President Fiona Simson said her group hadn’t heard anything more about the RIC since it was first unveiled during the 2016 federal election but remained supportive of the Coalition’s core farm policy commitment.

“Certainly while there’s still drought, especially in large pockets of Queensland, the RIC is still a very live issue,” she said.

Ms Simson said she understood the ARDB still had some support within farming and regional communities but it was now “off the table” for the federal government, after being rejected in the Agricultural White Paper.

“When it’s not in the government’s white paper the (ARDB) is not something that we need to push for, especially when there are so many other issues to focus on that they’ve said they will deliver on, like digital infrastructure,” she said.

“The feedback we get from growers is that the drought support loans are very difficult to access and part of the problem has been the timely delivery of that policy, so we need to have further discussions.

“Instead of having a strategic whole of government approach to agriculture, we’ve seen a piecemeal approach and that’s where we’ve been in trouble with drought policy.

“We need to make sure the government’s response to drought and to drought affected communities is very clear and transparent and policy commitments like the RIC that have been promised by the government, we need to find out where they’re at and actually pursue them through to completion.”

Ms Simson said throughout that last drought a “huge amount of difficulty” existed with states treating support loans differently, and the commonwealth, which provided the funds, having to negotiate varied agreements, which defied the program’s intent.

But she said having a commonwealth agency oversight the loans would streamline the process and help relieve pressure for farmers trying to access support.

“It also means the funding can be delivered in a timely fashion which didn’t happen in this latest drought,” she said.

“I think the RIC is a really interesting proposal and something that has a lot of merit.”