At least $60 million of the $100m the Government says is now available for live export industry support represents money affected businesses will have to borrow from commercial lenders.
The additional assistance measures announced yesterday comprised interest rate subsidies on loans of up to $300,000, as well as $5500 grants for affected businesses to access financial advice.
The Federal Government said yesterday that when combined with $33m of assistance announced in June (comprising payments of up to $25,000 per enterprise), the additional measures meant there was now almost “$100 million that is able to be injected into the market”.
However, most of the $67 million of the additional measures announced yesterday does not represent Government funding.
Only $8 million of that amount comes directly from Government coffers in the form of interest rate subsidies, plus a further $400,000 to fund the $5500 grants for financial advice.
The remaining $60m included in the Government’s $100m figure comprises commercial loans of up to $300,000 that affected businesses would have to borrow from their commercial lender to access the interest rate subsidies the Government has made available.
Department of Agriculture, Fisheries and Forestry spokesman Tom Aldred explained that in effect the Government will contribute $8.4 million “to leverage a further $60 million from financial institutions”.
Liberal Senators at yesterday's live export senate inquiry accused the Government of building on the problem instead of helping it, by forcing affected businesses to take out further loans and accumulate further debts to access the cash they needed to survive the impact of the Federal Government’s ban on live exports.
They also questioned how affected businesses would be able to borrow more money given their existing dire financial state.
“This is a waste of bloody time, because the people who are in serious circumstances for the fuel for the pump, for all of the things we have taken evidence about, they are at the limit, a lot of them are in distressed accounts, they have got no bloody chance,” Liberal Senator for NSW Bill Heffernan said.
“You’re feeding them to the dogs.”
Senator Heffernan asked if the DAFF officials believed that a bank would put a distressed enterprise at further risk by asking it to service an additional $300,000 of debt.
“Blind bloody freddy can see that these people through no fault of their own deserve compensation, not more debt.”
Liberal senator Sean Edwards from South Australia continued the line of questioning: “That is what we’re saying isn’t it – extending more credit on that asset?”
Mr Aldred: “That would be the expectation senator.”
Available assistance around $60,000 per enterprise
Affected cattle producers, livestock transporters and helicopter musterers repeatedly told last Thursday’s Senate hearings in Darwin that direct losses incurred as a result of the Indonesian ban ran from at least hundreds of thousands of dollars to millions of dollars, depending on the scale of each business.
DAFF representatives yesterday confirmed that the total amount of support businesses could expect from the Government in response to the impact of the ban was about $60,000.
“If an enterprise utilised a full interest rate subsidy on a $300,000 loan over a couple of years, it would be in the order of $36,000, plus the ability to access a $5000 and $20,000 grant,” Mr Aldred said.
Senator Heffernan said feedback from the northern cattle industry indicated that Government assistance of at least $250 million would be required to get the industry back on its feet.
DAFF officials did not concur.
“In terms of $250m, given the overall trade was only $316 million last year, and half of the animals went in the first half of the year, it is probably not in the order of that magnitude for one year, particularly since we also have the trade up and going,” said Paul Morris, acting deputy secretary for DAFF’s Live Animal Export Taskforce.
“But the loss is going to be quite difficult to estimate right at the moment, because we’re really at the early stages of the re-opening of the trade.
So far DAFF had received Notice of Intentions to export over 20,000 cattle for August, and that number would grow in following months.
“So we could see quite a large number of animals exported for the remainder of the year, recognising that it has to be done, or at least some of it has to be done before the wet comes, but we do know that the record of exports is that there are still some exports that occur in November and December and January, from those farms which are actually on the bitumen,” Mr Morris said.
Senator Heffernan asked if DAFF representatives believed northern businesses would have the security against which to borrow a further $300,000.
“We know from the ABARES financial surveys that equity levels on average are pretty high, we also know that not just on average, but the distribution is that equity levels are quite high,” Mr Morris said.
The interest rate subsidies in the new package will be available for two years.
The subsidies will be available for interest rates of up to 8pc in year one and will phase down in year two, believed to drop to 4pc in the second year.
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