Representing Federal and State electorates in north western Queensland that are among the worst drought affected regions in Australia, Bob and Rob Katter have teamed up with broadcaster Alan Jones to draw national attention to the plight of producers affected by drought and heavy rural debt burdens across Australia’s agricultural sector.
Bob Katter, the Federal Member for Kennedy and his son Rob Katter, the Queensland Member for Mount Isa, have organised a rural debt crisis summit to be held in Winton on Friday, December 5.
Mr Jones from Radio 2GB will be the guest speaker.
Rob Katter said the forum aims to pull together beleaguered graziers, local agribusiness bankers, small business owners, politicians and with invites out to the big banks and the Australian Banking Association
The current situation was a a crunch point for the agricultural sector, not only in Queensland, but the whole country, he said.
“What is needed and what we’ve been calling for is a complete restructuring of agricultural debt,” Mr Katter said.
“Spiralling agricultural debt was a problem before Labor’s Live Export Ban, before the drought and it needs a systemic solution such as the Australia Reconstruction Development Board.
“There’s no doubt there are scores of grazing families in financial distress at the moment, and the combined cultural, economic, social and environmental impact of doing nothing further is difficult to comprehend.”
Mr Katter said he was calling on both State and Federal Governments to commit to some of the solutions out there for graziers who were on the verge of bankruptcy.
RURAL DEBT CRISIS SUMMIT
When: FRIDAY December 5
Start: 11.30pm lunch for a 1pm start
Where: Winton Shire Supper Room, WINTON
The current debt crisis is the consequence of too high debt to loan ratio’s, allowing too much borrowing against asset values that can widely fluctuate – more than 50% presently since 2008/2009. If a producer took out a loan pre 2008 at an LVR of 75% plus offered 50% of the herd for security and then added an overdraft, credit cards, personal loans etc etc, they will in the current market have a gross debt well above the assets market value (negative LVR). Also the ability to borrow interest only for extended period to acquire land assets causes repayments to be less, enabling to the producer to borrow more. In a booming economic cycle it might be afforded but upon a commodity price correction or production block (drought/live ex ban) the enterprise can not afford the repayments. Should interests rates increase, then there will be real disaster. Core finance industry restructure is critical:
1. Limit LVR’s to 50%
2. Ban interest only loans for asset acquisition and only for disaster management.
In the end it comes down to sensible agribusiness, caution lending and a couple of good wet seasons!!!!!