Concessional loans: Row flares more than cheap loans

THE Federal Government’s 11-year commitment to provide $2.75 billion in concessional loans to Australian farmers appears to have price it incredibly tiny.

Last year the Federal Agriculture Minister Barnaby Joyce launched the Government’s $4 billion response to its Agricultural Competitiveness White Paper, which included as much as $2.7 billion for concessional loans.

However the actual expense to the Commonwealth of delivering as much as $250m a year in concessional loans for 11 years seems to be extremely tiny, based on the discounted interest rates the Federal Government and its Treasury take pleasure in.

Since it stands, the Federal Government accesses funds to cover the loans at rates among the Reserve Bank Price of 1.five per cent along with the Government’s 10-year bond rate of two.25 per cent.

The Federal Government has lent the funds to dairy farmers at two.66 per cent and drought-affected farmers at 3.05 per cent, beneath the loans scheme that closed on Monday.

Yet regardless of the loans costing the Federal Government quite little, it has been in repeated disputes with the Victorian Government more than the price of administering the loans.

Within the most current round of negotiations Victorian Agriculture Minister Jaala Pulford accused the Federal Government of short-changing the state.

Within a letter to Federal Agriculture Minister Barnaby Joyce, seen by The Weekly Occasions, Ms Pulford mentioned Victoria had reluctantly agreed to the Federal Government’s supply of:

$1.75 MILLION to administer the newest round of $70 million in Farm Business Concessional Loans, which were as a result of start yesterday at a new concessional interest rate of two.47 per cent.

$500,000 to administer an added $20 million of Dairy Recovery Concessional Loans (which closed this week). The Federal Government had already allocated $30 million towards the scheme.

But Ms Pulford told Mr Joyce the federal contribution fell “well quick from the total funds needed to implement the schemes”.

Mr Joyce’s office argued the administrative funding was “appropriate”.

“It just isn't unreasonable to expect state jurisdictions to create a contribution towards the cost of administering the loans since drought is really a shared responsibility,” a spokeswoman for Mr Joyce said.

The Victorian Government is also attempting to sort out what occurs with unmet demand from applicants towards the dairy and drought concessional loans schemes as well as the launch in the new loans scheme, which can be meant to happen this week.

A single Government insider stated it was unlikely the new round of $70 million in loans would be rolled out this week.

In her letter to Mr Joyce, Ms Pulford named on the Federal Government to clear up the uncertainty some farmers faced on the transition from the old drought and dairy recovery concessional loans scheme that closed on Monday and the new $70 million Farm Enterprise Concessional Loans Scheme that was meant to become launched this week.

As of your close of applications on Monday, 216 dairy farmers had applied for Dairy Recovery Concessional loans, with 72 authorized for $37.four million in loans. Yet another 143 farmers had applied for drought concessional loans, of which 81 had been authorized for $35 million in loans.
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