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PRIME MINISTER

FOR MEDIA SUNDAY SEPTEMBER 5 1982

ELECTORATE TALK

I don't think any of us now need to be told how serious .

the drought is, particularly in the Eastern States. It is  Ã¢ÂÂ¢an enormously difficult situation for farmers. Both cattle  and sheep prices are down considerably on last year. Unless  there is substantial rain over the next few weeks, Australia

will face one of the worst rural disasters that it has ever  experienced.

Against this background, the Commonwealth has made a number of  substantial decisions. Two of these decisions which are vastly  important will be totally funded by the Commonwealth Government  and other decisions will involve the traditional co-operative  arrangements between the Commonwealth and the States.

The Commonwealth will fund totally a subsidy for farmers on  interest payments exceeding 12% on debts. That means a farmer  will pay the first 12% on his overdraft and if he is in a

drought declared area the Commonwealth will pick up the balance.  However, if a farmer has readily available liquid assets, he  would be expected to use those to help reduce his level of  debt before he would be eligible for interest subsidy.

The Commonwealth will also provide a 50% subsidy on purchases  of fodder for livestock. This decision is very important  because in the period ahead what we have to do is make  sure that basic stock are preserved. Yarding and sales have

increased very greatly in recent weeks but if Australia's  breeding numbers fall significantly, then permanent damage  will be done to the grazing and pastoral industries, and it .   would take much longer to recover from the damage of the

drought when finally the drought breaks.

In addition to these two Commonwealth initiatives, the  Commonwealth is to propose significant changes to the core  measures operating under the natural disaster relief arrangements  when Commonwealth and State Agricultural Ministers meet next . week. The Commonwealth funds these core measures on the

basis of $3 from the Commonwealth to $1.from the States once  the base amount has been provided by the States.

When first implemented, therefore, it should provide no  particular burden on the States. The core measures include  carry-on loans, freight concessions, stock slaughter and  stock disposal subsidies and water subsidies. What we are  proposing is that the core measures not only be expanded,   but that there is a more co-ordinated approach between the .

States. With our own intiatives there is no reason why the  States should not accept these additional proposals. - - V 2

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Our proposals include support for local governments in sinking  bores for water supplies for farmers. That is particularly  useful in areas where the farmers run out of water and they  cannot put down a normal farm bore because the cost might be

too great. We hope that the States will accept the cost of .   such,bores and the manning of such bores as part of the normal  core measures for the purpose of this drought.

We will also be suggesting to the States that the limits on  carry-on loans be raised to $40,000 or doubled, whichever  is the greater. In some States it is already up to that level.

But in Victoria, the carry-on loans are only $15,000, which  of course is not going to be all that much assistance to farmers  in great and serious difficulty at the present time. .

The Commonwealth will also require the money that it makes  available to the States forÂ· drought loans be on-lent by  the States at no more than 4% interest. We have been  providing these funds to the States in the past at no

interest and some of them have been charging 5% or 7%, There  are proposals to take this up to even 12%. There is no reason  why the States should make a profit on the funds that are  on-lent for these particular purposes.

We will also be suggesting that States should extend the  carry-on loans arrangements for farmers to small businesses  in rural communities that are affected by drought.  This is  already done in Queensland and we would like all States to

follow Queensland's example.

We will be proposing that the subsidy on water cartage be  set at 100% and we will be proposing also to the States that  the freight subsidy on the transport of fodder and livestock  be set at 75% which is the same as the Queensland level at

the moment. In some of the States it is now 60%. In other  States it is 50%. ,  .

We will be proposing that these six measures should form  part of the normal co-operative arrangements between the  Commonwealth and the States. The assistance that all these  measures will give the rural sector should be complemented

by recent announcements on US beef imports and on live sheep  exports., both of which will be particularly welcome at this  time of hardship for the farmers.

Sheep farmers will welcome the fact that on 11 September a  .  ship will berth at Portland to load live sheep for export. The ACTU and the AMEIU at the Federal and State levels have  agreed to the lifting of bans and restrictions on the export

of live sheep. Beef producers will be heartened by the -

assurances given by the Americans that the US will meet its  full commitment to Australia and import from Australia  676.9 million pounds in 1982. There had been recent pressure  in the US from the Cattlemen's Union to restrict beef imports.

As we expected,the US government is maintaining its purchases  under our joint agreement. .  .

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By pursuing Australia's interests the Government avoided  the situation which' occurred under Labor in 1974 , when our  beef exports to the US were chopped back considerably,  and we lost all access to the Japanese market.

I am sure that the resumption ofÂ· live sheep exports from  Portland and the assurances given to our beef producers  by the Americans, as well as the drought relief measures,  will give farmers greater security at this difficult time.

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