RADIO TRANSCRIPT: ABC'S CARA JEFFREY INTERVIEWS RIC CEO, JOHN HOWARD, DISCUSSING RIC LOAN AVAILABILITY, ELIGIBILITY, BENEFITS AND DROUGHT CONDITIONS.
EMILY MIDDLETON: Now paddocks may be sporting a green tinge after recent rain, but many farmers are still feeling the financial impacts of prolonged dry conditions. In what's being described as a green drought, where feed returns but farm businesses remain under pressure after months or even years of dry times. Regional Investment Corporation Chief Executive Officer, John Howard says there are hundreds of millions of dollars in low interest government loans still available to help eligible producers recover and prepare for the future. He's speaking here with Cara Jeffrey.
JOHN HOWARD: We are definitely seeing continued inquiry about the nature of our loans, especially our Drought Loan and Farm Investment Loan products and also the new Drought Hardship Loan. Key parts of those are to help people that are going through extended periods of dry times, which one shower of rain doesn't necessarily mean that it's come to an end. So, we absolutely are seeing people still showing an interest in our loan products and we're still seeing money going out the door.
CARA JEFFERY: And the Regional Investment Corporation does have quite a range of different loans that help people. So, what are people mainly borrowing money for at the moment?
JOHN HOWARD: A split between our Farm Investment Loan, which is a recovery product to cover a multitude of either single or multiple events, including droughts, floods, fires, biosecurity events, those types of things, and our Drought Loan and the new Drought Hardship Loan, that came into effect at the end of March this year. So, for the first two, you have to show a two-year impact of the event or events. And with the Drought Hardship Loan, it's for those that have been in a drought for longer than two years or the drought's been going on for longer than two years. And that's where the demand has been coming from. And given the seasonal conditions over the last say 18 months, two years, most of the activity has been through that Riverina area of New South Wales, but also extending into Victoria and South Australia, that particularly nine months to two years ago, had significantly drier conditions that were impacting those regions.
CARA JEFFERY: Does that mean people have to be in drought for two years? So, does that mean you're getting a lot of applications now?
JOHN HOWARD: No, they don't have to be in drought for two years. Their business has to be impacted by drought for two years. And what I mean by that for our Drought and Farm Investment Loans is if you're a person running a livestock enterprise and it's a breeding operation; you could be in a drought for a 12-month period. And in order to manage through that, you've had to sell all of your ewes or your cows. Therefore, if it may rain, you've got to go and buy sheep, ewes or cows again and join them and then wait for that progeny to come through. Therefore, that second year is going to be impacted as a result of that one-year drought. So, you don't have to wait for two years of drought. You can be managing in advance of that and say having one year actual and one year forecast. And I think it's a really important point this one because it's understanding that of the options that you've got risk in your business, of which drought or natural disasters is one of them, where one of the RIC loans is one of the things that can help you manage through that period and you don't have to wait until things get too bad. You just able to demonstrate your impact and then you're eligible for one of our products, be ready in advance and that way you're able to get the benefit of the concessional nature of our interest rates.
CARA JEFFREY: And so how does a RIC loan differ from a standard bank loan?
JOHN HOWARD: Primarily through the lower interest rate that we offer. So, currently it's at 5.18 per cent. It gets reviewed twice a year and the next review will be effective on 1st August and the other one is 1st February. So, we have a lower interest rate than what they're able to get in the bank. The other key component is a 10-year loan term. So, there's surety of understanding what the terms and conditions are for that 10-year period. But the other key element besides the lower interest rate is 5 years interest only in the first instance and then 5 years of principal and interest after that.
CARA JEFFREY: As we near the end of the financial year, is there still plenty of funding available or should people be looking to apply in the next financial year?
JOHN HOWARD: Plenty of funding remaining this year, Cara. We'll end up approving about $150 million of $460 million that's available this year. So, there's plenty this year. But next year the Government's got an appropriation for us to do loans to the value of $333 million. So, using the run rate of our $140 - $150 million this year, at the moment, it looks as though there'll be plenty of funds available, so no rush.
CARA JEFFREY: And so, if that money from this financial year's bucket doesn't all get spent, does that money carry over to the next financial year?
JOHN HOWARD: That's a matter for Government. At the moment there's plenty of money on current demand scenarios for next year. The position of the rollover funds is a matter for Government to decide.
EMILY MIDDLETON: That's John Howard, the Chief Executive Officer of the Regional Investment Corporation, speaking there with Cara Jeffrey. If you'd like to find out more about RIC low-interest government loans, jump onto ric.gov.au.
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