The proposal is to establish a Future Farmer Guarantee Scheme (FFGS) that would guarantee 40% of an eligible farmer’s new commercial loan up to a maximum value of $1.0 million.

Applications for the Guarantee would open for an 18 month pilot from 1 January 2023. Eligible loans would be guaranteed for a maximum of 10 years, with an option to extend the loan term by 2 years for applicants who are experiencing significant financial hardship. A further allowance is provided to account for mediation or recovery action.

The guarantee would be funded by reallocating $75.0 million of loan funding from Regional Investment Corporation (RIC) loans. The intent of this proposal aligns with the charter costing COA 007 – Future Farmer Guarantee Scheme prepared by the Department of Finance during the caretaker period. The Parliamentary Budget Office (PBO) has calculated the public debt interest (PDI) based on the implications of the entire proposal on the headline cash balance, rather than the loan component only as per the charter costing.