Mr. Mark Cunningham:

The Senator asked if this should be the nature of the scheme. As he may be aware, there are considerable EU constraints and restrictions on the manner in which the scheme could be used. If the SBCI, the Government or anyone else wishes to introduce a scheme, all the banks have indicated that we are more than happy to co-operate to figure out how it can be done. Members have seen that this is of a very limited nature with a very hard drawdown time stop on it. It does not seem likely to be a blueprint for schemes to be looked at in years ahead. However, should the Government wish to pursue it, we would be more than happy to facilitate it.

The issue of the term of the credit scheme received some airing earlier. The point that may be being missed here is that normal bank terms and conditions apply to the scheme. Normal bank terms and conditions apply if somebody has a one-year loan. Somebody with a one-year stocking loan or other product should only get a loan for that product over one year. Somebody considering a capital expenditure programme with a longer-term payback on the capital expenditure could get a loan over a longer-term period. Perhaps in some instances the nature and benefits of the scheme may have been somewhat oversold with the perception that two-year interest-only six-year term loans were being provided here. However, what was not looked at was the small print. Normal bank terms and conditions apply. If the purpose for borrowing this money is for one year or for two year, that is the basis on which the loan should match the term of the asset they are seeking.

I have no evidence and would not be party to any suggestion that we were looking for security, given that the security-free nature of these facilities was one of the conditions of the scheme. I have no evidence of that.

The Chairman asked if the banks are playing catch-up.

All the banks sell in this market is money. Many people choose to offer credit subsidies or upfront zero percentage interest rates, whether they are selling furniture, cars or trying to buy in milk, to try to entice farmers or purchasers to purchase their stock. That is clearly something those businesses can do, but it is not something the banks can do. The banks are making their profits from selling the loans; the banks must make the profits from that loan or lending product. There is no doubt that, particularly in the milk sector, there is intense competition between the co-operatives for this extra milk and to manage or process it. Many of the co-operatives may be seeking a way in which they can add additional terms and benefits to their milk processing or milk supply agreements by trying to entice farmers in supplying credit to them. We have certainly seen it in the motor trade, the furniture trade and the store trade. It is more indicative of the co-operative sector coming to terms with the rest of the merchandise sector.

In terms of the tillage and pig sectors, we can only speak to our own statistics. We have seen no suggestion that these people are not in a position to pay their debt or have not been in a position to avail of the scheme. The numbers we have seen would be broadly commensurate with the level and volume of applications we would see across our book. Perhaps the timing for the sector might not have been the most appropriate and it might not have been as tuned in, but the volume and level of applications are broadly similar to what we are seeing across our broad book.