Rural Finance in Australia: A Troubled History

Abstract

The last twenty years has witnessed a seismic shift in the provision of and attitude towards differentiated financial facilities for the rural sector. Specialist facilities built up over a century have been dismantled. Official data collection has been narrowed, but anecdotal evidence indicates that segments of the rural economy are no longer being adequately serviced. The paper begins with a treatment of the uneasy relationship after World War II between the rural sector and the trading banks, the dominant segment of the Australian financial sector. There then follows a brief history of alternative financial institutions and instruments catering to the rural sector, especially those at the national level. These developments had, by 1980, ensured the rural sector greater access to credit and on more appropriate terms. Beginning in the 1970s, an ideological shift ushered in much proselytising of the merits of the ‘free market’. The significant report of the Campbell Committee (1981) provided legitimation for subsequent deregulation of the financial sector, which accompanied the gradual dismantling of much of the institutions and instruments specifically addressed to the rural sector. Agricultural economists, economically orthodox in analytical emphasis and worldview, have viewed this dismantling benignly. Because of the key role of this network in mediating rural policy, representative opinion is examined at some length. The 1990s is outlined as a period for which rural finance has become a non-issue for officialdom, and yet dissent has resurfaced. A final section examines specific institutional and cultural structures that have mediated the broad changes affecting the Australian rural sector. Domestic banking culture and ‘free market’ ideology appear to have exerted independent influences in the mediation of credit to the rural sector.

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Evan Jones

Evan Jones is Associate Professor in Political Economy at the University of Sydney. He has an Honours degree in Commerce from the University of Melbourne and a Doctorate in economics from Michigan State University. He has lectured at the University of Sydney since 1973. As a member of the ‘Political Economy’ discipline at the University of Sydney he has contributed to the construction and teaching of an alternative syllabus emphasising economics as a social science. He has published on the methodology and philosophy of economics. His current research interests are in the political economy of industry and economic policy in Australia after World War II. Dr Jones is also a regular contributor to the print media on economic policy controversies.