Senator Cory Bernardi has expressed caution about what is colloquially known as the 'Barnaby Bank', named after Nationals Party leader and deputy prime minister Barnaby Joyce.
The Australian Conservatives founder and leaders said the proposed bank went against conservative principles of smaller government and respecting the federation, namely, states' rights to administer their own affairs.
The Farm Weekly newspaper reports online that Senator Bernardi told the senate yesterday that the bill to enact the 'Regional Investment Corporation' was being discussed just weeks ahead of the Select Committee’s Lending to Primary Production Customers report being tabled on November 29, which was an inquiry initiated by One Nation which he supported, along with the Coalition, Labor and NXT.
Senator Bernardi said there was "no doubt the major banks struggle to understand farmers" and the stress they come under, during periods of drought and other unforeseen climatic events that affect agricultural production.
"The big banks struggle to extend the grace to farmers that they need due to the sporadic nature of their cash flow," he said.
But he said competition in the banking sector which was occurring - including for rural finance - was an answer to the problem being debated, rather than more government intervention.
"When confronted with every single market problem, even if government created the problem in the first place, the answer for these people is to expand the role of government to fix the problem that the government created originally," he said.
"It was Ronald Reagan, I think, who said that there is nothing as like perpetual life as a government program because they're constantly trying to fix their previous mistakes rather than admit it was a complete disaster, move along and start something else."
"This Regional Investment Corporation Bill is no different to that."
"This is effectively a federal takeover of the distribution of drought relief and financing."
"In some respects it is back to the future, because we're going back 43 years and reinstating what is in effect the Commonwealth Development Bank."
Senator Bernardi said the RIC was not a small-government measure or one designed to reduce the size, scope and reach of government and in fact was "quite the opposite".
"It's engorging government," he said.
"It's providing even greater authority to the Commonwealth government at the expense of the principle of federation and also at the expense of this whole notion that those closer to the action are better placed to make decisions on that."
"So it's not a decentralisation measure; it's a centralisation measure."
"It has all the hallmarks of socialist politics and Keynesian economics - it is, perhaps, also a potential breach of our Constitution."
"This regime may indeed get through. I, and on behalf of the Australian Conservatives, have severe concerns about it. I'm not convinced it is the right approach to the age-old challenge of farm financing."