Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Hansard source

As we have heard, few in this parliament would know more about the reality of drought than the member for Mallee. His region has been living through the most severe and prolonged drought any of us can remember, and we have heard just some of the stories of hardship and distress that have come to him, as the local member, from farmers and their communities as they wonder how much longer they can keep going.

Tonight’s motion asks us to think about what these farmers are going through, particularly when it comes to the attitude and practices of lenders seeking to recover the debts accrued during the long years of drought that brought so much devastation to farming businesses. These debts are substantial. National Farmers Federation figures show that rural debt has increased by 85 per cent since 2002-03, and the debt-servicing ratio has followed a similar upward trend in that time. The NFF warns of the potential for regional land prices to fall should the banking sector withdraw its support of the agricultural sector and aggressively foreclose on rural debt. This was echoed by a farm management consultant in my electorate who said that lenders need to be careful that their actions to recover debt in a region do not drive down the equity of other landholders.

It appears that this caution is not always being heeded in Central Queensland. One grazier, an industry leader, told me that she is aware of instances in Central Queensland of banks being overly aggressive at present in their dealings with farmers. The solution the member for Mallee proposes in his motion is to introduce debt recovery protocols in commercial lending similar to those for mortgage lending and also to require compulsory debt mediation prior to lenders exercising their rights to pursue debt recovery through legal processes.

While the conditions applying to home mortgages may not always be suitable for the kind of debt arrangements farmers need to enter into, because of the differences in the amount of loans an income patterns, there are other measures that should protect farmers just like they protect other borrowers. State and territory regulations oblige lenders to consider an application by an eligible borrower who is experiencing financial hardship for a change in repayment arrangements. The major banks are also subject to the Australian Bankers Association code of banking practice. It would be interesting to know whether the Rural Bank of Australia that the member for Mallee referred to is part of that code. This includes an obligation on the bank to act fairly and reasonably towards their customers in a consistent and ethical manner. Under the code, banks are specifically required to assist with financial difficulties.

The Queensland Farmers Federation and other farming bodies in Queensland such as AgForce and Canegrowers have taken a proactive approach and reached an agreement with a number of lenders on the Queensland Farm Finance Strategy. Among other things, this requires lenders to inform farmers in writing if they are aware that there are financial problems and encourage farmers to take remedial action to resolve their financial problems as early as possible. It also requires lenders to urge farmers and their advisers to identify and develop actions and financial and business goals that will improve their position. The strategy also sets out a framework for resolving financial problems by negotiation and includes a formal mediation process. The banks that have signed up to that strategy include the National Australia Bank, Westpac, ANZ, Suncorp, Rabobank, Bendigo Bank and Bankwest, just to name a few. Given these protections, I am concerned by reports from a local grazier whom I spoke to today, and I remind banks and other lenders of the commitment they have given to treat farmers fairly and work with them to manage their businesses in a way that ultimately benefits both the farmer and the lender. On the face of it, the proposal for compulsory mediation does sound attractive, but we must be wary of possible perverse consequences making it more difficult for farmers to access finance because they are seen as more risky or the restrictions on legal proceedings too onerous. I join with the member for Page in hoping that we can work through some of these problems through the second phase of the consumer credit legislation.

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