Monday, 18 February 2019
Banking Amendment (Rural Finance Reform) Bill 2019; Second Reading
That this bill be now read a second time.
All too often we have heard the stories of farmers who, during drought times or difficult times, are forced into debt and despair. For some, their worlds come crashing down completely; the suicide rate is desperately high among farming families, many times the suicide rate of non-farming families.
Primary producers ride the swell of international commodity markets, exchange rates and weather, their fortunes so often dictated by factors well beyond their control. Many family farmers hope to make profits over a multi-year cycle by using their good years to build a financial buffer to see them through the bad. Capital rich and income poor, the ability of smaller primary producers to pay their creditors is reliant upon these profits in the longer-term cycles.
Banks have not always been accommodating to these vagaries as faced by farmers; everyone in a rural community during a downswing would have heard the stories of woe where banks have not been willing to throw farmers a lifeline so as to protect their loan book. Banks have an obligation to their shareholders and cannot be expected to prop up failing farms more than they can be expected to prop up any genuinely failing business.
I appreciate that not all institutional lenders have tightened the screws on their struggling customers, but, taken as a collective, it is fair to say that the banks and other lending institutions have not made it any easier for their rural customers. We only have to look at the findings of the recent banking royal commission for examples. Horror stories that came out of that banking royal commission proved the farmers right—that banks were giving them and other customers a raw deal.
I first introduced this bill back in 2017. I went to the National Party and I said: 'This is your constituency. This is my constituency. We need to make change.' And I heard nothing. I received no interest from government in helping to level the playing field between farmers and banks. I was a relatively new member of parliament and I had already heard the horror stories and about the lack of a fair playing field for farmers. As I said, now the royal commission report has been released, it is my hope that the government will suddenly become interested in this.
The banks have behaved badly, and this bill addresses the real problems. Albeit nearly two years later, we can act now. We could use this week to get this legislation through.
For example, primary producers are often given the barest minimum of notice of sudden and unilateral variations to their loan agreements; re-evaluations of farmers' assets given as security to a loan can be undertaken by the bank, and often they reclassify the value of the asset and they really don't give the farmers any time at all to try and seek other finance. These material adverse change clauses in their contracts and terminations of loans really are incredibly unfair, because what we need to remember here is that for small farming families—I'm talking about loans for under $5 million—their farm and their business is also their home.
Farmers are not asking for non-commercial rates to access credit or unfair advantage; financial lenders, after all, need to remain competitive. But we are talking about addressing a policy imbalance because the pendulum has gone back too far the other way.
Further, I recognise that there is a marked difference between large commercial lenders and those small, family farmers, and that is why my bill is contained—it is just properties under $5 million.
This bill takes a reasoned, measured approach to lending and to levelling the playing field between lender and lendee because we want to make sure banks are still willing to lend money to farmers—that's another heartache. We find that there's very little interest when your postcode starts with, in South Australia's case, 51. It certainly is very difficult to obtain finance.
As I said, this bill takes as measured approach. The bill seeks to:
I might just say I actually raised this bill with the National Farmers' Federation. I was deeply disappointed they had no interest. This is about small farming families, and we need small farming families. We don't need the whole of Australia's farming industry to become large corporate agribusinesses. It's the farming families that shop local. It's the farming families that stay in our rural towns.
The contents of this bill may seem technical and dry, but they are long overdue and will result in genuine equity for smaller farmers and other primary producers. It is high time for the coalition government, which purports to represent rural constituents fairly and even-handedly, to give the bill its full and wholehearted support, particularly in the wake of the findings of the banking royal commission. And I look forward to working with any member of parliament or party that appreciates the importance of giving farming families and other small primary producers a fair and measured hand in their loan agreements with the big banks. Thank you.
I second this motion as I was proud to second it when it was first introduced to the House, and I would like to add my support to the work and the words of the member for Mayo and to express the disappointment we feel with those on the other side of the House, the government, in their failure to actually speak up for those in our constituency, which is farmers and farming families who have been hugely affected. So I'm very grateful to the member for Mayo and to her staff for the enormous amount of work they have done in getting this bill before the House. And I do call on my colleagues in the National Party and the regional Liberals to please step up and bring your voice to this House to represent your constituency. It's my real pleasure to second the Banking Amendment (Rural Finance Reform) Bill 2019.