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Monday, 26 February 2018
Page: 1767


Ms SHARKIE (Mayo) (10:33): I move:

That this bill be now read a second time.

For years this place has held hearings and released reports on how to better support customers of banks, and these reports invariably get buried among the papers, no doubt archived somewhere, and nothing ever really changes.

Just last year, months of hearings took place across the country, with senators listening to further harrowing stories from primary producers who lost everything because of bank lending practices.

And then finally, in December, after several extensions to the reporting time, the Senate Select Committee on Lending to Primary Production Customers eventually released its report, possibly hoping that this report would be lost over the Christmas period.

I do not want to see this report die a quiet death in some archive box and so I have taken a number of the recommendations made in the hearing submissions and put them forward in this private member's bill.

Primary producers ride the swells of international commodity markets, exchange rates and weather, their fortunes so often dictated by factors well beyond their control. Family farmers hope to make profits over a multiyear cycle, using the good years to build their financial buffer to see them through the bad. Capital rich and income poor, the ability of small primary producers to pay their creditors is reliant upon these longer term profit cycles.

Banks have not always been accommodating to these vagaries as faced by primary producers. Indeed, 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 farmers any more than they can be expected to prop up any genuinely failing business.

I appreciate that not all institutions and not all 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 may not have always made it easier for their rural customers.

It is for good reason that rural Australians are among the strongest proponents of the royal commission into banking, which the coalition government has been dragged into kicking and screaming.

For example, primary producers are often given the barest minimum notice of sudden and unilateral variations to their loan agreements.

Revaluations of a farmer's assets given as security to a loan can be undertaken unilaterally by the bank and during downturns when asset prices are depressed, often as a means to call in the loan and force the farmer off their land and off their loan books. This happens to primary producers even when they do not miss a single loan repayment.

Banks also employ get-the-bank-out-of-jail-free clauses, known as 'material adverse change' clauses. to significantly vary or terminate a loan.

These are just a few of the means by which banks have a distinct and unreasonably upper hand in loan negotiations and agreements.

Farmers are not asking for non-commercial rates to access credit or an unfair advantage. Financial lenders, after all, need to remain competitive in order to provide a much-needed service to their primary production customers.

There is always a danger in seeking to redress a policy imbalance to push the pendulum too far back the other way—I recognise this.

However, the power dynamic between banks and primary producers does need rebalancing to give small farmers, in particular, more time and transparency to prepare for whenever there is a potential for a major change or challenge to their financial circumstances.

Further, I recognise that there is a marked difference between large commercial operators and small, family farmers. Thus, the measures in this bill only apply to loans to primary producers for under $5 million.

This bill seeks to take a reasoned and measured approach to level the playing field between the lender and the borrower by:

requiring authorised deposit taking institutions, known as ADIs, including banks, building societies and credit unions to provide simple one-page summaries of the clauses that may trigger a non-monetary default by the borrower;

prohibiting ADIs from unilaterally undertaking a valuation of security to a loan;

requiring that when valuations are undertaken a copy of the valuation instructions and final valuation report are actually provided to the borrower, with the same to apply with any investigative accounting or auditing of the primary production business;

requiring the ADI to provide six months notice before seeking to unilaterally vary conditions on the loan, except where there is a change to the money payable by way of reference rate or it is to the borrower's benefit and except where the borrower has substantial breaches of the loan agreement;

requiring the ADI to provide notice and request to meet with the borrower at least six months prior to the expiry of the loan;

prohibiting the use of those catch-all materially adverse changes provisions, except where they relate to alleged fraud or criminal misconduct;

requiring the ADI to provide a minimum of 90 business days notice when the loan is not going to be extended or renewed; and

requiring the ADI to inform the borrower about their right to external dispute resolution when the borrower receives a default notice from the bank or when the borrower is in financial hardship and has declined assistance from the bank or when the ADI refuses to renew or extend the borrower's loan.

Failure to adhere to these protections would result in substantial civil penalties to the bank, building society or credit union.

The content of this bill may seem technical and dry, but it is long overdue and will result in genuine equity for smaller farmers and other primary producers.

It is high time that the coalition government, which purports to represent its rural constituents fairly and even-handedly, gives this bill its full and wholehearted support.

For this place to continue to do nothing on important issues such as regional finance is unacceptable.

It is even more galling when we have members of government wearing akubras and saying that they are the voice of regional Australia, when this issue, more than any other, causes farmers to take their own lives—and nothing has been done.

Statistics on farmer suicide rates are not well documented in Australia, but a 2013 report on Queensland found that the average standardised suicide rates in the 10 years between 2000 and 2009 were 66 per cent higher for farmers than they were for nonfarmers; the youngest farmers have the most tragic statistics, with farmers under 34 facing average standardised suicide rates at 165 per cent the rate of nonfarmers.

So—the hat doesn't cut it anymore—farmers see through this and so do I and they need this place to act.

And so I look forward to working with any member in this place or in the other place who, like me, genuinely wants to improve the lives of mum-and-dad farmers, small primary producers in a very tangible way—and this bill is a good start.

The DEPUTY SPEAKER ( Mr Rob Mitchell ): Is the motion seconded?