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Wednesday, 27 June 2018
Page: 4203


Senator McCARTHY (Northern Territory) (18:20): I rise to speak on today's matter of public importance. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has started to turn its attention to the long-suffering plight of those farmers and primary producers treated unfairly, those in debt due to circumstances well beyond their control.

The Turnbull government didn't want this inquiry to proceed, and they certainly did everything they could to protect their mates in big business. They did everything they could to help their mates working for the big banks. And let's not forget that the only reason the Prime Minister relented and called this inquiry was because the banks asked him to do so. It wasn't pressure from Labor, pressure from his own party room or pressure from the parliament—or even pressure from the people—that got him to change his mind; it was a request from the banks themselves.

Labor from the outset has been critical of the banks, and rightly so. Time and time again we hear stories of heartache and stories of loss, both financial and personal. This Senate in particular, as well as the Senate of the previous parliament, can hold its head up high for leading the charge to help shine a light on the unconscionable conduct of the banks. In particular, I draw reference to the Senate Economics References Committee report into forestry managed investment schemes. These investment practises were particularly detrimental to farmers. Some farmers, who leased their land to MISs, suffered massive financial loss from failed MISs. It was difficult for them to seek clarity on their legal position with regard to ownership rights over land and trees, and liability for damage. The administration and liquidation of MISs gave rise to a number of difficulties, again associated with ownership rights, but also with conflicts of interest. And when they reached out for help, this government turned them away.

People want justice, whether it is through this royal commission or through the litany of inquiries conducted by the Senate, and they deserve it. At the time of the publication of the Senate report into forestry managed investment schemes, ANZ, through its association with Timbercorp, set up hardship funds for investors, but it was hardly compensation. It's also worth noting that stories like these are not isolated incidents; they are systemic, which is why this royal commission is so vital.

Only yesterday, throughout the commission's hearings in Brisbane, we heard the story of the Harleys. Stephen Harley had just suffered a heart attack when ANZ ruthlessly pursued his family for the default of a loan, saying they had to pay off their entire debt by March 2014 and that, if they didn't, they'd have just one day to leave their beloved farm. And even worse, this correspondence was received despite Stephen's wife, Janine, informing the bank that her husband had been flown to Perth for heart surgery. She wrote:

I hope you can now understand the pressure we've been under … we ask that this is taken under consideration when a decision is made.

The Harleys are just one story of many farmers who have been relentlessly hounded by the banks, mostly due to circumstances beyond their control, such as previous financiers having their agribusiness books acquired by banks like ANZ.

The Harleys managed to sell five of their nine land lots and livestock to pay down $1.6 million of the $2.5 million debt before the March 2014 deadline. However, because the bank refused to accept the circumstances they faced due to the heart attack of Stephen, they were forced to sell the four remaining parts of their farm, but these lots were sold by the bank. However, they were sold for $570,000 less than they were valued at, and at a much lower value than that at which the Harleys had sold the first five lots. Eventually, in July 2017, the bank decided it would not pursue the remaining $309,000 that the Harleys owed. When asked why it took so long to inform them, despite knowledge of Stephen Harley's heart condition, ANZ executive Ben Steinberg replied, 'I don't know.' He conceded that if the Harleys had asked for that nine-month extension today it would more likely have been granted. This is too little too late.

The behaviour of the banks and their inability to show compassion towards farmers—or anyone else, for that matter—existed long before these stories. Back in 2016, at the height of the CommInsure scandal, James Kessel, a former cotton picker and diesel mechanic, suffered a massive heart attack. He thought his road to recovery would be aided by his personal life insurance. It wasn't. His understanding was that his cover allowed him to claim up to $1 million in compensation. However, they had different ideas. Essentially, they claimed that its definition of a heart attack had not been met by the events that occurred in Mr Kessel's case and instead relied on an old, outdated definition to determine the severity of a heart attack. That was the claim from the insurer. Seriously, banks, financial advisers and CEOs should not be deciding what the definition of a heart attack is. That should be reserved for medical professionals.

To take another example, let's have a look at the powers. This government has since 2016 been promising laws to give ASIC important powers to crack down on dodgy payday lending practices and dodgy rent-to-buy schemes. To date it has failed to introduce this legislation. The delay is hurting families who are preyed upon by unscrupulous lenders. At the latest estimates, in May, Treasury officials couldn't provide an answer about when this vital legislation would be introduced. All they could say was that it was a matter for government. Claims that these loans help people to get out of hardship ignore the fact that the cost of a payday loan is itself a significant financial burden for a person on a low income. You could say that a low-income earner who is trapped in a debt cycle has effectively taken a pay cut, courtesy of their payday lender. A $300 payday loan typically requires a $372 repayment after 28 days. Given such a high repayment, it should be no surprise that a low-income borrower will borrow again to meet a further shortfall caused by the cost of the loan itself. This is how payday loans trap Australians into an ongoing debt cycle. Far from assisting them to overcome financial hardship, payday loans perpetuate hardship, and a high proportion of payday loan borrowers—almost 25 per cent, at last count—are Centrelink recipients. As such, many borrowers are committing a significant proportion of their welfare payment towards repaying payday loans. Many payday lenders target First Nations families and their communities, perpetuating financial hardship in many cases.

I hope the royal commission into misconduct in the banking and financial services industry has prompted financial sector institutions and advocates to reflect on the effectiveness and impact of lending practices. I hope it prompts this government to finally take action on some of the irresponsible lending practices that are rife across our communities. The royal commission sits in Darwin this month, and I suspect that we will be hearing more stories of the hardship and trauma that these unconscionable practices are causing for the people of the Territory. All I can say is that whatever recommendations come out of this royal commission—be it for farmers, be it for small business owners, be it for those who have received dodgy financial advice or be it for those on low incomes, deliberately targeted by unscrupulous lenders—it had better be a matter for government, because this government does owe all these people an apology.