Minister for Agriculture David Littleproud has welcomed the release of the Hayne Royal Commission and news Australia will work towards a National Farm Debt Mediation Scheme.
“I’ve been pushing for a single national approach to farm debt mediation service for more than a year now and I’m glad to see the Treasurer will act on this recommendation and help make it a reality. I will be asking state agricultural ministers to support this on Friday at the Agricultural Ministerial Council.
“It’s no good having one farm debt mediation system in NSW and another one in Queensland – we need a harmonised national approach so farmers know what to expect.
“I’m also glad our Government is going a step further and extending the remit of the Australian Financial Complaints Authority (ACFA) to allow aggrieved farmers seek redress from the banks for wrongs committed back to 1 January 2008.
“The Treasurer’s announcement supporting the removal of default interest charges to farmers suffering drought or a national disaster is a very good one and I call on the Australian Banking Association to immediately amend the Banking Code to give effect to this recommendation. It’s time that despicable practice ended full stop because I don’t believe the rate the banks charge reflects the actual cost to them.
“Treasurer Frydenberg’s announcement that valuation of farm land will need to be independently determined from the lending processes is another strong move and the banks will need to work to limit the cost to farmers from this.
“I’ve always said we need to make sure the banks use staff who have agricultural experience and so the change to make sure distressed farm loans will only be managed by those with agricultural experience is common sense. I understand from the evidence heard that most banks, with the exception of Rabobank, decreased their regional footprint and expertise and I hope they’ll now work towards restoring strong, local knowledge as part of their strategy to help agriculture reach its full potential.
“Receivers will now be used only as remedy of last resort; which they always should have been, and there will now be a compensation scheme of last resort which farmers can use.”
- The Agricultural Ministerial Council agreed to work on general principles supporting a harmonised national Farm Debt Mediation Scheme in April 2018.
- Currently Victoria, NSW, Queensland and South Australia have legislated schemes, which are relatively similar in their approach and require lenders to offer Farm Debt Mediation at the time they are considering taking enforcement action against the borrower.
- Western Australia maintains a voluntary scheme and the Northern Territory, ACT and Tasmania currently do not have a scheme in place.
- The Government’s expansion of ACFA’s remit to consider complaints dating back to 1 January 2008 will be in place for 12 months to cover the period covered by the Royal Commission, for eligible complaints that meet ACFA’s thresholds. For primary producers the maximum amount of compensation able to be sought through ACFA is $2 million. For more information on ACFA see https:///www.afca.org.au/
- During the current drought some banks have already removed default interest charges as part of their drought assistance packages.