BANKS will be forced to engage in a formal mediation process with debt-stressed Queensland farmers before starting any enforcement actions under new laws introduced to parliament today.
Agriculture minister Leanne Donaldson said the Farm Debt Mediation Bill 2016 would help ensure financial disputes between farmers and banks could be resolved with the assistance of mediators.
“In response to issues identified by the Rural Debt Banking Roundtable, and the findings of the Rural Debt and Drought Taskforce, the government announced a $36 million assistance package to assist farmers whose incomes and profitability have been eroded by drought,” Ms Donaldson said.
“This bill delivers on key aspects of the Rural Assistance Package, legislating a farm business debt mediation process for the efficient and equitable resolution of disputes between farmers and financial institutions.
“The forced sale of farm assets is always difficult, but there are times when farming families believe they have been unfairly treated when required by lenders to repay loans.”
The rural banking roundtable was announced on November last year and included Australia’s major banks, the Australian Bankers' Association, QRAA, and Queensland Treasury Corporation. The associated Rural Debt and Drought Taskforce was chaired by the Member for Mount Isa, Robbie Katter.
However, Mr Katter said the government’s response fell well short of what was required to address rural debt. (Click here for the story.)
Central to his complaint is the failure of the Palaszczuk government to establish a rural reconstruction board, which has long been proposed by the Katter Party.
"Sure this (bill) is a positive gesture, but it falls hopelessly short of addressing the real problem of rural debt which is what our bill Rural and Regional Adjustment (Development Assistance) Amendment Bill 2016 is about," Mr Katter said.
"The mediation they have proposed is better than what we have now, but it still does not resolve the imbalance in negotiating power between banks and producers.”
AgForce president Grant Maudsley said while farmers were not opposed to a mandatory approach to mediation, clear benefits over the current voluntary process needed to be demonstrated. (Click here for the story.)
"AgForce is a signatory to the Queensland Farm Finance Strategy, which includes a voluntary negotiated debt mediation framework and emphasises the early recognition and resolution of financial issues,” Mr Maudsley said.
"Our key interest is in ensuring the best possible outcome for primary producers faced with farm debt problems, and we are not opposed to a mandatory approach to mediation when it can be shown to provide clear benefits over the current voluntary process.
"Access to affordable financing is vital for the development of agriculture in Queensland, and any mandated farm debt mediation should not detract from the capacity for borrowers and creditors to resolve issues informally.”
Ms Donaldson said the bill would establish a process for banks and farmers to resolve financial disputes through an official mediator and structured negotiation.
“Mediation is a confidential process that is quick, accessible and affordable,” she said.
“It is an alternative to expensive and drawn-out legal processes and it does not stop farmers taking legal action to resolve disputes where such action is warranted.”
Ms Donaldson said the bill would apply to all providers of rural credit in respect of farm mortgages.
“The bill would not stop financial institutions and producers from using informal negotiations to resolve problems,” Ms Donaldson said.
“But if informal talks fail the mortgagee will have to offer mediation to the farmer before starting enforcement action.
“Removing the need for expensive and potentially lengthy legal processes to resolve issues relating to farm debt will be a huge benefit to farmers.”
The bill also establishes the Queensland Rural and Industry Development Authority (QRIDA) to replace QRAA.
The new authority will administer enhanced schemes of assistance to farmers.
"QRIDA will also carry out research into the financial performance and sustainability of the rural and regional sector in Queensland, and have the responsibility of administering the farm debt mediation program," Ms Donaldson said.
"As foreshadowed in the Rural Assistance Package announcement, some of the measures affecting QRAA loan schemes will require changes to the Rural and Regional Adjustment Regulation 2011 which will be made in the near future.”
A new mandatory farm debt mediation process must ensure costs are kept to a minimum and primary producers have access to skilled professional assistance so they can negotiate on an equal footing with financial institutions, AgForce said today.