Four agriculture-related recommendations produced by the Hayne’s Royal Commission into financial sector misconduct were sensible, practical initiatives that should be implemented as soon as possible.
That is the conclusion of Professor Michael Adams, the new head of the University of New England’s Law School, who supports a bipartisan effort to get the recommendations implemented as quickly as possible.
We’re seeing more compassion now from the banks, which is a good sign.Senator Senator Williams
The four recommendations deal with:
- The concept of a national scheme of farm debt mediation.
- The amendment of land valuation standards to account for external events that impact on the realisable value of the property could have credit lending implications for farmers, as loans require security based upon a valuation.
- Recommendation 1.13 recommends that the Australian Banking Association (ABA) amend the Banking Code to ensure that banks cannot charge default interest on loans secured by agricultural land.
- Recommendation 1.14 requires banks, when dealing with distressed agricultural loans, to use only experienced agricultural bankers and offer farm debt mediation as soon as possible.
“The Royal Commission into Misconduct in the banking, superannuation and financial services industry has brought to light some long-sidelined issues,” Prof. Adams said.
“Recommendations relating to agriculture have been discussed in the past, but there hasn’t been the impetus necessary to ensure that these ideas were acted on.
"The Royal Commission has provided that impetus.”
NSW Senator John Williams said they were four good recommendations by the Hayne’s Royal Commission and he had no doubt they would be implemented.
Senator Williams’ main concern was penalty rates applied to farmers going through hard times, and he said it was like putting the boot in when someone was down.
“In 2011 we had a Parliamentary Inquiry into the banks and it recommended we stop penalty rates back then. So, it’s a good thing to see the banks come forward and say they won’t be charging penalty rates,” Senator Williams said.
“Farm debt mediation we’ve had for years in NSW, good to see that’s being rolled out across Australia, and David Littleproud has been working on that for some 12 months.
“I’ve seen receivers go into a farm and make a total mess of them, with sheep dying and weeds all over the place. Too many times we see farms sold in drought for half the value, it’s important they get the maximum value for the property if they do have to sell.”
Senator Williams said the farms and mediation recommendations had yet to be ticked off by the states and then legislated, the changes to receivers was a voluntary thing and the penalty rates may also need legislation.