THE NATIONAL Farmers’ Federation (NFF) have welcomed the banking Royal Commission as a “good thing” as a retrospective investigation to uncover and resolve poor practices towards the farm sector.
But NFF CEO Tony Mahar says farmers also want the powerful political examination – announced today by Prime Minister Malcolm Turnbull, to report in February 2019 – to consider issues that can prompt proactive changes to help incentivise an investment landscape to aid agriculture’s goal of being a $100 billion industry by 2030.
“Let’s hope that this Royal Commission identifies any behaviours of concern and sheds some light on what we can do going forward,” he said.
“It’s a positive step to uncover any practices and behaviours that have been detrimental to the industry so that’s a good thing.
“But also for the NFF, in looking forward towards a $100b industry, we need to look at what needs to change in the finance and banking sector, to enable farm businesses to be more nimble, to attract more investment and to be more innovative in the way they structure their businesses.
“That’s an issue we want to focus on.
“This Commission will be looking back retrospectively and that’s fine because there are some issues there that need to be examined.
“But it also needs to be looking forward at what needs to change for the agriculture sector to ensure we reach our goal and kick-on to being a $100b industry.”
Mr Mahar said the NFF had been watching the fluid political discussions occurring in Canberra over recent days, leading up to today’s announcement that the banking Royal Commission would finally go ahead.
He said the NFF was aware of issues that had been occurring in the agriculture sector around banking, in relation to farm loans, defaults and debt mediation which he expected would now be uncovered and dealt with.
“We’re acutely aware of some of the concerns that have been raised in the agriculture sector over the last couple of decades and how banks deal with farmers,” he said.
“But having said that, there have also been a number of inquiries into the financial services sector and banking.
“Our view today is that this Royal Commission will hopefully uncover and shed some light on some of those concerns that we’ve had.
“It is going to be retrospective, so for us it will be about what outcomes are we searching for and they’re around transparency, fairness and consistency in the way banks deal with agriculture and farm business.
“But going forward, we also want to make sure that there’s some actually outcomes from this.
“It’s going to take a while and it’s going to be expensive so we want to ensure there are some outcomes delivered.
“If we’re looking at investment in agriculture across the board domestic and foreign, what’s the finance and banking sector’s role?
“We want to ensure we continue to attract investment so how can the banks and finance sector assist farmers at all levels, to structure their business so that they are innovative, profitable and productive and they can continue to grow?
“That’s what we want.
“We want the banking and finance sector to help agriculture grow.
“No doubt the Royal Commission will uncover some issues in the agriculture sector and let’s have a look at those issues, but we also want to make sure it provides a pathway forward.
“Looking backwards is one thing and that’s okay but looking forward and being proactive around the future of agriculture is also what we’re interested in.”
Mr Mahar said a recommendation he’d like to see come out of the banking Royal Commission was to implement nationally consistent debt mediation standards which was initially an outcome of a Canberra rural debt roundtable meeting, held in November 2014.
That forum was Chaired by the then Agriculture Minister Barnaby Joyce and attended by officials from his Department, the NFF, Gulf Cattlemen’s Association and Australian Bankers’ Association which said at the time the national rural debt was $61b.
Last week, the Coalition government said the Australian agricultural industry was currently valued at $60b, while figures from ABARES say it was at $64b in 2016-17 and $51.5b in 2013-14.
ABARES figures provided by the Department of Agriculture and Water Resources also showed the total institutional lending to agriculture, fishing and forestry was $69.5b at June 30, 2016 with $66.9b in all lending by banks.
In 2013-14, all lending by banks to agriculture, fishing and forestry was $2.5b, $65b in 2014-15 and $67b the year after that.
The total bank lending to agriculture, fishing and forestry at June 30, 2017 was $68.6b.
Mr Mahar said the move to implement nationally consistent debt mediation rules had been “on the table for a number of years – but hasn’t been progressed”.
“I’m not clear or aware why it hasn’t been progressed,” he said.
“I’ve sat around the workshops on debt mediation that the Department has held.
“I’m not actually sure where they’re up to.
“There was a process of trying to get consistency across states and we were part of that, we want to be party of that and that would be a good recommendation going forward.
“It’s something that’s been on the table.”
Mr Mahar said the Commission was likely to uncover issues regarding farm loan arrangements, like mediation and foreclosure processes which may also need attention.
“There’s been a number of stories and events over the years that have been well documented so it would be good to get some transparency and recognition of what can be taken out of there and what learnings and behaviours might or might not have been conducive to good relationships between the farm sector and banking sector,” he said.
“We’ve got to be able to have a good relationship with the banking sector and hopefully this Royal Commission will uncover some practices that we can identify and recognise which haven’t been conducive to good relations, if the Commission finds that.
“And that’ll allow us, if it’s true, to change that behaviour to allow a more productive and collaborative relationship.”