Farm Debt Mediation Bill

Second Reading

Adjourned debate on second reading (resumed on motion).

Mr McBRIDE (MacKillop) (15:56): I rise to speak on the Farm Debt Mediation Bill. I am pleased to have the opportunity to speak today in support of this bill introduced into parliament on 6 June by the Hon. Tim Whetstone. The introduction of this bill is a significant step forward to safeguard the financial security of farmers, who form a key part of the regional economic powerhouse of this state. The Marshall government's commitment to introduce this bill within the first 100 days is part of all the other commitments we have made. It is absolutely reassuring that we have put this into the first 100 days as well as all the other commitments.

The proposed farm debt mediation framework is focused on supporting farmers to give them every opportunity to succeed and meet the growing demand for agricultural produce and contribute to regional prosperity, the state's economy, jobs and exports. Farms are a group of businesses that are important and we want them to succeed. The current absence of a mandated farm debt mediation process enables the unfair situation where a farming operation can be forcibly foreclosed by a bank without any form of negotiation.

The current situation leaves farmers vulnerable in what is likely one of the most stressful events in their lives. My commitment and support for this bill stems from the desire to see farmers and their businesses thrive in my own electorate, which has a strong foundation and dependence on agricultural productivity. The region and the state has a strong reliance on the success and financial sustainability of our farming sector.

In my electorate, we are fortunate to have an enormous diversity of farming businesses and enterprises. The landscape and climate of the region enable a significant and impressive diversity of farming businesses ranging from commercial apple orchards in the regional areas like Kalangadoo in the south, broadacre cropping across vast tracts of the region, cattle, sheep meat and wool, viticulture, dairies and small seed crops, to intensive piggeries and poultry farms such as those found in the northern part of my electorate. It is for these businesses and for farming businesses more widely in the state that I am proud to speak in support of this bill.

Farming enterprises vary from small and large family businesses through to larger corporate operations. Fluctuating commodity prices, the seasonal conditions and the cost of financing are a range of forces that impact on the operation of these farming businesses. For farms, there are often a lot of costs incurred up-front, which cannot be realised if the season does not deliver the conditions required. This can impact farms small and large.

The Hon. Tim Whetstone rightly highlighted in his second reading contribution that the impact of severe storms, bushfires, frosts and drought 'can leave farming families and their assets prone to financial crisis'. Farming can be a risky business, and farmers take calculated risks every day. Severe weather events can be difficult to manage and have significant and at times catastrophic impacts on farming businesses of any size.

Farming businesses are often intergenerational operations, with families handing on a business, a rich heritage of experience knowledge and a way of life from generation to generation. Farming families such as these are an enduring constant and strength in our regional communities. The opportunity to provide a safeguard to these businesses through a process of required mediation should foreclosure be under consideration is a priority.

The management and administration of the farm debt mediation scheme will be the responsibility of the Small Business Commissioner. The ability for farmers to be given a fair opportunity to present and discuss their case with an independent mediator before they have their farm foreclosed provides much-needed breathing space for them in a difficult period. The arrangements, in essence, embed a process of good faith.

The debt mediation framework will be there to assist farmers who are in financial difficulty to find a pathway to overcome the challenges before them to re-establish a financially viable business. The framework will also provide a process for cases where it is not possible to establish financial viability to work through an approach that can assist farmers to move out of their particular industry. Importantly, in such a situation the mediation process will support decisions at this difficult time to minimise the impact on farmers and their families.

There should be no doubt that this is also about mental health and mental health in regional areas. As the farming industry and communities around our region know, we have financial counsellors supplied by Rural Business Support networks. This mental health aspect is a very important part of the discussions and negotiations, and a good form of communication helps all those in this process. It should not be doubted that in the world of agriculture a lot of elements are taken out of our hands and are not in our management or decision-making and we have little choice about them. It is like the three stars we try to pursue in a successful business.

We have no control over commodity prices, we have no control over seasonal impacts, but we have control over management decision-making. In that decision-making, when farms take on debt and take on more finance, people in agriculture are obviously a very optimistic breed. We work on the goodness of the fact that we do believe there will be good seasons, that we do believe there will be good commodity prices to be seen and reaped; we just sometimes do not know when these will occur. When it goes pear-shaped and against what we consider good outcomes for regional South Australia in the agricultural sector, we never know how long these issues, be they dry seasons or poor commodity prices, will last.

I remind the house of the Millennium Drought, a one in 100 year event. That was the extent of how dry and tough that period was for agriculture. The businesses that survived the Millennium Drought—and no doubt many of them operating today did survive—were obviously businesses that had good steps or processes in place to combat those difficult financial times. They would have put money aside and had good financial commitments and arrangements with financiers to get over these hurdles. For those who did not have that strength, and perhaps were more vulnerable, a millennium drought can also kill these farming businesses off. A good process is required to ensure that businesses of all shapes and sizes can get through these difficult periods and strive for the next good time that may be around the corner.

One of the ironic things about the drought was that it happened around the 2006-07 period. We were involved in a citrus farm on the River Murray, and the River Murray took a long time for the water to dry up and for a lack of irrigation water to be available. On this citrus farm we got only 30 per cent of our water requirements on our permanent water licence, and then we had to go to the market and buy water. On top of that, we also had a dollar that was in excess of parity in terms of the Australian-US dollar, so we were talking about $US1 to $US1.10.

We were selling oranges for a very low price and then had to go into the market to buy water at $1,000 a megalitre. In that one year our business went into a million dollars' worth of debt just to keep going, and that was due to those two circumstances: the water being very expensive and the parity of the dollar. Basically, our citrus was not required on the world market or, if it was, they were only going to pay a small amount for it. It took another two or three years after recovering from that difficult dry period and the high dollar, and lack of world market forces on the citrus industry, for growers to recover.

It is not without negotiations with financial systems that businesses can survive those two elements that are totally out of their control. This is where good communications are required and where confidence is required not only by the farming businesses growing this produce but also by the financial institutions offering the services, and it has to be as transparent as possible for all that to work. One of the other issues I have had to fight and survive relates to the wool industry.

As I said in my maiden speech, one of the biggest financial collapses in corporate Australian history was the collapse of the Australian wool floor price. It took nearly 20 years to recover from that. There is no financial institution that can grit its teeth and allow businesses to continue on without any commitment or payment of their debts, so what had to happen was that those sheep producers who survived those 20 years had to have great relationships with their financial institutions, had to have strong books, but the communication also had to be very open and transparent.

That was not the case for everyone in that position. We know that hardships were felt by producers in that wool industry over the 20-year period, and we know that negotiations took place. We heard that there were businesses that had borrowed funds from financial institutions, that had met all their commitments, that had paid all their commitments as they were obligated to, but the bank still foreclosed on them. Basically, it was due to the fact that the bank had lost confidence in the industry, had lost confidence that the business was ever going to get its head above water and pay back the debt that they were still meeting their commitments on. There was probably very little of the communication taking place that we hope will take place with this Farm Debt Mediation Bill.

Another industry that comes to mind is the cattle industry. Around Australia, it bore the brunt of the government decision banning live cattle trade out of the northern parts of Australia. It was far reaching, affecting not just those northern cattle producers, but I will not take anything away from them—they suffered the brunt of it, and a lot of them were sent to the wall by those sorts of decisions. Again, that is another reason that good financial negotiations and mediation need to take place so that financiers and the farms and producers can work through these hurdles, which are unexpected and out of the control of these businesses. It was no fault of the cattle producers when these sorts of bans and impositions were put on them.

That beef ban was widespread across Australia. Although I talk about the wool industry suffering for 20 years from the collapse of the wool floor price, beef prices have also had a very flat market for the period from the late nineties right through up until 2010 or 2012, when they started to improve again. There were probably about 15-odd years there when, in benchmarking figures, some of the wool enterprises outshone the beef production figures. Again, when a decision is made by government to ban a whole section of our production cycle—in this case the northern cattle market—it has wide-reaching implications. Its tentacles were felt right down to Victoria and Tasmania by a massive beef oversupply.

That brings me to my next point. Industries that are doing well right now that we know about include the beef industry that has had a massive improvement. It has been a little softer in the last 12 months because there is a massive dry spell in the northern parts of Australia. Again, it shows an example of why, with these dry periods, we are seeing right now that the beef market is flooded. It is a processor's market at the moment because cattle are in abundant supply, probably not in the finished condition they would like, but no-one can help that.

These tough times need good communication and skills between the producers and the financial institutions. We know one day it will rain. It will turn around. They will need refinancing. They will produce more beef again and it will be of prime quality, meeting the world demands as we can do. The other industries that have been thriving at the moment are lamb and mutton, and particularly wool is having a really good time of it.

I think one of the reasons for this regarding wool is that, yes, there is a world demand out there for a natural fibre of high quality but our production is way down. One of the reasons the production is down is that, yes, it is a dry period, but a lot of producers have not survived this downturn. They have not gone through this 20-odd years because it was too tough, and some of them would have been foreclosed by financial institutions, wrongly or rightly. We just hope that the negotiations that were taking place then will hopefully have changed now that we are introducing this mediation bill so that it is done and accepted by both parties in a universal decision.

A couple of industries that are doing it tough right now are the pork and dairy industries. The pork industry is suffering from an oversupply in world markets. It is very tough at the moment. Grain prices are okay but it is just general oversupply. The dairy industry, too, is okay but it could be a lot better. Those industries would need good negotiations with financial institutions. They need negotiations where it is very open and transparent, and I am hoping this mediation bill absolutely helps that to happen and that it allows these businesses in the pork industry and the dairy industry to survive this downturn and wait for the next good times to arrive.

The other thing of note is that the federal government is making tax laws that are easier for businesses to survive these downturns. I will talk about the FMD system. The FMD is a farm management deposit where in the good times landowners and agricultural producers are allowed to put money aside for the tough times. What a great system to have, because we know, due to benchmarking figures, that over the last 30 years it has worked out on average that two years in 10 are your two good years when you have to make money, and the other eight years you must survive and try to be profitable.

So, if there are two years in 10 that are going to be years when the money is really going to be made for that 10-year period, you certainly do not want to waste it. You certainly do not want to just throw it all to the tax man. You want to be able to say, 'Can I take this money out forward for the next drought, the next downturn, the next commodity collapse or maybe the next bad political decision that is made?' and an example is what has happened in the beef industry, that you then have to survive. These FMDs are there to help those producers do that, and that is a new mechanism out there that has been taken out to $800,000 now where it was $400,000 24 months ago.

The other thing is that with these booming industries I alluded to—beef, lamb, wool and mutton—we look at the free trade agreements and we look at world demand and world markets. I really hope that they continue on because this run that we are seeing in these commodity prices is nearly unheard of at this stage, especially in my generation. We have been in the industry since 1992 and we are thinking there could be a few more years in it yet. Again, this is the time that I am hoping the industry is able to lay down funds, like in the FMD system, to help them through the next downturn that occurs, whether it be seasonal or regarding commodity prices.

The introduction of this farm debt mediation process will provide protection and financial security for farmers and, importantly, will put South Australian farmers on a more level footing with their interstate counterparts. It is also worth noting that the commonwealth government is committed to a nationally consistent approach to farm debt mediation processes. New South Wales, Victoria and Queensland are states that all have farm debt mediation legislation in place, so we have been fortunate to be able to review and understand some of the benefits of having such a framework in place.

Notably, an important piece of feedback gained related to the Victorian scheme is that farmers involved in that scheme felt more supported and less vulnerable than they otherwise would have, had the scheme not been in operation. The considerable mental stress that is understandably experienced by farmers being subject to foreclosure is something to be taken very seriously.

Another point about suicide and suicide prevention is that when this stress comes upon farmers, the worst thing is that when farmers are pushed to the wall and pushed to the limit, because they have access to a means of committing suicide, they are more likely to be successful than their city counterparts. It is another reason to make sure that we do everything we possibly can to help with this mental health issue and suicide prevention. We as a government believe that this will help both the financier and the farmer over the long term, and that good communications take place for good outcomes. I commend the Farm Debt Mediation Bill to the house.

Mr TRELOAR (Flinders) (16:15): The South Australian government is committed to providing improved protection and financial security to farmers through the introduction of the Farm Debt Mediation Bill 2018. The bill seeks to legislate a mandatory farm debt mediation scheme to be administered by the South Australian Office of the Small Business Commissioner and has been modelled on the successful farm debt mediation legislation and scheme in Victoria. Debt mediation is a structured negotiation process in which the mediator, as a neutral and independent person, assists the farmer and the creditor in attempting to reach a mutually agreeable outcome on the present arrangements and future conduct of financial relations between them.

The Farm Debt Mediation Bill seeks to enforce a mandatory farm debt mediation scheme before a creditor is able to foreclose on a farming operation. Best farm business management practice recognises that financial planning and financial problems are best addressed at the earliest possible stages. In South Australia, we have rural financial counsellor services through Rural Business Support—and what a great job they do right across the state—who are able to provide discreet support and advice about farm financial matters.

Rural financial counsellors can provide a free, confidential and independent service that helps primary producers with information on government assistance schemes, and personal or family counselling where required; however, when financial institutions and primary producers find themselves in a situation they are unable to resolve through discussion or negotiation, then the mandatory farm debt mediation legislation can and will help. The new legislation will provide a framework for open communication and relieve the emotional and mental stresses associated with financial issues, and ensure South Australia's farmers are given every opportunity to resolve financial problems.

Farm debt mediation resolution can also be pursued through the voluntary South Australian Farm Finance Strategy and the Farming Industry Dispute Resolution Code under the Fair Trading Act 1987. The farm debt mediation legislation and scheme will put South Australia's farmers on a level playing field with their east coast counterparts. Similar legislation has been in place in New South Wales, Victoria and Queensland for some years now, and this legislation has the support of the banks, the financial services industry, and the primary industries in these states.

The federal government, too, is committed to a nationally consistent approach to farm debt mediation, encouraging the establishment of a standard set of principles and model legislation across the states. In the absence to date of a nationally consistent approach, the establishment of mandatory farm debt mediation legislation will align South Australia with practices in place in other states. The South Australian government is committed to unlocking the resources and production of the state's regional areas and ensuring growth opportunity for regional businesses and industries.

A healthy and supported agriculture sector is vital to the state's future economic prosperity; however, harsh climate conditions, damaging weather events, and unpredictable commodity prices, all of which have been spoken about in other contributions, can make farming a volatile and sometimes unpredictable industry leaving farming families and their assets in financial difficulty.

A mandatory farm debt mediation scheme in South Australia can help relieve some of the emotional and mental stresses associated with a foreclosure at what is understandably an extremely difficult time. This legislation will ensure that South Australian farmers are given every opportunity to resolve financial problems, meet growing demand for our food and fibre and grow our economy, jobs and exports.

In 2013, the Fair Trading (Farming Industry Dispute Resolution Code) Regulations was introduced under the Fair Trading Act 1987. This provides for a farming industry dispute resolution code, which is administered by the Small Business Commissioner. The code applies to a dispute between a participant in the farming industry and another participant in the farming industry, or a person to whom goods or services are or may be supplied by the participant relating to the business of primary production.

While this code provides the Small Business Commissioner with important statutory powers to assist in mediation and alternative dispute resolution, it requires a party to lodge a dispute, and then the Small Business Commissioner must be satisfied that a genuine dispute exists and genuine attempts have been made previously to resolve the dispute. The code has been used on a number of occasions and will remain an influential factor in the alternative dispute resolution process. Also, while participation under the South Australian Farm Finance Strategy is voluntary, the banks can be compelled by the Small Business Commissioner, under the farming industry dispute resolution code, to participate in mediation.

Under the new Farm Debt Mediation Bill 2018, creditors will have no alternative but to undertake a mediation administered by the Small Business Commissioner before enforcement action against a farmer under a farm mortgage commences. The new bill also allows for a farmer to request mediation within 21 days from the date written notice was given by a creditor stating the creditor's intention to take enforcement action against the farmer. A creditor who proposes to take enforcement action against a farmer under a farm mortgage must give written notice to the farmer.

A creditor must not take enforcement action until the expiry of the period of 21 days from the day that notice is given. The notice must state that a creditor intends to take enforcement action and that mediation between the farmer and the creditor is available. A farmer who is given a notice may, within 21 days from the date that the notice was given, notify the creditor that the farmer requests mediation concerning the farm debt involved. A farmer who is liable for debt may request mediation.

A creditor who receives a request for mediation from a farmer may, by notice given to the farmer, agree or refuse to participate in mediation in respect of the farm debt involved. If a creditor subsequently refuses to participate in mediation with the farmer, the farmer can apply to the Small Business Commissioner for a prohibition certificate, preventing the creditor from taking enforcement action against the farmer up to six months.

Conversely, the creditor is entitled to apply for an exemption certificate if the farmer is in default under the farm mortgage, no prohibition certificate is in force against creditor, and certain conditions regarding mediation proceedings have been met. The exemption certificate allows the creditor to begin enforcement proceeding and remains in force for varying periods of time depending upon the steps previously taken under the legislative framework.

The Small Business Commissioner must make arrangements to facilitate the resolution of the farm debt dispute by mediation as soon as notice is received that a farmer and a creditor have agreed to participate in meditation. A failure by a creditor to agree to reduce or forgive any debt does not demonstrate a lack of good faith on the part of the creditor in participating or attempting to participate in mediation. Once proclaimed, the Office of the Small Business Commissioner will be responsible for the administration of the farm debt mediation scheme.

There is a lot of detail in my contribution. It is a very important bill that provides support to our primary producers and farmers that has not previously existed. It is very important legislation that brings us in line with other states and gives farmers and primary producers, who find themselves in difficult financial situations, the opportunity to negotiate and mediate their way through the situation. I commend the bill to the house.

Mr CREGAN (Kavel) (16:24): I rise to support the second reading of the Farm Debt Mediation Bill. Farm debt mediation legislation has been in place in New South Wales since 1994. Legislation in a similar form to the bill now before the house was introduced in Victoria in 2011 and later in Queensland in 2016. I welcome the member for Giles indicating the opposition's support for the bill. I have listened carefully to the contribution of other members, including the member for Heysen.

I appreciated very much the contributions made by those members, particularly the sharing of directly relevant experience and stories of the difficulty faced by many farmers in managing debt during circumstances of drought, hail, pests, inclement weather events and other seasonal changes, which make farming a difficult occupation at the best of times. I will reflect in further detail on those challenges in a moment in my remarks. The bill has as its object:

…to provide for the efficient and equitable resolution of farm debt disputes by requiring creditors to provide farmers with the opportunity to have the disputes referred to mediation before the creditors are able to take possession of property or other enforcement action under farm mortgages.

Clause 6 does much of the work of the bill by prohibiting enforcement action by creditors who have failed to comply with the terms of the bill. The real machinery of the bill is to be found in clauses 8 and 9. Clause 8 requires that no enforcement action by a creditor be taken unless notice requirements in respect of the availability of mediation are observed and, by operation of clause 14 together with clauses 8 and 9 and the other clauses of the bill, no such action can be taken by a creditor unless they have been issued with an exemption certificate.

It is necessary also to observe that a farmer may obtain a prohibition certificate under clause 13 and no enforcement action can be taken against a farmer who enjoys the protection of such a certificate. The operation of similar clauses in the New South Wales legislation was tested before the High Court in Waller v Hargraves Secured Investments. The decision was handed down by the High Court on 29 February 2012. I relate the circumstances of the proceedings to the house in brief though, I hope, sufficient detail to illustrate the significance and importance of this legislation at times when farmers appeal to the law to vindicate and protect their rights.

The creditor, Hargraves Secured Investments, obtained an exemption certificate after mediating with a farmer in respect of a farm debt. As might be expected, there was a loan agreement giving rise to that particular farm debt. The farmer and the creditor negotiated a second loan agreement as part of the settlement of a dispute in relation to the first loan. Later, a third loan agreement was negotiated when the second was breached.

I have had the benefit of considering a gloss on the case prepared by Mr James and Mr Frost of the firm Clayton Utz. Mr James and Mr Frost observe that the primary question for the court was whether the exemption certificate issued to Hargraves lifted the bar on enforcing the mortgage for the advances made under the third loan agreement.

You will recall, Mr Acting Speaker, that the exemption certificate was issued in respect of the first loan and loan agreement. The court held that the successive discharge of the debts under the first and second loan agreements extinguished the creditor's obligations arising under the mortgage. As a consequence, no enforcement action could be taken under the mortgage by reference to obligations arising under the subsequent agreements because the third loan agreement created a new interest or power over the farm and, of course, there was no certificate available to the creditor for that third agreement.

Worth observing was Justice Heydon's reflections on the misfortune that the bill is directed at assisting farmers to overcome. I reflect that the member for Narungga has similarly adopted or reflected on these remarks. Paragraph 28 of Justice Heydon's judgement states:

The background to the act—

that is the New South Wales act—

lies in the notorious problems which face Australian farmers. They include harsh climatic conditions; the vulnerability of crops and animals to disease; unpredictable volatility in prices on world markets; the tendency of farmers to be asset-rich, but cash-poor; their dependence on loans; the risk of speedy ejection from their land if there is entire freedom for creditors to enforce their general law rights, despite the possibility of remedying defaults if climatic and market conditions change; and the expense of and often delay in litigation as a method of keeping creditors within their rights. In contrast, some perceive in mediation a capacity to produce much cheaper and speedier outcomes.

We see great benefit in an adequate scheme to effect mediation between creditors and farmers in South Australia. It is important to observe that a farmer may request mediation under our bill before they fall into default. It is our clear intention to create a scheme under which farmers can take early and direct action before farm debts become unmanageable. We wish to prevent, wherever possible, farms being repossessed when a negotiated outcome might otherwise have been possible.

Members in this place, in the course of debate, have earlier reflected on the advantages of forcing parties to the table early, particularly in circumstances where a family home might be repossessed by creditors. That home has a significance in the life of that family far beyond the business as might be obvious, and I respect very much the contribution made by members in terms of the pressures that face farmers whose homes are being repossessed, often at times of great stress, but also of great stress in the wider farming community. It is often the case that the misfortune that befalls one farmer befalls an entire farming community.

A farmer is defined to include a person engaged in a farming operation, and the act affords a wide meaning to farming operations so as to include any of the following activities undertaken for commercial purposes: agricultural, pastoral, horticultural, viticultural, forestry or apicultural activities—and I will return to apicultural activities in just a moment—poultry farming, dairy farming or any business that consists of the cultivation of soils, the gathering of crops or the rearing of livestock; aquaculture or the propagation or harvesting of fish or other aquatic organisms for the purposes of aquaculture; or an activity prescribed by regulation. It would only be right that there be a catch-all at the end of the clause.

You will know, Mr Acting Deputy Speaker, that apiculture is the keeping of bees, and I reflect only very briefly that my own father kept bees. My role was to assist in smoking the very small number of hives that were maintained on the property and, on occasion, robbing those hives.

Knowledge of primary production of all types is waning in our society. I am pleased to say that on this side of the house we maintain an abiding interest in every form of primary production and, in some cases, direct and clear knowledge of changing industry conditions. Many of us on this side of the house, in fact, return to farming operations when in our constituencies. I cannot say that directly for myself, but I am particularly interested in the welfare of farmers within my community, in the success of their businesses and family farming businesses, because the success of those operations directly informs the wealth of my community and the wealth of this state, as well as the welfare, of course, of those families and the communities that they support and from which they come.

We will always fight to maintain the interests of farmers. This bill is a very practical tool to assist farmers manage their debts in some of the circumstances I outlined earlier and in some of the circumstances other members outlined to the house. I commend the bill to the house.

Mr PEDERICK (Hammond) (16:34): Thank you, Mr Acting Deputy Speaker. You do a fine job in your role at the moment, as you do as the deputy whip and as the member for Newland. I rise to speak to and absolutely support the Farm Debt Mediation Bill. As this house knows, I come from a farming background. My family goes back to 1840, when they settled in Plympton and had a little farm and boot shop, and then they eventually ended up at Gawler River, Angle Vale and then down at Coomandook, where I have lived all my life on the family farm.

I am personally well aware of—and, knowing the seasons, certainly in this role—what can happen if you get a run of bad seasons—in some cases, a family break-up in farms. It can have a really significant effect on your bottom line if, all of a sudden, your debt blows out by an extra 50, 60, 80 or 100 per cent, or even more, for all sorts of different circumstances. Throughout the eighties and early nineties, we saw scenes that I hope we never see again. I remember interest rates were up around 22 per cent. Interest rates are now in the very low numbers, and I often wonder how people can function, even at the moment when we have high wool prices, high sheep prices and pretty handy cattle prices. They have backed off a bit, as I said the other day, and our cropping is going along not too badly, but with a lot of cost.

The cost of machinery and input is just massive on the land. You can have spray rigs that cost $400,000 to $500,000, you can have harvesters of up to $1 million on their own and you can have large tractors costing towards $400,000. Air seeder units—and I obviously have not priced one for a while because I have not actively farmed, as I have it leased out for 13 years—may cost $600,000 by the time you have the bin and the bar to cultivate a section. The old adage is: either get big or get out. That is a bit sad because you lose a lot of history, but I guess it is pretty true.

Certainly, many members who have spoken on this bill understand how it works when you have to put your hand in your pocket: you have to make it work. You cannot get nervous about high six-figure overdrafts or loans, or even seven-figure loans if you are in a big way. There would be plenty of people in this day and age who would be spending over $1 million just putting in a crop—plenty. It is a lot of money to put out, and there is no guarantee that you are going to get it back, and on the land that can compound not just the debt levels but also the stress levels.

The year 2006 was interesting. The good bit was that I got elected to this place as the member for Hammond. However, there was a drought, a severe drought, and I activated early. As a new member, you come in here and you look like a deer in the spotlights, sometimes—I appreciate that because I was there before. I thought, 'What do I do? I've got to help the people, the good farmers and their families, of this state,' so I advocated to get a special exemption so that we could get exceptional circumstances in this state without the normal three-year window of drought needed before it is even implemented. I managed to negotiate that with the federal government after there had been only two dry years, which is bad enough, and we managed to get exceptional circumstances funding into this state.

Some say that only helps people who may fall out of the system anyway, but it also helps a lot of other people. I am not trying to be too hard on those people, but I do agree that, with the other work that has gone on since that time of exceptional circumstances declaration, there is more work going on so that we can get farmers braced for the tough times, build up their productivity, build up their equity and build up their resilience so that they can manage the tough times.

There is a limit, though. There is a limit, because if you have too many dry years in a row, or prices crash or everything just cascades down upon you, whatever you do, no matter how good a manager you are, no matter what happens, you may fall over. Along the way, we need to do the best we can for our primary producers of this state. Primary production has something like over $17 billion produced every year directly, and that also translates to $25 billion, roughly, every year in finished food products, so we need to support our primary producers.

This is a little bit of an aside. I am a bit stunned when I hear about faux meat—fake meat, meat that some people might like to eat and that is their choice—on the meat shelves at Woolworths. I think that is disgraceful.

An honourable member: How does it get called meat?

Mr PEDERICK: Yes, how does it get called meat? It is not meat: it is made out of plants. I am fine with that. If people want to eat fake meat, go to town.

An honourable member: Knock yourself out.

Mr PEDERICK: Yes, knock yourself out, but I will eat real meat. I tell you what, a good steak or some good lamb is really good to tuck into.

Members interjecting:

Mr PEDERICK: Thank you for the help in the background. We have to stick to reality. We have to stick with supporting our producers. I mentioned the scenes we saw in the 1980s. Farmers crawled up windmills when the bailiffs turned up with the police. They went up these windmills and said, 'I am not coming down.' Some even went to the nth degree and said they would not come down and, sadly, some people took their own lives.

I think we have matured a bit since then. Thankfully, interest rates have not got anywhere near that level, but it does worry me that if they ever did we would be in real strife because of the price of inputs—not just the price of machinery that I was talking about earlier but also the price of fertiliser and sprays for the cropping. It is not just for the weeds; it is for the bugs. There is a fair bit of stuff, a fair bit of effort and a lot of money, as I said, with some people spending $1 million, and some people spending $2 million or $3 million on their inputs, just laying it on the line so that they can grow food for this state and this country to export, and for use domestically.

I want to reflect on a rally that was held in Canberra quite a few years ago. This was back in the 1980s, when 45,000 farmers rallied at a national tax summit in Canberra. I reckon that is not a bad job, getting 45,000 farmers together in one place. I have an aerial photo of these 45,000 farmers rallying on the first day of the tax summit at the now Old Parliament House in Canberra in July 1985.

In 1985, the prime minister at the time, Bob Hawke, hosted a national tax summit to overhaul the system in place. It was held in the first week of July, and the summit was to look at a range of proposals, including reducing marginal income tax rates. To do this, the idea of a consumption tax was floated, and farmers in particular were very worried about a consumption tax and its effect on fuel prices.

The 1980s had also seen farmers squeezed by high interest rates, as I mentioned earlier, and other farm costs. So on the first day of the tax summit these 45,000 farmers marched through Canberra in one of the biggest rallies in the capital's history, and the largest ever held outside what is now Old Parliament House. The National Farmers' Federation president, Ian McLachlan, the former member for Barker, gave a rousing speech (this was obviously before he was the member for Barker), where he told the crowd:

We don't want to be subsidised to produce and then subsidised to export, we are not after short-term handouts. But we are sick and tired of subsidising the rest of Australia. We want the government to remove taxes on our productive inputs, we want all the taxes taken off fuel so that we can get down to level terms with [international] competitors.

At the rally farmers came from most states and from places as far as away as Cape York and Perth, with one farmer commenting:

I thought today was a wonderful effort by rural Australia to get here. I came to be a drop in the ocean and I think that's why everyone came.

After the summit, Paul Keating, who was treasurer at the time, fought for the consumption tax, as only Paul would, but the prime minister, Bob Hawke, became worried about the political consequences. The summit showed that a wide range of people, not just farmers, would oppose the tax and in August of that year it was buried. New reforms were announced, such as taxes on fringe benefits, capital gains and the tightening of tax provisions in areas such as farm losses.

Many farmers felt that the Australian farm rally was the real success as it showed politicians what rural Australia could do. As I said, markets currently are not bad, but they will not stay that way forever. Costs are going up—fencing costs, input costs—and you run into some dry years. This year we are a long way from being out of the woods; some people have not had enough rain yet to put in much of a crop. Down my way they were fortunate to get 32 to 40 millimetres a couple of weeks ago, which really has the crops bouncing out of the ground, but we are a long way short of our average rainfall.

I have heard of farmers in the northern Mallee, up towards the Riverland, who have put in thousands of acres and a lot has come up and then died through a lack of moisture. It is pretty heartbreaking. It may be lower input country, but if you have run over 20,000 acres and you have 50,000 to put in, and 60 per cent of the first 20,000 has died, it is pretty heartbreaking.

We need to do what we can. We need to put resilience into agriculture. There are pressures on farmers at the moment, and there are issues, obviously, around live sheep export from what I have heard anecdotally.

We have seen disgusting scenes on television, but one thing I will say about the disgusting scenes is that, if Animals Australia thought they were so disgusting, why did they not put it out in the media when they had the footage instead of waiting six months? These animal activist groups do it every time. I challenge them to take responsibility for their actions, instead of just grandstanding. If they see poor animal welfare practices—and I do not condone poor animal welfare practices—they should release the footage immediately and show that they really do care, instead of just staging media stunts.

We need to make sure we have the right animal welfare practices because, unless you do, there is no profitability in it for the farm market. We saw what happened in 2011, when the live cattle trade was stopped. That did not just impact the poor station owners in the north. I saw some terrible practices on the footage. Not only did it impact those growers in the north, those people who had no other market but to put their cattle on a boat and send it to Indonesia, but it also reflected all the way down to places like Kapunda and other places where the pellets are made for the live export boats.

I can remember probably 30 years ago helping cart small bales of hay—man killers, I call them now. I do not know if anyone would want to handle small bales of hay. I do not even know if the member for Finniss would handle small bales of hay. He is saying no. I am glad he does not because they are terrible things. It is a good thing we have moved forward with bigger bales and round bales. I can remember trucking trailer loads of straw over to what was to be dehydrated fodder at Meningie, which was being pelletised for the live boat trade.

These issues do have far-reaching effects. Certainly, when the live cattle trade was pulled all of a sudden, there were quite a few station-owners who, sadly, took their own lives. Farmers are proud of what they do and they do want good animal welfare practices. We must make sure that the shippers and everyone in the industry—and even if the animals are not going overseas and they are being handled locally—promote good animal welfare practices.

I know of the recent yards upgrade that went in at Thomas Foods in the last 10 years or so. Sadly, they had the big fire in January. They use Temple Grandin style of yards with closed races and that sort of thing so that the cattle or sheep cannot see light and run better off trucks or onto tracks or into the processing area so you can handle them gently. There is no point getting animals stressed. Anyone who has anything to do with animals knows that, if you stress them, it does affect the quality of the meat.

Farm debt mediation is the prime interest we have in this bill. It was developed between Primary Industries and Regions South Australia and the Office of the Small Business Commissioner. Debt mediation is a structured negotiation process in which the mediator, as a neutral and independent person, assists the farmer and the creditor in attempting to reach a mutually agreeable outcome on the present arrangements and future conduct of financial relations between them. This bill seeks to enforce a mandatory debt mediation scheme before a creditor is able to foreclose on a farming operation.

Best farm business management practice recognises that financial planning and financial problems are best addressed at the earliest possible stages. That is why I talked about that business training so that people can get better up to speed to handle their debts and their issues. It is far better than a rescue package at the end where you are just essentially bailing people out.

We have excellent rural financial counsellor services through Rural Business Support. They provide discreet support and advice about farm financial matters. Rural financial counsellors can provide a free, confidential and independent service that helps primary producers with information on government assistance schemes and personal or family counselling where required.

Sometimes, when people find themselves at the end of the road and they are in a situation they are unable to resolve through discussion or negotiation, the mandatory farm debt mediation legislation can help. The new legislation will provide a framework for open communication and relieve the emotional and mental stresses associated with financial issues and ensure South Australia's farmers are given every opportunity to resolve financial problems. Farm debt mediation resolution can also be pursued through the voluntary South Australian farm finance strategy and the Farming Industry Dispute Resolution Code under the Fair Trading Act 1987.

Finally, when this bill goes through this place, as I believe it will, it will put our farmers in this state on a level playing field with their east coast counterparts. Legislation has been in place in New South Wales, Victoria and Queensland since 1994, 2011 and 2016 respectively. This legislation has the support of the banks—they have had their own headaches recently—the financial services industry and the primary industries in these states.

I note that the federal government is committed to a nationally consistent approach to farm debt mediation, encouraging the establishment of a standard set of principles and model legislation across the states. I think this is fantastic legislation. It has taken a while to get to this point. Farmers working with a small business commissioner get that mandatory negotiation up and running to give our farmers in this state a better go. I commend the bill.

The Hon. T.J. WHETSTONE (Chaffey—Minister for Primary Industries and Regional Development) (16:55): I am quite buoyed by the debate we have had here today. The contribution from both sides of the house has been sensible and robust input, and it is great to see that the farm debt mediation has received support from both sides of the house. Contributors have highlighted their concerns and the concerns of their constituents, and there have been many concerns. As a primary producer living in the regions and having been through the hardship of drought, bushfire and hail, I know that there is more to it than dealing with just the natural impediments of weather.

The member for Ramsay touched on people dealing with hardship. Sometimes it is not just financial hardship; sometimes it is dealing with matrimonial issues, a broken marriage through difficult circumstances, and sometimes it is dealing with isolation. In a lot of cases, primary producers are very proud people and they put their head in the sand and do not deal with the issues at hand, and those issues at hand can be a wideranging set of circumstances.

At the end of the day, it impacts on the way the businesses are run or managed or on the decisions that are made. At the end of the day, most of those decisions come down to financial decisions. The farm debt mediation is sensible legislation. It will be overseen in South Australia by the Small Business Commissioner, John Chapman. He is a sensible Small Business Commissioner, and he welcomes this legislation and thinks that it is long overdue.

The opposition has been briefed, and the shadow minister has seen fit to support this legislation. He has a good handle on something that has been a missing link in the support needed for primary producers. It also needs to be noted that this legislation has been supported by a wide range of sectors. Primary Producers SA has welcomed it and has said that it is a critical part of the puzzle because we know that primary production, farming, is a ruthless game.

We are dealing not only with decision-making but with situations that are out of our grasp, whether they be markets, emerging markets, trading prices or exchange rates. There are so many different variables that the farm debt mediation will help with.

Mediation will be based on an amended Victorian model, and I am really buoyed to hear that they have had a 98 per cent success rate with their model. I think that is an outstanding achievement, particularly for those primary producers who get into a really difficult situation. I know that when you are going through those difficult situations sometimes it is hard to make a considered decision, or it is hard to make decisions that will have a lasting impact, because your judgement might be clouded through high stress or outside forces might not be allowing you to make good judgements on the day.

This mediation acts as a line of communication. The Small Business Commissioner will be there to mediate between the farmer and the banker. It is about opening up the lines of communication. It is about making sure that there is some form of a negotiation process, and we all know that good communication and good negotiation normally end up in a good place.

There is also the thought that when someone experiences hardship there is a high level of intimidation by the financial sector in dealing with them. They want their pound of flesh, and they want to make sure that they are getting a return on their investment, as we all do. Again, that return on investment is only ever going to happen if we have a successful mediation process, which also provides the best chance for that business to be ongoing, making sure that it contributes to our state's economy and making sure that the business is given the best opportunity to continue to put food on the table.

If it is a primary producer with a family, it is making sure that family is looked after and that they do not have to go to government looking for social benefits. They do not have to go to government looking for some form of a handout. It happens a lot. When the chips are down, normally a lot of these people go to institutions looking for some form of assistance. This is where the mediation will potentially open up lines of communication to make sure that the situation is laid out on the table and dealt with.

The Parker family, who live in my electorate down at Maggea, have needed some form of a mediation process to deal with land clearance to be able to borrow money to put in a crop, and for too long it has been ignored. Even though it is a different set of circumstances, their situation is that if they had good mediation they could have dealt with this situation and it would have been resolved by now. It is a situation that has been ongoing for far too long, and this is just a prime example.

As I said, I have acknowledged Primary Producers SA. I also want to acknowledge the Banking Association. I have had significant contact with them. I have also had significant contact from the banking sector and their input. They are all there with open arms thinking that this legislation is vital to their industry because they know that the farmer who is managing their property—because they are the financier of that property—is doing an outstanding job and the best job they can. But sometimes through financial situations they do need that input.

I will commend the opposition again. There have been a number of members who have had input for the right reasons. We want to see business given the support they need so that they can be an ongoing business. There is nothing worse than having a cross next to a business name. It is always much better to see a tick and make sure that that business is ongoing.

I have also been contacted by the banks, and they have shown keen interest in this legislation. They are waiting for it to be introduced so that they can use this farm debt mediation process to assist some of their customers. This is real live information as we speak. Those banks are waiting to use this legislation. It speaks mountains of just how important this measure will be to our primary producers and of how important it will be to the state's future of an ongoing business.

I am very proud to have brought the Farm Debt Mediation Bill to the parliament. I am proud that we have worked in a bipartisan approach in this chamber. I thank everyone for their contribution, and I expect that this piece of legislation will go down in the history books as a great day for the primary sector of South Australia.

Bill read a second time.

Third Reading

The Hon. T.J. WHETSTONE (Chaffey—Minister for Primary Industries and Regional Development) (17:05): I move:

That this bill be now read a third time.

Bill read a third time and passed.