Bills

Farm Debt Mediation Bill

Second Reading

Debate resumed.

Mr ELLIS (Narungga) (12:17): It gives me great pleasure, as a regional MP, to rise today to speak on the Farm Debt Mediation Bill 2018. Indeed, agriculture was a big battleground in the Narungga election campaign, particularly between Liberal, SA-Best, the Australian Conservatives and the Greens, who all recognise the importance it plays in our economy.

I commend the Minister for Primary Industries and Regional Development, the Hon. Tim Whetstone, for introducing this bill and for the work he has undertaken in forming the legislation. I would also like to express my appreciation to the Hon. David Ridgway in the other place for the private member's bill introduced and carried through the Legislative Council during the last parliament. It is wonderful work by two members who recognise the vital role that agriculture plays in our state's economy and who are taking steps to support it accordingly.

This Farm Debt Mediation Bill comes in addition to the support we have shown by slashing ESL bills, which disproportionately affect farming families, as well as the policy announced at the election to arm the Office of the Small Business Commissioner in its fight to represent farmers against mining exploration companies, and a commitment to introduce multi-peril crop insurance. I know that the farming community is really feeling the benefits of a change in government.

Those who have spoken before me have spoken of the benefits and protections for farmers that this legislation will bring, and there is no doubt that the requirement for mandatory mediation will benefit both parties—landholders and the financial institutions—as clear communication and informed and fair negotiation are vitally necessary to ensure the best outcomes for all.

In the case of a farming family facing foreclosure along with significant financial loss and the upheaval that come with such a stressful plight, there is not only administrative and financial advice on offer through this legislation but also important emotional support, which is a positive spin-off resulting from such mandatory sharing with others of problems being faced. I am pleased to have found in my research on this topic that farm debt mediation legislation has been operating successfully in other jurisdictions, namely Queensland, New South Wales and Victoria, and that this bill, in particular, mirrors the Victorian model which was introduced back in 2011.

I was also pleased to find throughout all my research on this topic that in all jurisdictions with similar legislation the mediation process has been found to be wildly beneficial for all participants. I found a Law Institute of Victoria article, written in December 2016, particularly interesting. The article is entitled Debt and Distress and I will quote from the wise words of Brian Kennedy, a barrister at the Victorian Bar who holds a Master of Commercial Law and whose background is predominantly in banking and commercial practice, including commercial arbitration.

Mr Kennedy describes Victoria's Farm Debt Mediation Act as the vessel for 'a compulsory mediation scheme requiring mortgagees to offer farmers a mediation before commencing enforcement action', which is as good a description as any. He comments that the Farm Debt Mediation Act was considered so vital for the jurisdiction that it:

...was rushed through parliament to offer farmers some protection from mortgagees—usually with large institutional lenders—after the financial assistance provided to the many farmers affected by droughts and floods across Victoria expired in 2010.

Mr Kennedy adds:

Farmers are rightly seen as being in a worse position than other mortgagors in default because losing the farm entails the loss of both business and home. The High Court, describing the Act's New South Wales counterpart, stated: 'the background to the Act lies in the notorious problems which face Australian farmers. They include harsh climatic conditions, the vulnerability of crops and animals to disease…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…

The Act protects distressed farmers from 'speedy ejections' by voiding all enforcement action taken by lenders without first offering farmers a mediation, with the goal of keeping communication lines open so that a dignified exit or (less commonly) a settlement can be negotiated.

The article also reinforces:

The compulsory offer of mediation makes it particularly important for lenders to identify whether the Act applies before issuing mortgage default notices.

On my reading, it is also apparent that the quality of selected mediators and access to them is also very important to the success of the process. The Victorian Act, which this South Australian model I support today mirrors quite closely, is also very similar to the New South Wales farm debt mediation legislation.

I read with interest that New South Wales has been successfully operating its farm debt mediation legislation since 1994. It has just made some amendments to its 1994 bill—as recently as 3 May this year in the Farm Debt Mediation Amendment Act 2018—to enhance the principal act by strengthening its accessibility, flexibility and fairness. The amendments, which received bipartisan support, are seen as providing more opportunity for farmers and creditors to successfully resolve debt issues, providing opportunities for long-term success in farming businesses.

The amendments respond to the findings of a review of the act in 2017, overseen by the board of the New South Wales Rural Assistance Authority. The review found:

…broad stakeholder support for the key features of the Act including its simplicity, flexibility and structured approach to informal dispute resolution and its procedural fairness and equitable cost sharing.

Farm debt mediators, financial counsellors, lawyers, farmers, industry bodies and accountants provided that feedback to the review. The amendments are also cited as contributing to the national harmonisation of farm debt mediation legislation. Indeed, we can learn much from past experiences in New South Wales, having had such a mediation scheme for 24 years, the longest of any state in Australia.

Taking it back a few years, I found very interesting a report published in 1998 reviewing the first four years of the New South Wales scheme. It was released by the University of Western Sydney Macarthur, Faculty of Law. The report, entitled Research into Farm Debt Mediation Act 1994, was written for the New South Wales government's Department of Primary Industries' Rural Assistance Authority. The executive summary of that report states:

Lenders' and farmers' representatives reported substantial cost benefits from participation in FDM [farm debt mediation]. Those farmers who reported costs savings as a result of FDM…refer to quite substantial cost savings.

The review also stated:

Farmers report a significant decline in their debt to assets ratios post-FDM. This may be attributable to FDM, but may also be attributable to external forces such as increasing property values between 1992 and 1998.

I continue the quote:

Farm debt crisis leads to significant personal and lifestyle changes for the farmers and their families who experience it. There are significant social impacts which cannot be ignored: decline in community standing, unemployment, divorce and other family upheaval. Nonetheless, there are indications that FDM offers a more ordered transition in farmers' economic and personal circumstances.

Of the mediation process, the summary states:

FDM appears to increase the level of communication between farmers and lenders, but farmers remain concerned as to whether lenders really understand how they feel and whether mediation helped them to deal with the emotions which farmers experience as a result of farm debt. Farm debt mediators need to be even more vigilant to these concerns by farmers, and lenders need to understand the importance of these factors in contributing towards settlement prospects and durability of outcomes.

Of outcomes, it was stated that the first four years in New South Wales had resulted in:

… settlement by the parties not less than 72% of the time…The most prevalent outcomes of FDM [had been] the farmer refinancing, the lender allowing more time to pay, or the lender writing off part of the debt.

Indeed, in the Victorian example since the Victorian bill commenced, agreement was reached in 96 per cent of all farm mediations, which is well above the target program percentage of 75 per cent. Of interest, too, was the summary stating:

The majority of farmers and the overwhelming majority of lenders and representatives would use and recommend mediation again. Clearly FDM is regarded as a better alternative than going to court.

Further, it states:

The mediators undertaking FDM are performing their roles to the satisfaction of farmers, lenders and representatives, and there are no significant concerns about the FDM process overall.

If we fast forward 20 years to 4 May 2018 and to a New South Wales agri-politics article, journalist Alex Druce describes the amendments in the original Farm Debt Mediation Bill as having enjoyed bipartisan support from across the New South Wales government. It is great to see, finally, that we have it in the South Australian parliament with bipartisan support—years after the first private member's bill was introduced.

The key amendment in New South Wales, interestingly, was the inclusion of oyster and fish farming as well as forestry operations to ensure that they are now covered by expanded farm debt negotiation laws. New South Wales primary industries minister Niall Blair is quoted as saying the reforms, which passed unanimously, 'will enhance the 1994 Act by encouraging both farmers and creditors to seek realistic solutions to financial challenges'. He said:

It was particularly pertinent with drought gripping parts of New South Wales currently, particularly in parts of the Hunter, the Central West, the Central Tablelands, and the western and south-east greater Sydney divisions. Many farmers and farming communities in those areas are facing tough times.

The definition of 'farming operations' has been expanded in the act to include on-farm and offshore aquaculture and farm forestry, which used to be outside the scope of the law. Amendments to the New South Wales act also provide an incentive for early mediation by enabling farmers to ask their creditors to mediate before they default on loans. Mr Blair said that the government also aimed to discourage situations of the past, when multiple mediation sometimes resulted in a number of loan restructures, compounding the debt and, regrettably, sometimes bankruptcy. He states:

A requirement to offer only one mandatory mediation minimises this risk and encourages farmers and creditors to attend mediation with a willingness to find a viable and durable solution.

Another article I came across in my research is aptly titled 'Farm debt mediation: talk can be cheaper'. It was written in May 2015. It reflected on the success of the Victorian government's farm debt mediation scheme which, at the time of publication, was described as having been operating effectively since December 2011. The service was described as low-cost, confidential and independent, and there had been a very high level of satisfaction.

The example given was the 2012-13 financial year, with a total of 91 mediations completed and terms of settlement agreed in 87 cases for a success rate of 95.6 per cent. It was reported that comments provided by participants following mediation had been positive. I quote the comments provided by a couple of Victorian farmers:

This process gave us the opportunity to meet with our lender in a neutral location with a mediator who could put things in terms we could understand. We felt reassured we were not being bullied as had been our previous experience during direct discussion with the lender.

Another farmer said:

We believe this process is very good for farmers. Farmers are very emotionally involved in their business because it is also their home.

Finally, a quote from a creditor:

[It was a] well conducted mediation in what was an extremely delicate situation. The professionalism of the mediators continues to impress…

The 'Talk can be cheaper' article emphasised that:

Farm debt mediation is a structured negotiation process where a neutral and independent mediator assists the farmer and the creditor to try to reach agreement about current and future debt arrangements.

It clarified that:

The mediator's role is to facilitate the discussion and they will not provide advice on the matters in dispute. Mediation is a simple, voluntary and confidential process that is quick, accessible and affordable.

[In Victoria] the scheme is administered by the Department of Environment and Primary Industries and the mediation services are arranged by the Office of the Victorian Small Business Commissioner…

This is very similar to what the bill before us today has proposed, legislating that administration will be provided by the excellent South Australian Small Business Commissioner. The article continues:

The cost of mediation [in Victoria] is $195 per session for each party. This is [reportedly] significantly lower than market price and is subsidised by the Victorian government. Parties are responsible for their own costs in preparing for and attending mediation.

Whilst the urgency for this bill has been debated in the media, I am pleased it is in the Marshall Liberal government's 100-day plan. It is pleasing to note at this junction that this bill has been presented to the parliament well within the 100 days, another example of the government meeting its commitments, which is happening with startling frequency. Even though it has been raining off and on here in Adelaide over the last couple of weeks, steady rain has not been widespread across the state. We never know when the next drought will be upon us, which is the most well-known cause of financial difficulties for farmers.

Only last week in New South Wales, the government there announced additional support for farmers and their families facing drought with a boost of $284 million from its 2018 budget, bringing the New South Wales government's drought relief package to well over half a billion dollars. The Premier of New South Wales reinforced the value of New South Wales farmers with the words:

We know the drought is hitting our farmers hard but we want to reassure communities that we are doing everything we can to make sure the right help is available at the right time.

The Farm Debt Mediation Bill 2018 before this house also reinforces the value we place on our farmers in this state by ensuring that financial institutions offer the right support and the required mediation before taking action to foreclose on a farm mortgage. This is crucially important legislation that allows South Australian farmers to have such a support mechanism in line with other interstate jurisdictions, providing a level playing field with their Eastern States counterparts.

It also brings us one step closer to nationally consistent farm mediation and banking practices. Considering the mental health impact felt by farmers around the state and the levels of stress placed on them whilst waiting for rain or other factors, it is vitally important that they take this legislation as a means to increase their peace of mind. I fully support this bill and commend it to the house.

The Hon. A. PICCOLO (Light) (12:34): It gives me pleasure to stand in support of this bill. As my colleague the member for Giles has mentioned, the Labor opposition is supporting the bill because it represents an incremental improvement on the provisions in the law at the moment to help farmers. As the members for Giles and Ramsay have indicated, it was actually a Labor government that introduced the Small Business Commissioner Bill. The member for West Torrens was minister at the time. He was minister for small business when we introduced and passed the Small Business Commissioner Bill in this place.

I particularly wish to address in my commentary the farm machinery aspects of this bill—the debt that occurs from farm machinery because farm machinery represents a very big expenditure for farmers. Even though I do not have many farmers left in my electorate now because of boundary changes, I certainly had a number of farmers in my electorate whom I called on as supporters of mine. Given the history of the Small Business Commissioner Bill in this place, I will bring it to the attention of the house because the research of the members opposite has not quite highlighted that point at this time.

The Small Business Commissioner Bill, which was passed by this parliament, also had a range of codes of practice. There is an existing code of practice that deals with farming industry dispute resolution and that code of practice has been in place for some time and has provided some relief to farmers. Certainly, farmers I have spoken to have used the service already. That code of practice is under the Small Business Commissioner Act.

The Small Business Commissioner Act came about as a result of two inquiries by the Economic and Finance Committee of this parliament: one was the franchising code of practice inquiry, undertaken by the committee at the time when it was chaired by a Labor person, and the other was the farm machinery inquiry.

It is interesting to note that the farm machinery inquiry, when it was proposed by me at the committee, was actually opposed by all three Liberal members of that committee at the time. Their view was that there were no disputes between farmers and farm machinery owners, or producers and manufacturers, and that it was a waste of time. It was interesting to note that, as a result of both the franchising inquiry and the farm machinery inquiry, the Small Business Commissioner Act came into place. It was as a result of those two inquiries that the bill came before this parliament and was supported.

It is also interesting to note that the Small Business Commissioner Bill was supported by the then farmers federation. I worked closely with the then CEO of the farmers federation to develop a structure that would be flexible enough to deal with a whole range of industries, particularly the farming industry. It was also supported by Business SA at the time and also supported quite strongly by the ICA (independent contractors association), which I think now has a different name. They supported it from the point of view of small businesses, particularly contractors that were small businesses. It was also supported by a number of franchisees across the state.

Unfortunately, when the Small Business Commissioner Bill was brought to this place, it was opposed by the Liberal Party in this chamber despite, I understand, Liberal members having the right to vote according to their conscience. Not one of them crossed the floor on that occasion to support the bill that would give rise to the bill that we are speaking about today in which the Small Business Commissioner is going to take this mediation. I am glad to see that the Liberal Party have now come on board and seen the importance of the Small Business Commissioner Bill.

In fact, the reason the Small Business Commissioner Bill was opposed, according to Hansard, was that providing a service for small business, particularly when they are fighting against the big end of town, was seen as unnecessary red tape and stopping economic growth at the time. Clearly, members opposite have changed their minds since that time and see the benefit of providing small business with an advocate and people who can support them when disputes arise.

It is also interesting to note that the only industry organisation at the time to oppose the Small Business Commissioner Bill was the Franchise Council of Australia, and they were quite ferocious in their opposition. They certainly lobbied the members opposite. It is interesting that the Franchise Council of Australia represents the big end of town. Certainly, the Liberal Party, in both this house and the upper house, opposed the establishment of the Small Business Commissioner in this state.

There are a couple of other things I wish to add, which I think are very important. Last year, the Economic and Finance Committee accepted a motion of mine that we undertake an inquiry into how things are going in primary production, in the primary industries. That committee, in their report, 'From the paddock to the plate: a fair return for producers', made a number of recommendations, particularly for farmers, and I think they were very good recommendations.

Certainly, most of the recommendations were endorsed by the committee, although a couple were not. A couple were seen by members of the Liberal Party as unnecessary red tape. We will see if their view about that changes now. I am not aware whether the government has formally responded to those recommendations. I know that the government is required to respond within six months to the committee about how the government of the day will respond to those recommendations from the committee. I look forward to receiving those responses from the relevant minister.

I draw your attention to recommendation 2 of the committee inquiry and perhaps recommendation 3 as well. I think it is very important to have these dispute resolution processes in place, particularly where the bargaining power is unequal. That was one of the major findings of that inquiry: often the bargaining power between primary producers, whether it is farmers, viticulturists or whoever, and people in retail is quite unequal, and that is often where the problem comes about.

The committee recommended that the Small Business Commissioner be allowed to expand his role to provide advice to people who enter into contracts, whether it be a finance contract or any other contract for sale. That is important because it is one thing to say, 'We'll empower the commissioner to do this mediation when the dispute arises,' but it is much more important to empower producers to make sure that they do not actually sign unfair contracts. This is not only true of farmers. Other people often sign contracts that are to their detriment. Obviously, they are just busy doing their day-to-day stuff looking after a farm, and sadly, sometimes, some of the advisory services available in the private market are not as good as they could be.

I look forward to seeing the response from the relevant minister to see whether the Small Business Commissioner will be given additional resources to provide an advisory service to make sure that he can intervene at the point before contract signature to make sure that unfair contracts are not signed by primary producers. The Small Business Commissioner and others also recommended that on the government website, where it says 'starting a business', there perhaps be a bit more information for small business owners. When I say 'small business' I include farmers, because farmers are just a small business—in some cases quite a big business—but they are businesses nevertheless.

They also recommended that they look at some information about how they can work as a cooperative, or form cooperatives, because it is very important to aggregate their influence when they are dealing with the bigger players in the market. Whether it is purchasing finance, purchasing power or whatever, farmers buying cooperatively can strengthen their bargaining position and get a fairer deal. There are two things that farmers need: to keep their costs down and to increase their market share.

With those comments, I would like to support this bill and remind those across the chamber that the reason they are speaking today about the Small Business Commissioner in such glowing terms—which is appropriate—is that it was we who actually created it, against opposition from the Liberal Party at the time.

Mr DULUK (Waite) (12:43): I also rise to speak in support of this really important piece of legislation to ensure that farmers can have low-cost, high-impact results regarding credit and debt mediation. Currently, South Australian farmers do not have a mandatory farm debt mediation process. This means a farming operation can be forcibly foreclosed without any form of negotiation. The point of this legislation and similar legislation that occurs in other jurisdictions is that the parliament, the government, recognises the need for a form of farm debt mediation.

We know—as the member for Narungga acknowledged in his contribution, as did the member for Heysen—the worth of our farming sector and the importance it has, not only in the South Australian economy but also in the lifeblood of so many regional and rural communities. If we can keep farmers on their property for longer and help them through tough times and ensure that the family farm stays the family farm, then I think we are doing a good thing in the long run and helping the people of South Australia, which is ultimately what we are here to do.

This bill when passed will provide protection and financial security for farmers. Once established, the Small Business Commissioner will be responsible for the management and administration of the South Australian farm debt mediation scheme. Broadly, the essence of the bill is that it will give farmers a structured negotiation process through an independent person, the mediator, to reach a mutually agreeable outcome.

It will allow farmers to apply for a prohibition certificate through the Small Business Commissioner, preventing further action against the farmer for up to six months. Key elements of the proposed SA farm debt mediation framework include the provision of protection and financial security for farmers by enforcing a mandatory mediation process before a creditor is able to foreclose on a farming operation.

That is really important for many farmers. In a previous life, I worked for one of the big banks, not in rural and regional banking but in business and corporate banking. It was almost a position of reluctance to go down this path of foreclosure because it is the last thing that any lender of credit wants to see for their customers and their clients. Avoiding that process is very important. I think that it will be of great benefit and give a bit of guidance as well to credit lending institutions in this patch.

This legislation will put South Australian farmers on a level playing field with their Eastern States counterparts and ensure that farmers have a model in practice that they can rely upon in difficult financial circumstances. It will help farmers in financial difficulty to overcome such difficulty, re-establish financial viability or to exit the industry with a minimum impact on farmers and their families. It will help relieve the emotional and mental stress on farmers and their families associated with foreclosure and ensure that South Australian farmers are given every opportunity to succeed, meet the growing demand for agricultural produce and make a contribution to regional prosperity, which of course is the state's economy, jobs and exports.

As we are talking about exports and understanding their importance, I know that the minister in his position here will talk a lot about exports here in South Australia. Exports, especially in the agricultural space, whether it be wine exports, sheep and dairy exports—even in the live cattle section—wheat, barley or cropping, are so important to the future of South Australia. In fact, over the last three, four or five years, if it were not for the strength of our regions and the strength of our agriculture sector and in particular our mixed cropping farmers and their export to markets, we would be in a world of pain.

I know that in the member for Hammond's electorate farming is such an important agricultural component and that in the member for MacKillop's electorate wine and sheep and cattle and dairy are also so important. Without these fantastic regions in South Australia, this state would be in a much worse financial position and our state's budget would also be in a much worse financial position.

It is important that as a government and as a community we do all that we can to help our farmers because ultimately when our farmers are doing well, when wool prices and dairy prices and wheat prices are high, then we create jobs for South Australia and we create export. More importantly, we allow the opportunity for those profitable farmers to reinvest back in their communities and reinvest back in their businesses.

I know that when farming is good on Yorke Peninsula in the member for Narungga's community, they put back into the community. They buy newspapers. They put back into the footy clubs. They sponsor wonderful players in the league there to ensure that it is a very strong footy league on Yorke Peninsula. They steal players from metropolitan Adelaide as they commute to the peninsula to play with the member for Narungga for the Kadina Bloods.

Farm debt mediation legislation has been in place in New South Wales, Victoria and Queensland since 1994, 2001 and 2016, respectively. South Australia is certainly catching up in this area. I have to pay a lot of credit to the former shadow minister, the Hon. David Ridgway in the other place. When we were in opposition prior to the March election, he pushed for this bit of legislation in the parliament. We had a private member's bill, which was disappointingly not supported by the then Labor government.

It was pleasing to hear the contributions this morning of those opposite. The member for Giles, the member for Ramsay and the member for Light talked about the importance of this legislation, and rightly so. It is a shame those same members did not support this legislation a mere 12 months ago. But here we are today, and that is really important, and I feel that this bill will go through the parliament.

The proposed farm debt mediation framework is largely in line with Victoria's legislative framework, which is considered to be flexible, less prescriptive, and administratively effective and efficient. There is no point bringing in legislation that does not meet those requirements, so I am glad we are picking up here in this jurisdiction on best practice from across the federation. That is one really good thing about our federation, and that is why I am such a big federalist and support the model of federation: because it allows there to be a competitive advantage.

I am always reluctant when state ministers go to COAG in all jurisdictions and continue to pass powers over to the commonwealth as what is seen to be an easy fix. The moment we pass powers to the commonwealth is the moment we become a less flexible and agile federation. By allowing each state to develop rules and practices over time allows other states to then find best practice, to see what has been trialled and worked, and then bring it here into South Australia. That is pretty important. The member for Finniss, in his former life of chairing the dairy industry, would see best practice around the country and bring it back to South Australia. Understanding that nature is certainly pretty important.

Going back to the Victorian model, Victoria recently conducted an independent evaluation into its farm debt mediation scheme and the evaluation process revealed strong stakeholder support for the framework. The mandatory nature of Victoria's scheme was considered to be a key driver of its success. If we can have farmers and creditors come to the table in a swift mediation and come to a swift debt recovery position that can only ensure the financial stability of credit and lenders. Looking after those who provide credit is very important as well, because we do not have a strong economy unless we have strong banking sector. It is very easy to get on the board of bank bashing, but they actually provide a very important role in our society and in the functioning of our economy and marketplace.

Farmers participating in the Victorian farm debt mediation scheme feel more supported and less vulnerable than they otherwise would be if the scheme did not exist. That is reflected in the consultation process that was undertaken in Victoria. Hopefully, we will see that same confidence in the South Australian scheme. Data from the federal Department of Agriculture and Water Resources states that 90 per cent of farmers in the broadacre and dairy sectors are family owned and operated. Funds for land and capital purchases, such as new equipment, are limited to the viability of the farmer's property and of course their bank account.

As you would know, Mr Deputy Speaker, throughout the 1990s low interest rates meant a boom in lending and an increase in property prices. During the 2000s, when drought hit, loan repayments slowed. Since 2000-01, average farm debt has more than doubled. This has resulted mainly in an increase in the average farm size and working capital debt amounts for nearly 30 per cent of that increase in farm debt.

With larger farms and larger, more specialist machinery being utilised, investment in the agriculture sector is growing thus meaning higher expenditure and outlays for families. Operating expenses in the sector remain high as the costs continue to rise. Debt for broadacre farms in the 2016-17 financial year was on average around $616,900, and the dairy sector was $926,700—almost $1 million. This was an increase of 5 per cent and a decline of 2 per cent respectively in those two sectors.

Since 2011, when Victoria introduced their farm debt mediation scheme, 96 per cent of all mediations reached an agreement between creditors and the farmers. This is well above what was the 75 per cent program target. The voluntary system in South Australia has failed our farmers and this provision of mandatory mediation puts us a step closer to a nationally consistent approach. This bill will help South Australian farmers to be given every opportunity to grow and give them the support required to stay in business.

The previous government, as I reflected on recently, failed to protect the state's primary producers. The 21-day grace period provides farmers with a chance to seek mediation in the new legislation. This piece of legislation should be administratively effective and efficient because every farmer deserves to be treated equally. Denis McMahon of Legal Aid Queensland told the recent federal Select Committee on Lending to Primary Production Customers:

People's livelihoods, homes and whole lives revolve around the property. They are part of the community. When things go awry, it's not just one person that's affected; it's generally a whole family, and it can be generational. Other people within the community can also be affected if the client's business is wound up and other small businesses in towns don't get paid. All sorts of other ramifications might happen. It's also very socially damaging for a lot of people. These hurts don't go away.

That was in testimony to the recent federal inquiry. It is important that we understand what is going on and that it is not just a South Australian issue. It is a big issue in Queensland and obviously there were big drought issues at the time. We need to understand the impact debt, particularly on family farms, has on the stress and mental health of farmers. Also I think there is a lot of stigma associated with a failing business in country regions. If mediation can help reduce that stigma, I think that is very important. Having those debt levels under control is pretty important.

When debt causes stress in farming communities, it is the community that loses, too. With debt obviously comes the tightening of belts. Local groups and sporting clubs are often the first to lose their sponsorship money which is seen as a luxury to many local businesses. The loss of pride leads to the degradation of what makes rural and regional communities so close-knit and strong.

Deputy Speaker, recently I was on a trip with you throughout your wonderful electorate of Flinders, visiting the farmers in Wudinna and talking to local producers in Streaky Bay and Ceduna. Their pride for the community is so important, and we need to help farmers stay on the land and appreciate the community. I have been into the Mallee to places like Peake where they have great farming and proud communities. Things that we can do to support them—

Mr Pederick: A premiership side.

Mr DULUK: —a premiership-winning side—are so important. It must be your good work there and the good sponsorship of the member for Hammond. It is absolutely important that we support farmers and regional communities, and that is what we are going to do. Mediation is an important step in helping our farming-dependent rural and regional economies. In South Australia, we need to support our farmers through good times and bad. Farmers do not want to be slaves to the banks nor should they, and this legislative approach helps that mediation lead to a more financially secure future.

By creating a mandatory farm debt mediation service in legislation, farmers have their chance for their voice to be heard, which is so important. It allows there to be a great harmony. This bill brings a nationally consistent approach to our great state. I commend the bill to the house.

Debate adjourned on motion of Mr Pederick.

Sitting suspended from 13:00 to 14:00.