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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
2016-04-13 Daily Xml
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Bills

Farm Debt Mediation Bill

Second Reading

Adjourned debate on second reading.

(Continued from 9 December 2015)

The Hon. G.A. KANDELAARS (17:30): I rise to provide the government's response to this bill. The Hon. David Ridgway MLC introduced the Farm Debt Mediation Bill 2015 on 2 December 2015. The purpose of the bill is to provide for mediation of disputes between farmers and creditors relating to debt incurred in the conduct of farming operations. A process to deal with farm debt disputes already exists under the Fair Trading (Farming Industry Dispute Resolution Code) Regulation 2013, which provides mandatory alternative dispute resolution processes to participants on a low or no cost basis. The government is of the view that this code is effective.

I will highlight the following points as to why we believe the existing Farming Industry Dispute Resolution Code is working. As I just pointed out, the Farming Industry Dispute Resolution Code provides mandatory alternative dispute resolution processes to participants on a low or no cost basis. The code also deals with business-related disputes between farmers and local and/or state governments. The Small Business Commissioner has a variety of powers under the code to assist in resolving disputes. Parties can be compelled to attend meetings, exchange information, answer questions or participate in alternative dispute resolution processes.

There are two levels of penalties for breaches of the code under the Fair Trading Act 1987. On the one level, the Small Business Commissioner can issue a civil expiation notice for breaches of the code. The alternative is that the Small Business Commissioner can take court action to obtain a civil penalty of up to $50,000 for a corporation or $10,000 for a natural person.

The code is in keeping with the government's intention to keep matters out of court where possible and to help preserve business relationships by seeking to resolve farming disputes in a timely and cost-effective manner. The benefits of the existing code include: the range of matters dealt with under the code (as opposed to the bill, which covers farm debt only); the cost-effectiveness of the process; and the fact that matters are dealt with quickly and efficiently.

The bill introduces additional red tape and poses a significant resource issue. Parties involved in farming disputes would benefit from using the code to resolve disputes, as it can be dealt with quickly and efficiently through a process that already exists. While the bill covers farm debts only, the code includes any business of primary production, such as businesses of agriculture, pasturage, horticulture, viticulture, apiculture, poultry farming, dairy farming, forestry, rearing of livestock, and harvesting of fish and other aquatic organisms. The code also deals with business-related disputes between farmers and state and/or local government.

The Small Business Commissioner originally discussed the bill with the chair of Primary Producers SA, the Hon. Rob Kerin, on an informal basis. Mr Kerin expressed surprise at the introduction of the bill, based on his regular meetings with several bank officials in Adelaide who have confirmed they only have a handful of farming debt dispute cases.

The Small Business Commissioner held a similar discussion about farm debt in South Australia with former special drought adviser to the Premier, the Hon. Dean Brown. Mr Brown gave no indication that further powers to resolve farm debt disputes were needed. We believe the bill should be opposed as it has no benefit the community.

The Hon. R.L. BROKENSHIRE (17:35): This shows what disarray the Labor Party are in. I do not condemn my colleague the Hon. Gerry Kandelaars; he is just doing a job for the government, but what disarray the Labor Party is in. Here we have a situation where we are trying to help farmers. Agriculturalists, dairy farmers, horticulturalists, pastoralists, croppers and graziers are all farmers within the broader sense of the general wording of 'farming'.

Today, while the Labor Party opposes this, the federal Leader of the Opposition, Bill Shorten, is running around and jumping here, there and everywhere, saying that we need a royal commission into the banks. Yet, here we have a Labor government that will not even support a farm debt mediation bill.

Family First strongly supported and still supports the Small Business Commissioner. The Small Business Commissioner has an important role, but I have been dealing with people who are under extreme pressure when it comes to debt. We are seeing foreclosures and, sadly, I am advised that there are a lot of properties in certain parts of this state which the banks are looking at very closely with respect to potential foreclosure. In fact, I am told that some of those properties are on the market at the moment as a result of discussions between the bank and the farmer.

I want to commend Mr Lachie Haynes from the South-East. I have been discussing this concept with him, and he has also been talking to my colleague the Hon. David Ridgway, and if the Hon. David Ridgway had not put up this bill we would have done so. We have a state government, under the primary industries minister, which has put a measly couple of million dollars into helping farmers in the South-East in the third year of their drought. Yet, just over the border, between a water pipeline and other initiatives, a Labor government in Victoria has provided Victorian farmers in the same conditions with $100 million of government-funded input.

I do not see anything wrong in having a bill that puts some parameters around mediation between the banks and a primary producer when there are extreme hardships, particularly as a result of drought. There needs to be some compassion and a bigger picture looking right into the future. Looking at commodity prices in the South-East for a lot of the products they produce, I am sure that, once the rains come, we would have better outcomes if the banks had mediated properly with the mortgagor.

This legislation sends a very strong message to the banks of the intent of the parliament of this state. With those few words, I advise that Family First will be supporting this bill.

The Hon. D.W. RIDGWAY (Leader of the Opposition) (17:38): I thank members for their contributions on the bill. Of course, Mr Acting President, you made a contribution some weeks ago. While I do not really agree with much of what he said, I nonetheless thank the Hon. Gerry Kandelaars for his contribution, and I thank the Hon. Robert Brokenshire. Before I—

The Hon. R.L. Brokenshire interjecting:

The Hon. D.W. RIDGWAY: I do agree with what you said; I always agree with what you say, Brokie. I will just respond to a couple of points made by the Hon. Gerry Kandelaars. I am a bit surprised because he mentioned the Hon. Dean Brown, former drought coordinator of the Labor government and former Liberal premier. It was the Hon. Dean Brown who raised this with me that it was an important piece of legislation that we should implement. He was asking me to do it as a policy before the last election. He said it was really important and we should have this framework in place.

I do not know who has been writing the speeches of the Hon. Gerry Kandelaars, but the first I heard of this was from the Hon. Dean Brown who said that we have this framework in New South Wales and Victoria, and it works really well. In Victoria, there is a small business commissioner, yet we still have a farm debt mediation mandatory process in Victoria.

The Hon. Gerry Kandelaars mentioned the Small Business Commissioner. It is interesting. I have spoken to the Small Business Commissioner. He personally believes that they did not need it, yet there are still significant issues because this is a mandatory process that gets farmers and their financiers to the table first.

I am always a bit alarmed and it irks me a bit to say this, but the Hon. Martin Hamilton-Smith is the minister to whom John Chapman reports. I recall a discussion with the member for Waite when he was a member of the opposition when I talked about wind farms and mining on farming areas and he said, 'Ridgy, you have to think of the greater good. You cannot be too worried about a couple of farms.' So, I am a bit concerned about the direction that he may be giving his Small Business Commissioner.

The chief executive of Rural Business Support, Brett Smith, who handles all the rural counselling, supports this bill. All the banks that I have spoken to, which is the four major banks and Rabo, all support the bill. Some think, it is fair to say, that it is maybe not their number one issue that we should have but, nevertheless, none of them is opposed to it. Of course, the Hon. Rob Kerin, a former premier of the state, is not opposed to it. He accepts that at this point in time there are a very small number of farmers that banks are foreclosing on, but nonetheless this is a process of getting farmers and their financiers to the table earlier to start the mediation process.

That is what it is about: it is about making sure they address those issues early in the piece. It is also important to understand that it makes farmers address their business operations. Farmers are notoriously bad for addressing some of their business concerns. In our consultation with all the banks, Rural Business Support and Rob Kerin of Primary Producers SA and Grain Producers SA, the Australian Bankers' Association disagreed with a couple of matters and said that they would like to make a couple of amendments—this is the peak body of all the bankers' associations.

I will not move them tonight, as we are only doing the second reading vote, but I will quickly mention them because I know members are wanting to finish reasonably quickly today. The amendments came following feedback I received throughout my consultation process, most of which have arisen from the Australian Bankers' Association's submission. I think they are quite reasonable amendments which are mainly derived from the New South Wales legislation. I would like to thank the ABA for their detailed and very constructive submission.

The Hon. R.L. Brokenshire interjecting:

The Hon. D.W. RIDGWAY: It is the biggest and oldest industry in the state, the Hon. Mr Brokenshire, and I want to pay attention to it, and you will be out of this place soon enough, I am sure. As members would be aware, similar models already exist in Victoria and New South Wales. The bill currently before this house is modelled on the Victorian legislation; however, we have been asked to consider some safeguards and clauses from the New South Wales legislation which I have decided to take on board.

I will put those amendments on file over the next week or two. However, for the benefit of members I will outline these five amendments; the first is an additional clause to limit the scope of this bill to a farm debt between $50,000 and $30 million. The reason for this amendment is that if a farm debt is below a minimum threshold of $50,000, although mediation expenses are not too significant, the effectiveness of the process could be somewhat diminished. Similarly, if the farm debt is over $30 million, then perhaps mediation is not the most appropriate forum to settle a dispute of this magnitude.

The next two amendments I am proposing mirror each other in clauses 19(1) and 19(2), when a farmer or creditor is presumed to have refused to participate in mediation. This clause refers to how both the farmer and creditor are presumed to have refused to participate in mediation following an 'unreasonable delay' entering into or proceeding with mediation. The feedback we received was that this would create more certainty if there was a defined period.

Again, I have taken this feedback on board and now the farmer or creditor will be presumed to have refused to participate in mediation if either party is not entered into or proceeded with mediation within three months of a request being made under clauses 8 or 9 of this bill. To be clear, these amendments are intended to exist in conjunction with the remaining subclauses that already exist in clause 19.

The fourth amendment is the insertion of a subclause regarding the conduct of mediation under clause 23 which requires a premediation teleconference. This clause enables a mediator to call a premediation teleconference to be conducted by phone, video link or any other system of communication. The purpose is so that both the farmer and the creditor come prepared to mediate. The premediation conference gives both parties an opportunity to be better prepared for mediation and to ensure that they are aware of what is required of them. This should go some way to ensuring that the mediation itself is as fair and equitable as possible and takes place in a timely manner.

The final amendment, which was to clause 24(1)(b), prevents a person from disclosing any information obtained in mediation or in the administration of this proposed act without consent from whom the information was obtained or to whom it relates. This amendment requires consent to be specifically written consent. I think this is a sensible amendment which provides absolute certainty to ensure information is not being disclosed inappropriately.

I know it is late in the evening, so with those few words, and having foreshadowed these amendments which I said I would put on file in the next week, I thank everybody for their contribution and look forward to their support through the second reading of this bill and then, hopefully, the committee stage when we return in May.

Bill read a second time.

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