Farm Debt Mediation

The Hon. D.W. RIDGWAY (Leader of the Opposition) (16:03): I move:

That this council—

1. Condemns the state government for voting against the Farm Debt Mediation Bill 2015; and

2. Recognises that, in doing so, the state government has denied South Australian farmers the same protections enjoyed by primary producers in Queensland, New South Wales and Victoria.

This motion I am moving condemns the state government for refusing to support the Farm Debt Mediation Bill that was here last year and denying South Australian farmers the same protections as afforded to all farmers in the Eastern States.

It is interesting that this is a bill that I spoke to the Hon. Dean Brown about when he was the drought coordinator—I think that was his title—many years ago while working for the government. He said to me—I think it was prior to the 2010 election, so we are talking seven or eight years ago—that this was a piece of legislation that we need, that it was operating in Victoria and New South Wales, and that it was an important bit of legislation and an important tool in managing the conflict between farmers and their financiers when it comes to drought and financial stress.

Last week, we saw the Queensland parliament pass mandatory farm debt mediation legislation in Queensland. So, this is something that is not just a thought bubble from the opposition. It is something that has been well thought out across the Eastern States and, in fact, it was the government's own drought coordinator, who was being paid by the government, who made a suggestion to me that it was a good thing to do.

It certainly works very well on the east coast and very well in Victoria and New South Wales, and I am sure it will work just as well in Queensland. I could never really understand the rationale from our government and the Labor Party and the member for Waite, Martin Hamilton-Smith, who is the minister responsible. Of course, we have had it in New South Wales since 1994 and since 2011 in Victoria. It has been around since 1994 in New South Wales, so it has been around for a long time.

The minister referred it off to the Small Business Commissioner to have a look at the legislation. I had meetings with John Chapman, the Small Business Commissioner, and Martin Hamilton-Smith and his team of advisers, and public servants and spin doctors who were in the room that day. The government and the minister say we have a farming dispute industry code, but that has never been used, which is clear evidence, since its inception in 2000, that this voluntary code has not helped a single farmer. The minister does not understand his code, and that the voluntary code is at the end of the process.

It was very difficult to explain to him. It is actually at the beginning of the process where the mandatory mediation should take place because it is before farmers and business people get into particularly tight financial circumstances and while there is still some room to mediate and negotiate. He just did not seem to understand that it was more appropriate. He thought his voluntary code, which has never been used, was a better way to do it.

In terms of the Small Business Commissioner, I am not sure of his personal or private views, but you only have to look at how toothless the Small Business Commissioner was when it came to Elite Systems, the debacle at the Clipsal (not from the one just gone, but the one before), where Elite Systems, the lead contractor, went broke, leaving South Australian small businesses $1 million out of pocket. All the Small Business Commissioner could do was to recommend that they mediate. The Tourism Commission—and I really cannot understand why they would not want to mediate—said, 'Get lost, we are not prepared to mediate,' and so a very sour taste has been left in the mouths of small businesses in South Australia who lost $1 million through no fault of their own.

In respect of the due diligence that everybody said they should have done, they had a brand-new contract signed by the government with Elite Systems. It was only two or three months old when they were engaged by Elite Systems, and you would have thought the government had done its due diligence in that process. It is a little removed from farm debt, but in that process Elite Systems went into financial difficulty and the Tourism Commission then agreed to pay them weekly but took no steps at all—no steps at all—to make sure that the subcontractors of Elite Systems were being paid.

Of course, to rub salt into the wound, one of those subcontractors paid so many wages they tripped over to having to then pay payroll tax. They had to pay payroll tax on the wages that they had paid but they were never paid by Elite, and then in delaying paying the payroll tax they received a fine from the government for not paying the payroll tax that they should have paid if they had been paid by Elite, which in effect was the fault of the government because they had not done their due diligence. It just shows, I think, that the Small Business Commissioner is somewhat of a toothless tiger, and there may be other examples that will come out over the next few months.

However, when you look back at the farm debt mediation benefits, a report from the Macarthur University New South Wales around the model for mandatory farm debt mediation came back with a number of overwhelming positive statistics. Generally, the report found that:

1. the act is achieving its objectives;

2. all participants in farm debt mediation support the opportunity of farm debt mediation;

3. farm debt mediation is cost effective;

4. the majority of farmers and the overwhelming majority of lenders would use and recommend the mediation again;

5. the results of mediation under this act highlight the benefits of mandatory farm debt mediation; and

6. seventy-two per cent of farmers reached settlement.

I would remind you, Mr Acting President, that not one person or one farmer has used the voluntary code that Martin Hamilton-Smith says we should use, but 72 per cent of farmers who engaged in the process in New South Wales reached settlement.

Positive statements reported by farmers included that 30 per cent of the time farmers refinanced their debt, 20 per cent of the time the lender gave the farmer more time to pay and 23 per cent of the time the lender paid off part of the debt. After the farm debt mediation, 60.7 per cent of farmers felt positive and only 17 per cent felt negative. So, mandatory farm debt mediation is about getting the parties around the table early, before the relationship deteriorates. As I mentioned earlier, the current model that the minister thinks we should use here is at the other end of the process.

The bill I introduced would provide a critical support to South Australia's primary producers experiencing financial hardship by enforcing mandatory mediation between farmers and creditors before foreclosure. Of course, we have had a very good season, so hopefully that has relieved some of the pressure, but as you would know, having been formerly involved in agriculture, those tough times inevitably return.

In essence, the bill would establish a process by which banks are prevented from selling out the farm from underneath its owners without undergoing a process of debt mediation to see if suitable terms can be met. Primary production, as you well know, Mr Acting President, is the backbone of our economy, and farmers must be given every opportunity to succeed. It is important to note that my bill was supported by all stakeholders: the banks and farmers, the Australian Bankers' Association, ANZ, Westpac, Rabobank and farmers' and industry associations, just to name a few. It is only the government that is dragging its heels on this and playing politics.

As it is, life is getting tougher for South Australia's farmers. We all know the electricity crisis that the state is going through, and it affects primary producers just as much, if not more than a number of others. You have dairy industries that rely on electricity to milk their cows night and morning. Maybe a cropping farmer is not quite so reliant, but certainly some of the intensive animal activities are very reliant on reliable electricity supply. There is the rising cost of living, the emergency services levy increases that are crippling South Australian farmers and, of course, some of the natural disasters we have.

We need to ensure we have mechanisms in place to protect our farmers. I really wonder, at times, whether the cabinet colleagues and some of the cabinet ministers in the government really understand. Minister Brock represents a regional electorate that is semi-industrial with Port Pirie. I am not really sure that minister Brock understands. In my recollection, he may have voted for the legislation but clearly had no influence in cabinet.

Then, of course, we have Martin Hamilton-Smith, the minister responsible for the Small Business Commissioner, the minister who took the lead in voting against this bit of legislation. I am reminded of the many trips I did when that honourable member was the leader of the Liberal Party. I particularly remember one trip going down to the South-East, and we were going up the freeway. I know that in his professional capacity as a member of the Australian Defence Force he received very good training and that he has a different view of life due to his professional training. I was looking at the countryside, looking at the nice mob of cows and some sheep and thinking it was a good season—it was nice and green.

Martin Hamilton-Smith was sitting in the back of the car with me and he said, 'Oh Ridgey, look, there's a great spot over there for a machine gun post,' or, 'It would be perfect up on the hill over there for some heavy artillery.' Clearly, that was his professional training and I absolutely respect that, but it just showed that he did not really have any understanding of rural life and farming and it was more about another phase of his life. I just wonder whether he has been really able to grasp what it means to be a primary producer in South Australia—how important it is to have good support in a legislative sense.

We have the three eastern states—they are certainly three very big rural farming sectors—which have all seen fit to have this mandatory farm debt mediation, but for some reason he has decided we do not need it in South Australia. I think that is just a clear example of how out of touch he and the government are with the fact that the primary producers sector and food production are an important part of the government's strategic priorities. It is a very important part of the future for South Australia. We have legislation in other states that works well and is soundly respected by all parties, yet we do not have it here in South Australia. Mr Acting President, I seek leave to conclude my remarks.

Leave granted; debate adjourned.

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