December 11, 2014
Queensland Nationals Senator Barry O’Sullivan says he has begun seeking support from his parliamentary colleagues for a Private Senator’s Bill that would stop major rural lenders from enforcing penalty interest rates and foreclosing on drought impacted farmers.
Senator O’Sullivan said the Bill, which would be called the Drought Affected Farm Business Bill, states that whilst a farming property was under declared drought (based on the definition of a one-in-20 year drought event), a bank or financial institution cannot:
1. Apply penalty interest rates.
2. Foreclose on an agricultural business simply due to a collapse of the loan value ratio (LVR) covenant of the terms and conditions of the loan agreement.
Additionally, if a bank or financial institution decided to foreclose on a borrower for any other breach of a covenant, term or condition, they would not bring effect to the foreclosure until one year after the business is no longer declared to be in drought.
“Landowners across Western Queensland are hand feeding cattle in this drought while they also fend off plagues of kangaroos and wild dogs,” he said.
“Yet every time these farmers put their hands in their pockets, they find their bankers’ fingers there.
“Some people across the bush are on their knees due to the worst drought in a century – and the banks continue to kick these people when they are already down.”
Senator O’Sullivan’s announcement follows strong warnings from Federal Agriculture Minister and Deputy Leader of The Nationals Barnaby Joyce that government intervention may be necessary to force the banks to be more fair, decent and patient with rural landholders.
It also comes days after the release of the Murray Report, which has recommended several significant reforms to the banking sector.
“The Drought Affected Farm Business Bill will reduce an abuse of power by the banks and allow landholders to keep some of their dignity,” Senator O’Sullivan said.
“I have been working on this Private Senator’s Bill over the past couple of months because government needs to intervene to protect family farms and rural communities.
Senator O’Sullivan said he had written to the Australian Bankers Association, which would “leave them with no doubt about my resolve on this issue”.
“I have actively campaigned since taking my Senate position for the major banks to end their sledgehammer approach to dealing with rural debt loans.
“The banks have continued to be obstructionist and have denied almost every reasonable request. I warned them some months ago that time was up!
“All the while more and more farmers have been driven to the wall.
“The banks are living up to their reputation of being unreasonable bastards. The banks could reprieve their position by ending its application of debilitating measures, such as penalty interest rates, that only serve to drive people further down the road to financial and emotional collapse.”
This bill should be supported by all parties. It is the first step in saving our struggling farming industries.