MP Slams Banks Over FMD Offset Accounts

February 22, 2017

The unwillingness of banks to offer their agribusiness customers the same offset facilities they offer home loan customers has angered Member for Maranoa David Littleproud.

Last month Mr Littleproud wrote to all major banks asking about their intention to develop offset accounts for eligible Farm Management Deposit (FMD) holders.

FMDs allow farmers to deposit up to $800,000 of primary production income into an FMD account during good years; this serves as a tax deduction when the deposit is made, but becomes taxable when it is later withdrawn.

Mr Littleproud said on Wednesday he has now heard back from all the major banks, who have confirmed they will not be offering offset accounts to their agribusiness customers.

“All I am hearing is excuses from the majors, and it is really disappointing because a small bank like the Rural Bank of Australia has already demonstrated this can be done,” Mr Littleproud said.

“The message the banking sector is sending is a real kick in the guts to the loyal family farmers who have banked with the same institution, often for generations – these people are the backbone of Australia’s agricultural industry.”

While Mr Littleproud said he understands the process of developing and offering an offset account for a loan held by a corporation or a trust is complex in instances where the FMD account is held by an individual, he also noted that most loan facility accounts in the agricultural industry are held by individuals or partnerships.

“The opportunity in all of this is the potential to save farmers $150 million a year in interest repayments, which would undoubtedly be fed back into the agricultural industry, which currently contributes 67 per cent to our export industry.

“I believe the banks owe it to their loyal farming customers to tell them exactly what the costs of providing these accounts are, and outline in detail why their business can’t be changed to offer these products.

“With the decline of the resources industry, our agricultural industry is primed to become even more valuable in transitioning our economy.

“But if we don’t look after the farmers that feed us, clothe us and export overseas, then the industry’s human and knowledge capital will be at risk.”