Debate resumed from 17 November.

Mr PEACOCKE (Dubbo) [9.32]: I read the Farm Debt Mediation Bill with considerable concern. I believe in the principles of mediation. It is a strong principle that ought to be enforced. However, I believe that, if such mediation is enforced, its methodology should be beneficial both to the borrower and to the lender of money. It is critical that it be fair. This Farm Debt Mediation Bill will not really address the problem. Over a long period farmers have contacted me and have told me of their difficulties with banks and of problems in meeting their commitments to banks. The real problem is the charges imposed by banks under a deregulated system. Farmers expect the question of bank charges to be addressed in mediation. Unfortunately, that is not a matter for this Parliament; it is a Federal matter that needs to be addressed somewhere along the line. I am the last person who would support reregulation. Nevertheless, there should be a sense of responsibility by banks in the imposition of charges - a matter which the Commonwealth Government needs to address urgently. The bill, in its present form, would lead to a number of problems. It would be a nightmare for farmers and banks and it would be a bonanza for lawyers. It simply will not achieve any purpose.

Mr Amery: No lawyers are involved in the bill.

Mr PEACOCKE: The honourable member for Mount Druitt says that no lawyers will be involved in the bill. I assure him that lawyers will be deeply involved, if not directly in mediation then at some stage before it. Many farmers who are now in trouble with their banks and who, because of the drought and low commodity prices, face future problems with their banks, will be looking or are looking not just for mediation per se but for debt reduction. Mediation does not automatically guarantee that. Many of the farmers in my community who have approached me have a basic misconception of what this piece of legislation will do. If this bill is passed it will give them a false sense of security.

This bill has many faults. It is imprecise and does not define "mediation". This could lead to a situation where mediation becomes arbitration. If that occurred it would be non-appealable. That may or may not be beneficial to farmers, but it should not be allowed to occur. This legislation is rather like a bridge with no approaches to it; it leads nowhere and does nothing. In my opinion, mediation after the bank has exercised its power to call up debt is far too late. Mediation should take place early in the process. Obviously, if a farmer believed he was getting into trouble and he was unable to meet his commitments he would be loath to go to his bank manager and say, "I am in trouble", because he would fear that the bank would immediately exercise its rights.

If farmers made that approach and mediation took place early the probability is that farmers who are now being forced off the land either would be able to extend their loans and survive or would sell their properties and get off with some dignity and equity, which would enable them to start again. As I said earlier, to enforce a compulsory mediation at the request of a farmer or a bank after the bank has determined to exercise its powers under its security is far too late. There is another problem. In my
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opinion, if the legislation creates an arbitration system, it will utterly destroy the validity or the worth of mortgage security to banks on farms. That important factor needs to be considered. There are two basic issues which we all need to consider in respect of this legislation. The first is that we have an urgent and sincere desire to help farmers who are in trouble to get a fair go from their banks. Everyone in this House would agree with that.

In respect of the first point I must say that most banks that I know are fair to their clients in most cases. But I have evidence of some horrific things that I believe have been done to farmers. Fortunately, they are in a very small minority. I believe that the banks have been quite fair. The second thing we need to consider is the effect this legislation will have on the future borrowing programs of farmers, particularly following the disastrous drought from which we are now suffering. This is the most important issue that one could consider. I believe that the banks are not terribly interested in rural lending at the moment. That is not just an idle observation; it comes from talks that I have had with various banks on this issue.

I would not want to give the banks an excuse to cut off finance from farmers who are viable but who do need some finance to carry on after this terrible drought. That vital issue needs to be considered. That is why I said earlier that any legislation passed by this Parliament needs to be fair both to the borrowers and to the banks in order to preserve the future borrowing power of farmers, and to help them to recover from the drought, the low commodity prices and the high interest rates they have suffered in the past. We, therefore, have to walk a tightrope and be extremely cautious about the legislation. This bill is ill conceived in its drafting and is a political measure introduced by the Labor Party solely for the purpose of embarrassing the Government.

What does this bill achieve in reality? I shall run through the process. Bank A, with customer B, reaches a stage where it believes it has to call up its security, and serves the appropriate notice. Customer B then demands a mediation, which he would be entitled to do under this legislation. It needs to be clearly understood that the mediation could well end with no resolution of the problem. The loan is mediated, and there are time limits within the bill as to that happening. If the mediation is unsuccessful, even with the best will on both sides, it merely delays the final sale of the bank's security and further disadvantages the borrower because whilst that mediation is going on, interest is accruing. The disadvantage to borrowers could be very severe. I do not have time to go into the time scales set forth in the legislation, but they extend the time considerably, up to 12 months or so, for the bank to exercise its powers. If the mediation fails it costs the borrower more, the bank loses because it probably will not recover its full debt and cannot reinvest the money that is recovered, and in the end nobody wins. I am anxious for something to be done for farmers by way of mediation.

During the Committee stage significant amendments will be moved to this bill, so I shall not go through them at this stage. The amendments improve the legislation. The message should go out to farmers in the community, those who are struggling to survive, that whatever legislation is passed by way of a debt mediation bill it will not automatically mean a debt reduction bill. It is clear from extensive talks I have had with various people, including the farmers, that there is a misapprehension that the bill will save people by reducing their indebtedness to banks. That is not going to happen, and farmers ought to be aware of that fact. The bill will provide independent mediation in the hope that some solution can be reached that will be of value to them. This bill covers a limited number of creditors, and that presents another problem which this House, in conjunction with the banks and farmers, will need to address at some later stage. I do not have time now to go into that issue.

By and large this legislation - and I understand the Opposition has agreed to the amendments - will at least do something. However, we need to wait and see how it will affect lending. If the legislation is a failure, the House should be prepared to review it and then remove it, if necessary. In the meantime, this legislation has some prospect of being of assistance to farmers, even though that prospect may be small. Yesterday I and other honourable members had a conference with a group of bankers, New South Wales farmers and others. I was sorry that at that conference, and subsequent to it, the Australian Bankers Association and the individual banks have taken a line of total resistance to this legislation.

I understand why they did it; they think it is the thin end of the wedge, but with their cooperation we could have ended up with a bill that would have done something significant to help the farming community. We are all indebted to New South Wales farmers for their input into the amendments to make the legislation more workable. Let me say, as I began, that this legislation will not save farmers from being forced off their land. It is not about debt reduction. It is an effort to mediate on this traumatic, serious and desperate problem for farmers. In the end it is not this Parliament that should be addressing the issue; it is the Federal Government, which has the power to look closely at some of the charges made by the banks.

Mr HATTON (South Coast) [9.46]: I congratulate the honourable member for Mount Druitt for introducing this bill. There is no doubt that things would not have happened in this place, and certainly during the sitting of this Parliament, had he not done so. It has precipitated debate on both sides of the House, resulting in anger in some cases and concern in all cases, about what is happening financially to small business and to people on the land. We must not forget that we are talking about the whole range of the finance industry, not just the banks, although many of the financiers are backed by banks.

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I shall not repeat the concerns I expressed about the operations of the finance sector when speaking on the State Bank legislation. Suffice it to say that there is no longer a structure in this country, since the deregulation of the banking industry, which will cater for the long term, and particularly for the person on the land. In my view the Martin inquiry made some sound recommendations, but Martin was weak and did not have the guts to take on the banks. That was a great disappointment to many people around Australia. Senator McLean of the Australian Democrats revealed fraud, dishonesty and illegality in the operation of some banks, and in particular he revealed the famous Westpac letters. The amount of back pressure exerted in Federal Parliament was amazing. There was even an effort to try to interfere with the sanctity of the privilege of Hansard in an effort to prevent the truth from being exposed.

In my 20 years as a member of Parliament I have been aware that certain elements at the big end of town have an entree straight into Executive Government; and it does not matter whether it is Labor, Liberal or National. We saw that this week. The Australian Bankers Association telephoned me and asked me whether I would cooperate in delaying the bill for a week, and that is what I did. A meeting was organised by the honourable member for Manly. That meeting was attended by the honourable member for Wagga Wagga, the honourable member for Tamworth, the honourable member for Dubbo, the honourable member for Mount Druitt, the honourable member for Manly, me, the Australian Bankers Association, New South Wales farmers and a couple of private citizens who have had real problems with banks. I said my piece yesterday, and I said it with some passion. I expected those bankers to face the reality that there is anger on both sides of the House because the bill had been put off for a week, that they would accept something needs to be done and would proffer a way of improving the bill. Did they do that? No, they did not. They took an arrogant view, virtually saying that they thought the bill was bad but they had no positive suggestions.

The New South Wales Farmers Association had done its homework and had shown real concern for the people on the land. The association had amendments prepared. It had been in constant touch with me, with the honourable member for Tamworth and with others and it had updated amendments. Today the honourable member for Tamworth will bring the updated amendments before the House. They will certainly receive my support and I believe that they will be supported by the Opposition and other Independent members. We will have some sort of a bill and at least something will be done. I know about the attitude of the financial institutions. I became aware of that attitude when dealing with another major insurance company. The honourable member for Mount Druitt will remember that occasion. When we tried to interfere with a regulation that involved MLC Life Limited and $100 million the place filled up with blue suits. Those in the financial industry are well used to dealing direct with Executive Government. They had to deal with the democratic process yesterday and they showed their colours. I feel very strongly about that issue.

The honourable member for Dubbo has outlined many of the concerns that I share with him. I shall not repeat them because I do not want to waste the time of the House. I get angry when I do not get a response from people who have a responsibility. I understand that the financial institutions have a responsibility to their shareholders. I understand that an institution cannot lend money and have its mortgage rights interfered with. However, there has to be an understanding that in this process humanity is involved. Mediation has to be involved. It is interesting that the Westpac representative, Mr Joss, said yesterday that in his view the voluntary code of mediation was working in a large percentage of cases.

The fact is that there is still a disturbingly large number of cases in which the voluntary code has not been used and compassion and reasonableness have not been shown. We have all come across such cases. I have received complaints from Salvation Army officers against all major banks, in particular, the State Bank of New South Wales Limited and the National Australia Bank Limited. Offers made by the Salvation Army to mediate between the State Bank and farmers have been refused over the telephone. I should like to outline to the House two cases that have been of concern to me. One case involves the sale of a $1.5 million debt by the State Bank to a $2 company and the other involves a small property being sold up during a drought-induced rural recession.

The first case involves the "Kerwyn" property at Daysdale. Without advice, the State Bank sold the debt of $1.5 million to Silkdale Proprietary Limited for $1 million, thus divesting itself of the debt by writing off $500,000. No such generous offer was made to the property owners. Silkdale Proprietary Limited is a $2 company that purchased the property without inspection. It has no other assets and seems to have been set up specifically for that single transaction. After Silkdale purchased the debt, interest jumped to 30 per cent, at $613 per day. The debt now stands at $3 million. Mr Kerr has spent more than $150,000 in legal costs. That brings me to an important issue.

The most significant point raised yesterday by the honourable member for Mount Druitt is the enormous amount of money being spent in the court process. I think of the case of Mr Rigg at Nowra. I went to support Mr Rigg who chained himself to his premises at South Nowra. I believe that the Commonwealth Bank has illegally tried to transfer a mortgage from his cottage to the mortgage on his business. I still feel very strongly about that case. It seems that Mr Rigg might lose his cottage. The situation with Mr Rigg and others is that when people are on the deck and are before the courts, they have no money, they cannot fight, they are powerless. There is no justice in the system. That has to be fixed and it has to be fixed by legislation, if necessary at the Commonwealth level.

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I agree with the honourable member for Dubbo that the Commonwealth has to stand up and do something about this matter. The Commonwealth has to establish a structure that will look after long-term finance for people on the land. That can be done. The honourable member for Tamworth has done excellent work in that regard. I have had discussions with him and others about the possibility of $60 million being put into the system to set up a structure. I do not have time to go into the detail of the structure, which could be modelled on overseas models. Something could be done for small businesses and farmers.

The second case to which I have referred involves Mr Kuhne of "Washpool" at Rand. His property, normally valued at $400,000, is currently valued at $280,000 in drought conditions. The bank was owed $380,000. By taking eviction action in the Supreme Court, the bank would sell the property at a loss of about $100,000. The property is viable in good seasons. It could earn $100,000 in two good seasons. Its normal value would also cover the current debt. Mr Kuhne has spent more than $20,000 in legal expenses. In both of the cases I have outlined the State Bank has been prepared to suffer a substantial loss now rather than wait until conditions improve and the debt could be met or the property liquidated at a better price.

I understand that the issue is not simple. The honourable member for Dubbo made that clear. The question is whether a debt moratorium would work. The answer to that question is no, because the banks and the finance companies would withdraw from that form of lending and would therefore leave the farming community in a desperate situation, particularly in regard to money needed for restocking, seeding and other support necessary after a drought. I am not suggesting a debt moratorium. What I am saying is that the bottom line of the processes that are there now, without an alternative structure - that is, an alternative structure to reliance on banks and finance companies - and without a mediation process that starts early, is that increasing numbers of people will feel completely powerless and in the grip of a court system that does not deliver justice. In any event, if there were a chance that the court system could deliver justice, there would be no way in the world that those people could afford it.

Mr GLACHAN (Albury) [9.57]: At the outset I say clearly that I do not want anyone to get the idea that I am here to act as an apologist for the banks. I am certainly not going to act in that capacity and I want that to be clearly understood. I have a strong view that the banks have a lot to answer for. I am particularly concerned about the high level of interest that banks charge when they lend money compared with the very low interest that they currently give those from whom they borrow. That is an issue the banks need to address as quickly as they possibly can. That changes have to be made is evident from the difference between the huge profits banks are making and the enormous suffering and problems faced by those on the land in drought conditions.

If members on the other side of the House think that they have presented a bill that will solve the problems of rural Australia, they have another think coming. The problems of rural Australia have been with us for a long time and they are getting worse. Those on the land need a great deal of help to solve the problems of rural Australia. Somehow, sometime, someone will have to intervene in an effective way that will solve those problems. The bill before the House will not do that. In fact, the bill in its present form will not do much at all, except make things more difficult for those on the land. People on the land need a number of things. They need good commodity prices, good seasons and access to money. The ability to borrow money is an important element.

The great difficulty with the bill as it presently stands is that it will not help those who are in desperate situations, those who face being put off their farms. Many of those people will have to go anyway, but passage of this bill would make it much more difficult to borrow. The banks are businesses and if this bill were enacted they would decide that they did not want to be involved in this form of lending. They will put their money somewhere else. They will ask why they should take the risks involved in this sort of lending when legislation that will prevent them from getting their money back when they need to get it back is interfering with their operations. After all, it is not the bank's money but money lent by other people to the bank and in turn lent by the bank. This bill will make it difficult for people on the land to get finance and, if it is passed, other legislation would have to be introduced subsequently to force banks to lend money to people on the land. That is not on.

I understand what it is like to be a farmer. Few members opposite have been farmers, but many members on this side of the House are still farming or, like me, were farmers and have had practical experience. For many seasons I worked hard and did everything possible to achieve the best crop; I made sure I used the right seed and the best fertiliser and I obtained the best advice from agronomists. I put in many hours on the tractor preparing the ground and sowing the crop. But that does not automatically guarantee success. One year in late July or early August I had a conversation with a neighbour who said that his greatest worry was that Australia did not have enough money to pay all the farmers in Australia for the big crop we would harvest that year. He believed we would both achieve a 20 bag an acre crop, but it did not rain again after July and when we harvested the crop we only got five bags an acre. That is an example of the problems and frustrations of farming.

One year I produced an outstanding stock of fat lambs but the market collapsed and they returned only half the price they would have received if I had taken them to market one month earlier. I know the difficulty and frustration of taking to market a mob of young, first-class forward store fat ewes on the point of lambing, for which I was offered 26¢ a head. They are examples of the frustrations that farmers face. In that position, farmers need money from
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banks to carry on. When this drought is over our problems will not be solved. Those problems had been around for a long time. Farmers will need to obtain finance for seed, fuel, fertiliser and restocking.

If this bill is passed unamended the banks will say that they do not have enough money, or give some other excuse, to lend to farmers. This bill will do a great deal of harm to farmers. I am sure that members opposite have spoken with some farmers who are very keen to see this bill passed, but I suggest that they are farmers who face being put off their farms. I feel very much for those people, but some of them have no choice but to go. Cruel and hard as it may sound, leaving the farm would be the best thing for some of them, as they will not be able to make a go of it whatever happens.

Mr Amery: In some cases.

Mr GLACHAN: I agree that those cases are rare, but they exist. The honourable member for South Coast referred to some cases from the south of New South Wales. However, if the commodity prices double in the next 10 years, and if bank interest rates halve during that time, those farmers could still never pay the interest on the money owing. Everyone in those districts knows the position of those farmers, and that they would be better off if they left their farms, because they do not have a hope in the world of making a success. They should do that not only for their own sakes but for the sake of their families, who also suffer trauma as a result of huge debts.

I have the greatest respect for farmers, as they do a magnificent job. Since this nation was established 200 years ago our economy has been solidly based on the efforts, hard work and success of farmers, and that will continue for some time to come. Despite the fact that Albury is a fairly large city and considers itself to be a hub of industry and manufacturing, it depends very much on the success of farmers, who, year after year, month after month and day after day, spend money in the shops and businesses in Albury. They underpin the local economy. This nation needs farmers desperately, and we must protect them and help to keep them on the land.

Many farms could have been foreclosed a long time ago, but the banks, in some cases, have been fairly restrained in the way they have treated debts. The banks can determine fairly well which farmers will be successful. In every district there are one or two people will not make it. The banks, neighbours and others in the community know that. However, the banks are not completely blameless, and they must take more responsibility in lending money and supervising loans. They need to be more in touch with what the farmer is doing on his farm to ensure that he does not get into trouble. It is no good coming along at the end of the day when he is in a hopeless situation and then talk about mediation - that should occur at a very early stage. This bill provides for a stage of proceedings when it is too late to help.

Mr Martin: Pass the bill with amendments.

Mr GLACHAN: The bill must be very heavily amended if it is to work effectively. Major problems must be overcome, and mediation in some form or other will play a very important role in the future health of farming in Australia, and particularly in New South Wales. The way the bill is framed now, it will be no great help to farmers. A great deal of work has to be done, and the banks must change their attitude. We must take a practical look at the survival of farming in Australia, as we depend upon it. Many hard working, dedicated and first class people on the land deserve our support; however, the support provided by this bill will not do the job required.

Mr MARTIN (Port Stephens) [10.07]: The Opposition is showing leadership by introducing legislation that the Government could have introduced at any time during the past seven long years. The Government has had seven years, including four years of drought, to assist the farming community, but it has done very little for them. Last week my colleague the honourable member for Mount Druitt, the shadow minister for consumer affairs, made the offer in this Chamber that the bill could be passed here and amended in the upper House. That was refused, and now it appears that the Government might try to talk it out today. That would be tragic for the farming community. So to enhance the opportunity for this bill to pass through this House and be sent to the other place, I will shorten my speech.

The Federal Government established the Martin inquiry into banking. The Nyngan group's submission is outlined on page 288 of the inquiry's report. Page 283 of the report makes a suggestion about mediation, and I agree with the honourable member for Dubbo that it is a pity that that recommendation was not adopted. To that end this Parliament must act positively for our farmers. This week we saw the sell-out of the State Bank, one of the tools that could have been used to organise and ensure farming finance. That has gone, that is the past. This Government was hell-bent on selling the State Bank, and the financial loopholes and deals will come back to haunt the people of New South Wales.

The perception of farmers is that in many cases banks do not understand their problems. Much of that perception results from the downgrading of bank management. Instead of being in country towns, bank managers are either in provincial cities or in head offices, so the rapport between the farmer and the decision maker at the bank has gone. To that end a mechanism is needed to improve communications. An independent mediation system is needed in whose integrity both sides can have confidence. With such a system in place, problems can be worked through. The Gilgandra newspaper this week said it all for so much of New South Wales: it stated that this legislation should be passed.

The Opposition, with its minimum resources, is quite happy to improve the bill. If the bill can be improved and made to work in the interests of the farming community, the Opposition will be
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reasonable, and it will agree to improvements. The Opposition does not want to see the farming community left with such bad feeling between it and the banks. The average age of a farmer in New South Wales is 58 years. For only 20 years in the past 100 years have farmers had a reasonable relationship with banks, and this bill will rectify many of the problems. It will enable the parties to get together and resolve their problems, and put an end to any distrust and bad feeling between them.

In the United States at the end of 1990 there were farmer-creditor or mediation services in Alabama, Iowa, Kansas, Minnesota, Mississippi, Nebraska, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin and Wyoming. I wonder how many Government members bothered to find out which model could best be adopted for New South Wales. I wonder how many saw the video that was prepared by the University of New England, which shows how successful that system is. If they had seen it and had intelligently assessed it they would not have made the speeches they did last week and this week.

I was horrified to hear members of the National Party, that once great party that represented country people, speaking against country people. The Minister for Consumer Affairs was the worst in not supporting the rural sector and a fair system of finance - and by her speech the Government gave its game away. The Opposition has been able to force an inquiry through the Public Accounts Committee into the Rural Assistance Authority. If the program of farm and debt mediation is tied in with independent mediation, it would be possible to run a fair system. A mediation certificate can state that nothing can be resolved and the bank will foreclose; therefore there can be fair, open communication between the borrower and the lender. The Opposition asks nothing more than a fair go for the farming community of New South Wales.

Mr ARMSTRONG (Lachlan - Deputy Premier, Minister for Public Works, and Minister for Ports) [10.14]: This bill is important for the rural sector, and particularly for those who provide finance on a sale or for carry-on purposes of farming. This bill is not confined to banks; it affects other suppliers of finance, such as wool brokering firms, which are a traditional financier of livestock purchases; and carry-on funding to pay for shearing, for which sometimes a mortgage is taken on the land. The bill will affect finance that is left in by the vendor on the sale of property in the normal course of business. It will affect the security of people who leave finance in when a family partnership is dissolved. It will affect finance that is left in by the trustees and beneficiaries of estates, when finance is left in on a farm on a mortgage basis. It will affect finance that is raised privately through solicitors, accountants and other private financiers when a mortgage is taken on the farm.

I do not have statistics on the percentage of farms that have vendor finance, but it is considerable. I suspect that in some areas of the State 50 per cent of sales exceeding $500,000 and up to $1.3 million or $1.5 million would attract some sort of vendor finance. Up to 30 per cent of farms that are now in third generation ownership have some commitment to members of a previous generation: either an estate is wound up or a family member such as a brother or a sister has been bought out by the existing owner. If the legislation is passed, its tentacles will reach into many farms, families, bankers, accountants and solicitors.

I have no problem with the process of mediation; I support it strongly. That is one reason why negotiations have taken place between the Minister for Consumer Affairs and the Australian Bankers Association in recent weeks, and the Minister for Agriculture and Fisheries and the Hon. D. J. Gay and I have carried out negotiations. The banking institutions have agreed to form a voluntary mediation group, to be funded 50 per cent by the Rural Assistance Authority and 50 per cent by the Australian Bankers Association. This legislation will be amended today to achieve a more workable format.

The House needs to recognise the potential effect of the legislation on credit providers in this State, not only on banks but on wool firms and individual financiers. Rural industries, for as long as I can remember and for as long as records have been kept, have depended almost entirely on the availability of credit for seasonal purposes, market collapse, expansion and restructuring. Records show that since 1892 there has been a major rollover approximately every 30 years - a major transfer of considerable quantities of land in this State, usually every second generation. In every one of those major rollovers, in 1990-94, 1960-63, 1928-36 or 1900-06, most of the major sales were vendor financed. In many historical, highly publicised sales considerable finance was left in. One has only to look at the for sale columns in the rural weekly newspaper, the Land, to see the numbers of properties that come up for sale privately or at auction where vendor finance may be available to suitable applicants.

Other Government members will speak to the detail of the bill but my main objective today as the Leader of the National Party is to say that we entirely support the concept of the availability of finance, the right of people to borrow and the right of people to lend. And, of course, the people who lend have the right to get their money back in the same way that the borrower has the right to expect a fair deal and a fair go. In any borrowing and lending situation both sides seek commercial advantage. There is commercial advantage in borrowing finance an at attractive rate but the lender will not make finance available unless it is commercially attractive to do so. The Parliament has no right to do anything that will inhibit borrowers and lenders continuing to operate to the overall advantage of agricultural industries, particularly individual farmers.

We should look very carefully at the legislation and not jump to conclusions by accepting glib statements from the Opposition. This legislation will
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have no effect on interest rates or bank margins - the difference between the interest paid on money deposited and money borrowed. The bill will not change the margins banks charge to people considered to be at-risk borrowers. One of the biggest problems in rural Australia at the moment is that people are paying between 13 and 14 per cent interest on their borrowings and many are now incurring penalties called bank margins of up to 3 per cent - and in reported cases 3.5 per cent. The bill will not affect establishment and valuation charges, the recoupment of travelling costs, account servicing charges and penalty rates imposed when a farmer is as much as 24 hours late with his monthly, quarterly or annual repayment - often due to circumstances beyond his control. He may receive the proceeds from his wool, cattle or sheep 24 hours late because of a mail delay but he still has to pay the penalty.

Those are the real costs of borrowing. There are also small, hidden charges such as for the local manager to travel to visit a farm, and valuations at the behest of the banks. These things are written into agreements but they are hidden costs. The bill will not help people with these issues; that is where it is deficient. The Opposition probably believes that the bill will help but it is missing the whole point: keeping people on farms and viable. With a bit of assistance and a fair go people can have a viable future. We are not in the business of throwing people off farms but there will always be some people, as there always have been, who for various reasons get into financial difficulties and have to leave their farm, or may have to.

Mr W. T. J. Murray: People go broke in a good time.

Mr ARMSTRONG: Indeed. Some people work at going broke. That applies in all forms of business and in all forms of life. The legislation is extraordinarily narrow. Very few people will have access to its provisions. It is designed to accommodate those people who have exhausted all other forms of credit and assistance and are facing bankruptcy. But out there in people land a certain amount of enthusiasm has been whipped up that the bill will be a panacea for all the problems of farm credit. It is not; it is a con. It is an absolute hoax. The Opposition has been short-sighted. It may have captured the thoughts of a few people who do not understand how farm finance works. If the bill is passed - I suspect it will be - it will severely inhibit, and I suspect dry up completely, vendor finance on the sale of properties. Many families will be put into turmoil regarding security of money that has been left in a property or estate run by a family relative or in some other family arrangement - and they are many and complex.

The bill ignores entirely the real cost of money to people. It is the cost of money in its entirely that is the problem in farming. People do not want to leave their farms and they want consideration in regard to the cost of money so that they may stay on their farms and remain productive. The legislation reflects the capacity of the Opposition: it simply does not understand what it is attempting to do. Opposition members may even mean well - we know that they are being political - but they do not understand the ramifications of the legislation. This is because they have not been involved in business. I have some sympathy for them. They have received a cheque every fortnight in the mail - usually from a trade union or a government department. Unless you have had a bit of a roll in the dust, a bit of experience in the business world, it is hard for you to know what happens.

Mr Schultz: And understand the profit and loss sheets.

Mr ARMSTRONG: Indeed, Labor members understand about loss sheets at the moment because they have a building in Sussex Street that has a $10 million loss. They understand about banks calling in debt.

Mr SCHULTZ (Burrinjuck) [10.27]: Let me make it abundantly clear from the outset that I have no arguments against the process of mediation, but like many members of this House I have a very deep feeling about the way in which the banks have treated people in business and, more specifically, people running rural enterprises in New South Wales. I would like to take up a couple of points made by the honourable member for Port Stephens which were indicative of the introduction of the bill. It was pure political stunt making. It is about politics leading up to the 1995 election and an endeavour by the most financially irresponsible person in the State to get a little credibility in rural New South Wales at the expense of people working their butts off to try to make a living and who have come through a very severe recession. They have been subjected to interest rates set by the Federal Government. Since I was elected to the Parliament in 1988 not one Opposition member has made a critical statement about that or made representations to the Prime Minister. For some time rural people have been facing depressingly low commodity prices, compounded by the worst drought in Australia's 200 years of settlement.

Mr Fraser: And this mob is playing politics with it.

Mr SCHULTZ: That is right. Honourable members on this side of the House can go out tomorrow to talk with rural people right across electorates about their problems, and honourable members have been doing this for two or three years. I shall give an example of the type of human problem that has resulted from the irresponsible actions of banks and the Federal Government in condoning bank costs and interest rates remaining at their present level. About six weeks ago I spoke with a lady who lives in the high country. She was very upset at the time. I asked my wife to go and talk to her. The lady was almost in tears because her husband had been on the road for seven months with 800 head of cattle. She and her husband and their two sons were on the verge of losing their property because of the attitude of the banks.

Page 5776

Mr Nagle: You are the Government; you do something about it.

Mr SCHULTZ: Sit there and listen to something you know nothing about, you little twerp.

Mr Nagle: On a point of order -

Mr DEPUTY-SPEAKER: Order! The honourable member for Auburn will resume his seat. The honourable member for Burrinjuck will address his remarks through the Chair and the honourable member for Auburn will cease interjecting.

Mr SCHULTZ: The reason the lady was upset was that her husband had telephoned her two nights earlier in such a stressed state that he was contemplating suicide. This is not a laughing matter; it is a very serious situation brought about by the attitude of the bank he was dealing with. On the following Sunday my wife and I went looking for this man. We found him 300 kilometres from where his wife thought he was. We sat down and talked to that man for 2½ hours to try to console him and put him in the right frame of mind in the interests of his wife and children. That is the sort of heartbreaking human problem we are dealing with in rural New South Wales because of the attitude of banks and the inaction of the Labor Party at the Federal level and State levels in this country.

The previous Labor Government in New South Wales sat on its butt for 12 years and did absolutely nothing to assist people in such circumstances. Members of the Opposition should not preach to this Government about what it is doing for rural people. The Government's record is there for all to see, and it includes the introduction of a package to assist people in terms of intergenerational farm transfer and the removal of stamp duty. That is a classic example of an initiative undertaken by members on this side of the House. To illustrate further how serious the problem is, last week a representative of the Salvation Army told me some heart-rending stories about property owners and small business people who have real problems as a result of the way banks are treating them - and this is at a time when banks have made announcements of massive profits. Banks are doing nothing to assist people. I remind honourable members that business in rural New South Wales, as the honourable member for Dubbo said, relies on business generated by people on the land.

Mr W. T. J. Murray: This bill disadvantages small business.

Mr SCHULTZ: That is the point I am getting to. What the very learned honourable member for Barwon said is quite true. This bill definitely does contain some difficulties in that regard. I have no problems with the mediation provisions in the bill. A quality lifestyle requires some kind of mediation. But it has to be sensible, balanced mediation. I was pleased to hear that last night, in the spirit of bipartisanship, a group of politicians met with many people who will be affected by this legislation to try to reach agreement on amendments to ensure that the bill goes someway towards resolving the problems that people in rural New South Wales are faced with. I feel strongly about this matter. As I said before, I am one of the rural members of this House who has experienced similar problems, and those will be compounded by this inadequate and ill-conceived legislation.

From my experience and as a result of discussion with constituents I know that banks and lending agencies change the ground rules from time to time. Representatives of the banks sit down with people and go through what they call a mediation process to come, hopefully, to a sensible solution for all involved. Two or three months down the track they are called in again because circumstances change. Things happen that are beyond their control, vis-a-vis a drought, and they are faced with a new set of rules, their problems are compounded and their despair is magnified a thousand times. They are looking down the barrel of losing their homes. Too many people have had that happen to them. Families who have been on the land for 140 years have lost everything - their rural farming enterprise.

Personal friends of mine, who have been on the land for generations - a total of 143 years - have lost their properties. The husband and the wife are working elswhere to support their children and keep them going. That is the real issue. The Government is concerned about genuine working people. As many honourable members have said in relation to farm properties and the ability of people to manage them, there will always individuals who will go broke whether they are on the land, in business or in the Parliament. Unfortunately, that is a fact of life. The Government opposes the bill for a number of reasons. There has certainly been a failure to consider the full costs of the proposal. If banks are forced to mediate in relation to farm sector debt, understandably they will view the farm sector less favourably within their lending portfolio.

That in itself will cause a significant and permanent reduction in the supply of credit to the farm sector and inhibit the development of financial products tailored to meet the needs of farm business. Both effects would be detrimental to the long-term financial ability of the New South Wales farming sector. They are two very important and pertinent points. The Government, however, as I and many other honourable members have said, recognises the need for improved mediation services in light of the current financial difficulties experienced by the farming sector. The meeting held last night was indicative of the concern held by Government members about the situation. The Government, unlike the New South Wales Australian Labor Party, has taken a preferred approach to work with the Australian Bankers Association, the National Farmers Federation and the New South Wales Farmers Association to enhance the existing farm assessment scheme and mediation service, particularly through amendments to the code of banking practice and the farm code.

Page 5777

Extensive consultation and negotiation with these bodies has already led to significant improvements to existing schemes. The Government has increased mediation assistance from $1,000 to $1,500 in each case. Given the level of industry goodwill associated with the current scheme, the Government is of the view that the enhanced scheme warrants further trial before resorting to mandatory approaches. This legislation, in its present form, is draconian. It has been driven by people who have no direct appreciation of the fundamental problems that rural people face. I thank the House for allowing me to briefly outline my concerns for my constituents, particularly those in small business and in the farming sector. I hope in my heart that the amendments to be put forward in the Committee stage take that enormous human pressure off those who are living in despair as a result of the current drought, which is devastating rural New South Wales.

Mr SCHIPP (Wagga Wagga) [10.40]: The honourable member for South Coast mentioned during his contribution to the debate that yesterday I attended a meeting with the honourable member for Tamworth and the honourable member for Dubbo from this side of the House; the honourable member for Mount Druitt, who introduced this bill; the honourable member for South Coast; the honourable member for Manly; and representatives of a broad sector of interested parties, including individual borrowers. When I left that meeting I thought, "Give us another week and we could find a solution to this issue which is acceptable to all sides". I said something similar to the honourable member for Auburn when we dealt with the lorry owner-driver legislation. Over a series of meetings we came to a compromise in that regard which was accepted by the Parliament. It was an excellent result.

As I walked away from yesterday's meeting I thought that with a little time we could have a similar result in this regard. Fortunately, during the night a lot of hard work was put into this legislation. At yesterday's meeting the honourable member for South Coast showed a particular interest in the contribution of Mr Ross Bentley from Gilgandra. He was one of the original New South Wales rural counsellors in 1989. He is currently a rural consultant and an adviser to the New South Wales farmers. Mr Bentley said that the legislation, in its current form, is overkill; a sledgehammer to crack a nut; 32 pages of overkill which need to be amended.

The honourable member for South Coast said this morning - I hope I heard this correctly - that the honourable member for Mount Druitt, who is putting forward the view of the Opposition, is also attracted to the amendments which were put together overnight. I believe the honourable member for South Coast said that he supports those amendments. The time frame would be reduced; a lot of the top-heaviness would be removed. If amended, the bill would not have the dramatic effects which have been forecast.

We have heard glowing reports about what happens in the United States. However, other reports have given a different view. For example, there has been a contraction of available finance to the farm sector in the States where heavy legislation such as this has been introduced. I am very pleased that the honourable member for South Coast walked away from the suggestion about moratoriums. That is the next step after this legislation. Once legislation such as this is introduced, history shows that if further problems arise draconian measures are introduced. The American experience is quite different from that of the Australian experience. In the United States there is a plethora of banks - small local banks and large banks. The situation may have been out of control. I am not a student of the American situation. I believe that we have to address our situation, not just examine what is happening in other places around the world. The systems are dramatically different. We are talking about an Australian situation.

The honourable member for South Coast will play a critical role in determining the form of this legislation. I guess his view will be picked up, to a large extent, by the other two non-aligned Independents. The honourable member was quite critical of the banks. He said that they were obstinate. He gave a number of examples as to why he thought they do not play the game and are unfair. At the meeting yesterday the representatives of the banks tried to explain the reality of what is likely to happen. The honourable member for South Coast - I do not include the honourable member for Mount Druitt because he did not make this observation - virtually said that it was a threat for the banks to say, "This could lead to an increase in interest charges overall" - because someone has to pay the cost of the legislation currently before us - "or a withdrawal of financing away from the rural sector. It has the potential to increase the cost of money". That can have a dramatic effect, as we have heard today. I did not take it as a threat. The bankers were trying to put into perspective what happens in the real world.

The New South Wales farmers' representative, Stan Moore, made an observation about bank bills. A lot of farm financing is done by way of 90-day bank bills which are provided at a discount. Once that contractual mortgage arrangement, that security arrangement - the relationship between the financier and the farmer - is interfered with, what happens? There will not be bank bills. Therefore, farmers currently operating on that sort of system - these are successful farmers - will have that option withdrawn from them. I see another consequence. At present a person can go to the bank, and the bank is prepared to lend 40 per cent to 50 per cent of the farm asset. Because of the threat, because there will be a reduced value on the farm as an asset, they will go to a much lower ratio. They may only be able to borrow 25 per cent. These are the problems in the real world.

I believe that yesterday the bankers were saying two things. First, that this is what happens. It was not a threat; they were just giving us the benefit of their experience. I am not here as an apologist for the banks, but I think we have to be fair about the contributions of the parties involved. Second, the bankers' representatives said that a voluntary system of mediation is currently coming through. However,
Page 5778
it is not perfect; it has its shortcomings. But the banks, as a corporate group, are addressing the issue. They believe they can get a system which is tantamount to a mandatory mediation - although not actually written in those terms. The bill refers to voluntary mediation, but I rather think it is mandatory mediation. The bill provides that once the authority orders a mediation it must occur. To my mind, that is mandatory.

Yesterday the banks said that they are working on improvements to their voluntary code, which has been in place for only a short time. Somebody in this place - it may have been the honourable member for Port Stephens - castigated that system; he said that it has failed. I do not know how one can apply that sort of test to a system which has been in place for only a short time. The system has its warts and those problems have not yet been ironed out, but we were assured that those problems are being worked on. Prior to this legislation coming before the House work was being done to try to get the system into a workable form. We were given a couple of examples in which banks had failed the test; they had not applied the voluntary code in certain circumstances. We do not know the circumstances; therefore, it is hard to make a judgment.

Many judgments have been made with respect to the crisis within the farm sector without the benefit of both sides of the story. After the meeting I spoke to a couple of people who had been in attendance, such as Mrs Boyd and another lady, who showed me documentation about a mediation process that had gone on for six or seven years. She seemed like a fair and reasonable woman. She put forward a point of view which was quite different from that put forward by Mrs Boyd. She said that if she had been subjected to independent mandatory mediation, she would have been ordered off her farm three or four years ago. She said that if that had happened, she would have come out with about a quarter of a million dollars cash in hand.

I was becoming confused. I would have thought that anyone who had that sort of equity in a property could sell the property, go to their financier, and say, "There is the payout. Goodbye. I have a quarter of a million dollars". I was confused. That is why I am saying that we should not take these issues on face value as they are presented by the media. I have had my experience with the media. It can turn issues to the advantage of the headline rather than to the facts of the matter.

I am not being critical of this lady, because her farm is being sold on Saturday and she expects to come out of it not with $250,000 in her hand, but on the losing end and $400,000 in debit. She put forward the point of view that this measure would hurry the process; that there would be someone there to say, "You do not have a future. Get off". Mrs Boyd saw it from another angle entirely. She views the legislation as debt relief legislation. That is an indication of the false expectation that has been built up; that somehow there is going to be a magical writing off of debt through a mediation process.

At the meeting yesterday, Mr Bob Joss of Westpac Banking Corporation pointed out that day in and day out the bank is dealing with these issues to solve problems by reducing debt, waiving charges or putting people on lower interest charges for a period until they can overcome their problems. That is happening already. How is this legislation going to assist that process? Mrs Boyd has a debt of about $2.3 million but her property is worth much less than that. There will be no magic for Mrs Boyd. Who is going to mediate and say, "We will wipe all that. You can keep your property"? It is not going to work that way. In fairness to the honourable member for Mount Druitt, he said yesterday, "The Opposition is not locked in to this particular legislation. If anyone can come up with some realistic amendments, we will look at them".

I trust he will adopt a similar approach in Committee when we work through the proposed amendments. This will streamline the bill and reduce its 32 pages to about five, retain the mediation process but truncate the long, drawn-out process, which, as the honourable member for Dubbo said, could last beyond 12 months, with interest charges rising higher and higher. I suppose the best solution would have been to sit back for a while and, with this legislation hanging over the head of the banks, say to them, "If you do not come to grips with voluntary mediation, if it is not working and is seen to be not working, we will move in on you". But that will not happen; it is not an either-or situation. I hope that the amendments will be supported by all parties.

Ross Bentley has a feel for what is going on. He has been in the farm consultancy-mediation area for about five years. He is one of the very experienced people involved. I hope to hear something about the role of the Federal Government in this matter. I heard yesterday that the Prime Minister and Senator Collins do not support this legislation. I do not know what the honourable member for Mount Druitt thinks about that. I was informed that the Prime Minister and Senator Collins are of the same view about this legislation as honourable members on this side of the House.

I should have thought that before introducing this legislation the Opposition would have liaised closely with members of the Federal Government, in particular with Paul Keating and Bob Collins - after all they are all members of the same party. We must approach this legislation with caution. The finance that will be required to get the farm sector out of its dire situation will be enormous. Successful farmers will have to stretch their equity process beyond what has been regarded as the rule of thumb in the past.

If this bill is accepted in its present form, there will not only be a weather drought; there will also be a financial drought that will affect farmers significantly. I ask practical members, such as the honourable member for Auburn, to have a real think about where we are heading with this legislation, and I ask him to support the amendments that will be moved in Committee. They are the best compromise
Page 5779
in the circumstances. My preference is a delay to allow the banks to consider giving effect to their voluntary code, but I realise the Opposition will not agree to that course. In the circumstances, I will support the amendments. I believe they offer something that honourable members on both sides of the House can support, that the outside world can live with and that will not have the effect on the farm sector that has been forecast in this place and by the Prime Minister. [Time expired.]

Mr W. T. J. MURRAY (Barwon) [10.55]: I have been close to being totally bankrupt in an agricultural business; I have been a banker, having worked for five years in a bank at Collarenebri; I have been a farmer and grazier; and I have been involved in the political scene for approximately 20 years. This is a bill of total division; it will pit the agricultural sector against the small business sector in every town in every State, because there is no provision that takes into account the small business component of lending authorities.

This process will literally exclude small business, and when that happens the small business sector will take matters into their own hands and commence bankruptcy proceedings against individual farmers. If that happens, this mediation bill will have benefited no-one. The current situation is that mortgagors do not want bankruptcy proceedings - such proceedings are not in their interests. However, because the legislation excludes the small businessmen, they will be left with no option. Consequently, small businesses and farmers - each of whom depends on the other in every small town in country New South Wales - will become divided.

In 1930 the moratorium legislation was passed in this House. It was hailed at that time as the great saviour of agriculture and farming in this State. But what happened? Immediately the lenders had reference to the Moratorium Act excluded from the mortgage documents. If one insisted on those references, one did not get the money. It was as simple as that. A similar situation will arise if this legislation, as it is currently drafted, becomes law. To obtain funds borrowers will have to agree to the removal from the loan documents of references to the Farm Debt Mediation Act.

The banks and the finance sector are rapidly withdrawing from agricultural finance. It is extremely difficult today to get machinery finance from some finance companies - in fact, from most finance companies. They have a capacity to utilise all their available funds by lending outside the farm sector. They do not want to get tangled up with the farm sector - and this is before the Farm Debt Mediation Bill is put in place. Banks are leaving the industry in droves. The fact is that not all banks are crooks; not all farmers are angels either. Problems exist on both sides. Many farmers will sign themselves into mortgages and borrowings, knowing full well that they have no intention of meeting their commitments under those mortgages. I have seen this happen. In certain circumstances the banks have been equally gross in their financial dealings with farmers. The bill will play havoc with the rights of the borrower and the lender, to an extent that will cause both parties a great deal of harm.

Mr SMALL (Murray) [11.00]: Although I am aware that speaking times in this debate are limited, I want to point out briefly that the concept of the Farm Debt Mediation Bill is totally unacceptable. On many occasions over the past five or six years I have been approached by constituents in relation to securing mediation. The bill is not the answer to the present problems in rural areas, but would have been the answer to the problems of the severe depression years during the 1930s. I have done whatever I can to assist to resolve the problems between the farmers and the banks. Some banks have been fair in their attitude; others have been ruthless. Some banks have written off debts of $100,000 or $200,000 and have then helped to secure jobs for the farming families involved.

The other side of the coin is that some banks have been so ruthless that after a property has been sold, they still expect the former owners to pay off a debt of $100,000 or $200,000 although they are penniless. This bill will not help farmers, who need low-interest loans with long-term repayments. Interest rates can rise, the security for a loan is always subject to a charge, and there is also a charge for the risk factor. Bearing those problems in mind, the bill will not achieve anything for farming families and the farming community. Assisting the farming community and small business people in country towns by providing low-interest long-term loans is the way to go. If the bill passes through both Houses of Parliament, the banks will not be prepared to lend money fluidly to farmers, particularly in the present severe circumstances of drought.

Generally speaking, farmers depend on bank loans or financial assistance because of the nature of their enterprises and because of seasonal conditions. Whatever is done to assist farmers and small business people must be done in such a way that the banks will work in harmony with them. We must not establish legislation under which banks will not lend money in circumstances of farm mediation. The additional charges and commitments would not enhance a farmer's business; it would retaliate against him. A number of farming interests in my electorate are suffering hardship. I have held discussions with a number of banks in an effort to help farmers and the banking industry. The banks are subject to the wishes of their shareholders, and that is a difficult situation. The people living on the land, who are trying to help improve our economy, must receive the greatest possible benefits. Those benefits will not result from the bill as drafted. When a bill is introduced that will help the rural industry, I will support it.

Mr AMERY (Mount Druitt) [11.04], in reply: I thank all honourable members for their contributions to the debate. The speeches delivered by National Party members this week are different from those
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delivered last week. If some of them had another chance to speak, I am sure they would change the tone of their speeches. The Minister for Agriculture and Fisheries, who is at the table, shakes his head. I remind him of his contribution on 17 November. Last week I interjected when he was speaking and said, "You are an apologist, a mouthpiece for the banks". I could not find any better words to describe his speech on 17 November than those. In the first part of that speech he said:

When a person enters into an agreement with a bank or lender it is fairly clear that this a legal agreement.

That is true, but the banks have their own spokespeople and lawyers, and one would not have thought the response of a National Party member of Parliament representing a rural electorate would have been so cold. The best part was his statement a little later in the debate, when he said:

The Labor Party seems to believe that banks have a vast fortune which they lend out to make huge profits. Banks do not have vast amounts of money.

About half an hour after the Minister made that speech, the National Australia Bank Limited released its profit figures, which showed the greatest corporate profit in Australia's history. But the Minister for Agriculture and Fisheries said that banks do not have vast amounts of money and do not make large profits. I am sure he would like to change that speech. The honourable member for Bathurst is to be congratulated on his contribution and his continual fight, on behalf of rural New South Wales, to place legislation similar to the Farm Debt Mediation Bill before the House. During his contribution he said:

The banks are making thousands of millions of dollars in profit, and National Party members of Parliament would put the welfare of the banks' shareholders ahead of the welfare of those whom they are suppose to represent.

That statement sums up many of the comments of Government Ministers, particularly the Minister for Small Business and the Minister for Consumer Affairs. The honourable member for Broken Hill was right when he spoke about the hypocrisy and duplicity of the speeches of members of the National Party in this House in recent years. They have attacked the way banks have treated people, and that is contrary to the arguments they advanced last week. The Minister for Consumer Affairs, in a pro-bank speech, said:

Banks are in a business and have the right, though we may not like it, to raise interest charges and restrict credit to farmers in the future if they perceive that this sort of legislation will oppose additional costs or risks.

Whether that is right or wrong, surely the Minister for Consumer Affairs should have been looking to the interests of consumers and making a more compassionate contribution to the House. The honourable member for Tamworth has been productive in this process. Although the Opposition did not agree with the adjournment of the debate last week and regarded it as just another Government stunt to stall this bill, the honourable member for Tamworth has done a lot of work during the past week in drafting a number of amendments. The Opposition will support those amendments at the Committee stage. I do not wish to say too much about the amendments. However, in principle we do not necessarily agree with all of them.

In some respects the time restrictions on responses are acceptable. The time for the farmer to respond has been reduced, and so on. I am a little concerned about the mediation process being restricted to 21 days. However, the Opposition can live with that if it is the only way to secure the passage of the bill. The amendment about which I should put some concerns on the record is the removal of a great many civil penalties. Non-compliance with the Act will lead to a civil penalty of loss of interest. That amendment is virtually a cloning of the provisions of the Credit Act and has only been included to ensure compliance with the legislation. New South Wales farmers have put to us that other provisions in the bill insist on compliance and, of course, those sorts of prescriptive penalties are not needed.

I would have thought from the comments of the honourable member for Dubbo that he would be an enthusiastic supporter of this bill. Unfortunately, he is not. He referred to problems and spoke to the country media about the bill. However, he did not introduce alternative legislation. Previously he has introduced legislation on retail tenancies and the Opposition has supported that legislation. As he is a country member I would have thought he would have introduced his own private member's bill. The Minister for Consumer Affairs perhaps answers her own party's questions. A lot of criticism has been levelled at the Federal Government and, in many cases, that is justified. However, in answer to a question on notice yesterday the Minister said, in relation to a report from the University of New England, that she referred it to the Federal Government. The Federal Government did not respond and that was viewed as a lack of concern for the farmers.

If the Federal Government does not respond to suggestions of mediation, that is irresponsible, but if the State Government does nothing, that is considered all right. That is a duplicitous argument. If the Federal Government is to be condemned for its lack of action so, also, the State Government should be condemned. The honourable member for Burrinjuck made a passionate contribution, referring to a tragic incident of attempted suicide. That highlights the recommendations of the Standing Committee on Social Issues. That committee's report was released this week and its number one priority was that the State Government should urge banks to mediate with farmers as soon as it becomes evident that they are suffering financial hardship. This bill is consistent with the recommendations of that committee. Though the Government criticises the Opposition, perhaps it should take note of the recommendations of its own committee. I thank the honourable member for South Coast for his efforts, along with the other Independents, in formulating the amendments and in organising the meeting yesterday. The criticisms of the honourable member for South Coast of the banks
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in that they supported the matter being postponed for a week and then did nothing at the death knell are quite valid.

Mr Windsor: You did not say that yesterday.

Mr AMERY: They are valid. The New South Wales farmers' responses have been completely different. They came up with amendments, and the Opposition will support them this afternoon. The banks came up with the same old arguments. Issues of time restraints are highlighted in a statement released this week by the University of New England, referring to a case that cost a farmer $100,000 in legal costs and the fight took six years. Today the Parliament is arguing about 21 days and 60 days. The honourable member for Albury said he was not an apologist for the bank. He lasted two minutes before he started putting the bank's line in the debate.

The Deputy Premier, Mr Armstrong, made a number of comments and has been a strong critic of the banks over recent years. However, he also attacked the Federal Government, saying that the legislation will not resolve issues of finance, credit, interest rates and so on. The Opposition has never said this bill will resolve all rural problems. It has never pretended that. It is only one process of getting everyone around a conference table before involving legal people and being involved in court processes. I could not put the case any better than that stated in an editorial entitled "Helping the farmers" in the Gilgandra Weekly on 9 November as follows:

If there is ever to be a chance for some bipartisan politics in Australia, the NSW Labor Party's Farm Debt Mediation Bill fits the criteria . . .

The Bill is not, as some may suspect, slanted entirely towards the farmer. Both sides have certain obligations under the proposed Act . . .

The Bill in its present form may not be perfect, but it is a far better proposition than the heart rending sight of farmers being forced to walk off their land at a creditor's whim.

I understand that the Opposition will receive support from the non-aligned Independents and the honourable member for Tamworth. I thank those members in particular for changing the attitude of Government members, particularly National Party members. I commend the bill to the House.

Motion agreed to.

Bill read a second time.

Clause 3

Mr WINDSOR (Tamworth) [11.15]: I move:

Page 2, clause 3, lines 8-13. Omit the clause, insert instead:

Object

3. The object of this Act is to provide for mediation concerning farm debts before a creditor can take possession of property or other enforcement action under a farm mortgage.

In moving this amendment I would like to talk briefly about the 10 amendments I propose to move. The bill that was originally proposed involved matters of concern not only to the banking system but also to the farming community at large. The amendments being put forward today will simplify this bill to essentially put in place a mediation process that creates a situation where both the banker and the farmer speak through an independent mediator before eviction or foreclosure takes place. That essentially is happening through the voluntary scheme, but I have grave concerns for the farming community that if the bill as originally proposed was passed, several damaging aspects would result. The bill would have had the numbers to be passed. My amendments will make it more workable for the rural community if this legislation as amended is passed. More time and effort should have been devoted to amending this legislation and examining it further. I ask that Reverend the Hon. F. J. Nile and the other Independent members of the upper House examine this legislation carefully in case some inopportune clauses have escaped our notice. I urge honourable members to support this amendment.

Mr AMERY (Mount Druitt) [11.17]: The Opposition supports the amendment.

Amendment agreed to.

Clause as amended agreed to.

Clauses 4 to 8

Amendments, by leave, by Mr Windsor agreed to:

Page 2-4, clause 4, line 14 on page 2 to line 24 on page 4. Omit the clause, insert instead:

Definitions

4. In this Act:

"Authority" means the New South Wales Rural Assistance Authority constituted by the Rural Assistance Act 1989;

"creditor" means a person who provides financial accommodation to a farmer that creates or increases a farm debt and includes a bank, or a credit provider within the meaning of the Credit Act 1984;

"enforcement action", in relation to a farm mortgage, means taking possession of property under a farm mortgage, the sale of property under a farm mortgage, or any other action to enforce a farm mortgage including the continuing of action already commenced to enforce a farm mortgage but does not include:

(a) the completion of the sale of property held under a farm mortgage in respect of which contracts were exchanged before the commencement of Section 6; or

(b) the enforcement of a judgment that was obtained before the commencement of that action;

"farm" means land on which a farmer engages in a farming operation;

"farm debt" means a debt incurred by a farmer for the purposes of the conduct of a farming operation that is secured wholly or partly by a farm mortgage;

Page 5782

"farm machinery" means:

(a) a harvester, binder, tractor, plough or other agricultural implement; or

(b) any other goods of a class commonly used for the purposes of a farming operation that are prescribed by the regulations as being farm machinery for the purposes of this Act,

if the goods are acquired for the purposes of a farming operation;

"farm mortgage" includes any interest in, or power over, property (comprising a farm or part of a farm or farm machinery used by a farmer in connection with a farming operation, or both) securing obligations of the farmer (whether as a debtor or guarantor);

"farmer" means a person (whether an individual person or a corporation) who is solely or principally engaged in a farming operation and includes a person who owns land cultivated under a share-farming agreement and the personal representatives of a deceased farmer;

"farming operation" means:

(a) a farming (including daily farming, poultry farming and bee farming), pastoral, horticultural or grazing operation; or

(b) any other operation prescribed by the regulations for the purposes of this definition;

"function" includes power, authority or duty;

"mediator" means a mediator for the time being accredited by the Authority pursuant to arrangements instituted by the Authority under this Act, and "mediation" means mediation by such an accredited mediator.

(2) This Act extends to:

(a) a farm mortgage that was entered into before the commencement of section 6; and

(b) a liability or obligation that arose under a farm mortgage before the commencement of section 6.

Page 5, clause 5, lines 1-12. Omit all words on those lines.

Page 5, clause 8, lines 27 to line 11 on page 6. Omit all words on those lines, and insert instead:

No enforcement action until notice of availability of mediation given

8. (1) A creditor to whom money under a farm mortgage is owed by a farmer must not take enforcement action against the farmer until at least 21 days have elapsed after the creditor has given a notice to the farmer under this section.

(2) Notice to the farmer is to be in writing in a form approved by the Authority (for the purpose of informing the farmer of the availability of mediation under this Act in respect of farm debts).

Farmer may request mediation

9. (1) A farmer to whom notice has been given under section 8 may, within 21 days after the notice was given, notify the creditor in writing that the farmer requests mediation concerning the farm debt involved.

(2) The Authority may approve a form for the purposes of a notification under this section and a notification given to a creditor in that form is sufficient notification for the purposes of this section. Failure to use the approved form does not of itself invalidate a notification given by a farmer.

Enforcement action postponed to allow for mediation

10. Once a farmer has given a creditor a notification in accordance with section 9 requesting mediation, the creditor must not take enforcement action in respect of the farm mortgage concerned unless and until the Authority has certified in writing to the creditor that the Authority is satisfied that the mediation requested has been completed or has not been successful.

What constitutes unsuccessful mediation

11.(1) Without limiting section 10, the Authority is required to certify that mediation has not been successful if it is satisfied that the farmer concerned has refused or failed to take part in mediation in good faith.

(2) If on the other hand the Authority is satisfied that the creditor has refused or failed to take part in mediation in good faith, the Authority may refuse to certify that mediation has not been successful and may continue to refuse to so certify for as long as the creditor's refusal or failure continues, up to a maximum of 12 months after the creditor requests the Authority to certify that mediation has not been successful.

Clauses as amended agreed to.

Clause 63

Amendment by Mr Windsor agreed to:

Page 25, clause 63, lines 6-11. Omit all words on those lines, insert instead:

Arrangements for mediation

63. (1) The Authority is to institute arrangements for the accreditation of suitably qualified and experienced persons as mediators for the purposes of this Act and is to consult with the Australian Bankers Association and the NSW Farmers' Association on those arrangements.

(2) The Authority is to make arrangements for the referral of parties to mediation for the purposes of this Act. The costs of and associated with mediation are payable by the parties to the mediation in such proportions as they may agree among themselves or, failing agreement, in equal shares.

Clause as amended agreed to.

Clause 66

Question - That the clause stand - put and negatived.

Clause omitted.

Clause 67

Amendment by Mr Windsor agreed to:

Page 26, clause 67, lines 24-27. Omit all words on those lines.

Clause as amended agreed to.

Clause 68

Amendment by Mr Windsor agreed to:

Page 27, clause 68, lines 12-16. Omit all words on those lines.

Clause as amended agreed to.

Clause 73

Amendment by Mr Windsor agreed to:

Page 28, clause 73, lines 26 and 27. Omit "except as expressly allowed under this Act".

Clause as amended agreed to.

Page 5783

Clause 82

Amendment by Mr Windsor agreed to:

Page 31, clause 82, lines 24-38. Omit all words on those lines.

Clause as amended agreed to.

Clause 83

Mr WINDSOR (Tamworth) [11.24]: I move:

Page 32, clause 83, lines 3-11. Omit all words on those lines, insert instead:

Review of Act

83.(1) The Minister is to review this Act to determine whether the policy objectives of the Act remain valid and whether the terms of the Act remain appropriate for securing those objectives.

(2) The review is to be undertaken as soon as possible after the period of 2 years from the date of assent to this Act.

(3) A report on the outcome of the review is to be tabled in each House of Parliament within 12 months after the end of the period of 2 years.

Mr AMERY (Mount Druitt) [11.25]: The passing of this amendment will result in the Minister reviewing the Act to determine whether the policy objectives remain valid after two years. The other paragraphs are self-explanatory. I make this closing comment: a couple of earlier amendments knocked out clauses of the bill, but I believe the jury should still be out. Those amendments relate to compliance provisions; in other words, those with penalties against a credit provider not complying with the bill. The Credit Act of New South Wales, which I believe will be amended next week, has traditionally ensured compliance through civil penalties against credit providers. On principle, I do not agree with the removal of those provisions of the bill. However, in the spirit of bipartisanship displayed by the Australian Labor Party, the non-aligned Independents and the member for Tamworth, the bill should be passed.

Mr Schipp: What about us.

Mr AMERY: I include the honourable member for Dubbo and the honourable member for Wagga Wagga in my comments. This amendment will mean that the jury will be out and studying this bill for a couple of years to see whether the knocking out of some of the provisions will have a negative effect on the legislation. The review process should be supported. After the review, some of the provisions knocked out in Committee today may need to be reinstated in some form.

Mr WINDSOR (Tamworth) [11.27]: This amendment is significant. It will give the Minister and the Parliament the time to review any decision made today, considering the rush in which the amendments have been put together and the haste of debate on the bill. If any untoward consequences of this legislation emerge, they should be reviewed. In that way, those involved in a contractual agreement of a loan can have some changes apply if that is required.

Amendment agreed to.

Clause as amended agreed to.

Bill reported from Committee with amendments, and report adopted.