John Forrest (Mallee, National Party, Shadow Parliamentary Secretary for Regional Development) Share this | Hansard source

I take this opportunity to bring before the House my concerns regarding the tsunami of debt recovery that is occurring across the federal division of Mallee. With drought now in its seventh year, we have the situation of water shortages associated with the Murray Valley, particularly Mildura and Sunraysia in my electorate. I am grateful to the Minister for Agriculture, Fisheries and Forestry, who has taken me into his confidence and shared discussions he has had with the big four banks and other lenders across my constituency.

The situation in my electorate is a huge challenge. The people I am concerned about are principally primary producers, but the impact of debt recovery on the whole economy has also affected small businesses across the region. I have been discussing the circumstances of this situation with David Bell, the CEO of the Australian Bankers Association. There are protocols on how to deal with debt recovery for domestic housing. These protocols require a proper process to be followed and the borrower to be engaged in a debt negotiation procedure so that their dignity is retained. These circumstances do not exist for commercial lending. I have asked the Bankers Association to get its members together and form some protocols on how to deal with this situation. My experience with too many lenders in the last 18 months, which has come to a head in the last six months, is that there is a propensity for their middle-management, hairy-chested negotiators to move in far too quickly and to proceed to court action, with the end result of the complete removal of any control of the destiny of my constituent, particularly primary producers.

The problem with the process of a court order, which is where some judge orders the closing down of the facilities, results in a mortgagee in possession sales. The impact of that is that a farming family is left with no dignity whatsoever. The control of the sale is completely in the hands of their lender and, as soon as the sale is announced that this is a mortgage in possession sale, which is required by law, the price collapses and there is a fire sale. All a lender really wants is to redeem enough out of the transaction to have their debt paid, which does not leave the opportunity for my farmers to recover at least some of their equity. I have pleaded with all the lenders that there is a better way to do this.

This drive to represent my constituency comes from an incident that occurred seven or eight years ago, when I was part of supporting a grieving family whose principal worker in the entity ended up committing suicide because he could not cope with the shame that he felt, which was that the whole community knew he was being washed up by his lender. There have been more incidents, even as recently as in last couple of weeks. I say to those borrowers out there, whether they be members of the Bankers Association or not—and some of them are not; some of them are lenders of convenience: I demand that my constituents be treated with dignity. There is a process where a commercial settlement can be negotiated. In New South Wales, it is a requirement by state law that a negotiation occurs. This is like a-round-the-kitchen-table process. A commercial arrangement is put in place where the borrower concerned has the capacity to negotiate their own sale, run their own auction, and the term ‘mortgagee in possession’ does not get mentioned.

Time after time, I have been part of supporting families through this process. I have no problem with a lender redeeming what they are owed. Primary producers are businessmen just like anyone else. They acknowledge the fact that they have overextended themselves. To some extent it is unfortunate that each year they try that gamble again and borrow to do their cropping, and then the rain does not come. It is not entirely their fault but they accept their responsibility. So, on the basis of the examples that I have seen, I say to all of those lenders out there—I have been negotiating with some of them today: you will treat my constituents with dignity and you will involve me in the negotiations, because I am left to support my constituents through the emotional trauma that results. I have one case now where it is not just about the farmer himself. He is a first-generation father, and he is going through a traumatic process. Be warned: I expect consultation. (Time expired)

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