Tasmanian farmers in financial strife will have access to an independent mediator during debt discussions with their creditors.
- Tasmania to legislate Farm Debt Mediation scheme
- Any agreement reached through mediation will be binding
- A victim of banking malpractice encourages mental health support during mediation
The new legislated Farm Debt Mediation scheme is based on the NSW model, operating for the last 25 years.
Under this proposal, farmers can initiate the mediation process, whether they are in financial default or not.
Under the scheme, mediation costs would be shared equally between the farmer and creditor.
The push to set up a local scheme was triggered by Commissioner Kenneth Haynes 2019 in his report into the banking and financial services sector.
One of his 76 recommendations included a nationally consistent approach to farm debt mediation.
Former banker, now financial consultant, Greg Bott said he was unsure why it has taken so long to legislate a scheme in Tasmania.
“The government must have thought that was true as well.
“There would be some farmers that don’t agree with that.”
‘It would have helped us’
Dimity and Michael Hirst said the scheme was not available during their eight-year battle with the ANZ bank.
The Hirsts were left in financial ruin after ANZ forced the sale of their Tasmanian cattle and forestry business in 2011, to service loan debt.
Michael Hirst gave evidence of banking misconduct at the 2018 Royal Commission, detailing how ANZ encouraged the pair to increase their loans and expand.
In the same year, the bank dropped the valuation of the business by 40 per cent.
The couple is no longer farming.
Dimity Hirst said a farm debt mediation scheme for Tasmania was long overdue.
“It’s just going to need tweaking, and hopefully it will help people into the future.”
She said it was imperative the mediator needed to be legally trained.
“If they don’t have a legal background, how are they going to understand what’s being thrown at them?”
Mental health support needed in mediation
Mrs Hirst also suggested the scheme include the option to have a mental health support person present during mediation.
She said they sought help from professional counsellors during their ordeal with the bank.
“When you are in a financial crisis, you are also in a mental crisis.
“People have had their farms five, six, maybe seven generations.
“Maybe they have invested their whole lives into this piece of land and their animals, which they live for, ” she said.
“We totally get that and understand the pressure they are under.”
Has the banking culture changed?
There are mixed views on whether the culture within banks has changed since the royal commission.
“Certainly, the royal commission has done wonder for putting things into place, that are going to help people from now on, ” Dimity Hirst said.
But she is not convinced the culture at the top has improved.
“No heads fell,” Mrs Hirst said.
“The heads of all the big banks. They’re all still there.
Banking sector welcome scheme
A spokesman from the Australian Banking Association said the sector industry welcomes the Tasmanian Government progressing the introduction of a legislated farm debt mediation scheme.
“Since the Royal Commission, the ABA has introduced further changes to the Banking Code.
“Such as banning of default interest during drought or natural disasters.
“These changes give greater protections to farm businesses and ensures a standard practice across banks.”
‘Banks took notice’
Financial consultant Greg Bott believes the banks have changed their attitude towards farmers in financial trouble.
“The banks took notice of that and the few that I’ve seen since, people have been treated with a lot more respect.
“They’ve had the opportunity to air their side as well.”
In its consultation paper, the Tasmanian Government expects to see between eight to 17 farm debt mediations in the state each financial year.
Public feedback on the Tasmanian scheme closes February 5.
Legislation is expected to be tabled in State Parliament later this year.