Mr DULUK (Waite) (12:43):
I also rise to speak in support of this really important piece of legislation to ensure that farmers can have low-cost, high-impact results regarding credit and debt mediation. Currently, South Australian farmers do not have a mandatory farm debt mediation process. This means a farming operation can be forcibly foreclosed without any form of negotiation.
The point of this legislation and similar legislation that occurs in other jurisdictions is that the parliament, the government, recognises the need for a form of farm debt mediation. We know—as the member for Narungga acknowledged in his contribution, as did the member for Heysen—the worth of our farming sector and the importance it has, not only in the South Australian economy but also in the lifeblood of so many regional and rural communities. If we can keep farmers on their property for longer and help them through tough times and ensure that the family farm stays the family farm, then I think we are doing a good thing in the long run and helping the people of South Australia, which is ultimately what we are here to do.
This bill when passed will provide protection and financial security for farmers. Once established, the Small Business Commissioner will be responsible for the management and administration of the South Australian farm debt mediation scheme. Broadly, the essence of the bill is that it will give farmers a structured negotiation process through an independent person, the mediator, to reach a mutually agreeable outcome.
It will allow farmers to apply for a prohibition certificate through the Small Business Commissioner, preventing further action against the farmer for up to six months. Key elements of the proposed SA farm debt mediation framework include the provision of protection and financial security for farmers by enforcing a mandatory mediation process before a creditor is able to foreclose on a farming operation.
That is really important for many farmers. In a previous life, I worked for one of the big banks, not in rural and regional banking but in business and corporate banking. It was almost a position of reluctance to go down this path of foreclosure because it is the last thing that any lender of credit wants to see for their customers and their clients. Avoiding that process is very important. I think that it will be of great benefit and give a bit of guidance as well to credit lending institutions in this patch.
This legislation will put South Australian farmers on a level playing field with their Eastern States counterparts and ensure that farmers have a model in practice that they can rely upon in difficult financial circumstances. It will help farmers in financial difficulty to overcome such difficulty, re-establish financial viability or to exit the industry with a minimum impact on farmers and their families. It will help relieve the emotional and mental stress on farmers and their families associated with foreclosure and ensure that South Australian farmers are given every opportunity to succeed, meet the growing demand for agricultural produce and make a contribution to regional prosperity, which of course is the state's economy, jobs and exports.
As we are talking about exports and understanding their importance, I know that the minister in his position here will talk a lot about exports here in South Australia. Exports, especially in the agricultural space, whether it be wine exports, sheep and dairy exports—even in the live cattle section—wheat, barley or cropping, are so important to the future of South Australia. In fact, over the last three, four or five years, if it were not for the strength of our regions and the strength of our agriculture sector and in particular our mixed cropping farmers and their export to markets, we would be in a world of pain.
I know that in the member for Hammond's electorate farming is such an important agricultural component and that in the member for MacKillop's electorate wine and sheep and cattle and dairy are also so important. Without these fantastic regions in South Australia, this state would be in a much worse financial position and our state's budget would also be in a much worse financial position.
It is important that as a government and as a community we do all that we can to help our farmers because ultimately when our farmers are doing well, when wool prices and dairy prices and wheat prices are high, then we create jobs for South Australia and we create export. More importantly, we allow the opportunity for those profitable farmers to reinvest back in their communities and reinvest back in their businesses.
I know that when farming is good on Yorke Peninsula in the member for Narungga's community, they put back into the community. They buy newspapers. They put back into the footy clubs. They sponsor wonderful players in the league there to ensure that it is a very strong footy league on Yorke Peninsula. They steal players from metropolitan Adelaide as they commute to the peninsula to play with the member for Narungga for the Kadina Bloods.
Farm debt mediation legislation has been in place in New South Wales, Victoria and Queensland since 1994, 2001 and 2016, respectively. South Australia is certainly catching up in this area. I have to pay a lot of credit to the former shadow minister, the Hon. David Ridgway in the other place. When we were in opposition prior to the March election, he pushed for this bit of legislation in the parliament. We had a private member's bill, which was disappointingly not supported by the then Labor government.
It was pleasing to hear the contributions this morning of those opposite. The member for Giles, the member for Ramsay and the member for Light talked about the importance of this legislation, and rightly so. It is a shame those same members did not support this legislation a mere 12 months ago. But here we are today, and that is really important, and I feel that this bill will go through the parliament.
The proposed farm debt mediation framework is largely in line with Victoria's legislative framework, which is considered to be flexible, less prescriptive, and administratively effective and efficient. There is no point bringing in legislation that does not meet those requirements, so I am glad we are picking up here in this jurisdiction on best practice from across the federation. That is one really good thing about our federation, and that is why I am such a big federalist and support the model of federation: because it allows there to be a competitive advantage.
I am always reluctant when state ministers go to COAG in all jurisdictions and continue to pass powers over to the commonwealth as what is seen to be an easy fix. The moment we pass powers to the commonwealth is the moment we become a less flexible and agile federation. By allowing each state to develop rules and practices over time allows other states to then find best practice, to see what has been trialled and worked, and then bring it here into South Australia. That is pretty important. The member for Finniss, in his former life of chairing the dairy industry, would see best practice around the country and bring it back to South Australia. Understanding that nature is certainly pretty important.
Going back to the Victorian model, Victoria recently conducted an independent evaluation into its farm debt mediation scheme and the evaluation process revealed strong stakeholder support for the framework. The mandatory nature of Victoria's scheme was considered to be a key driver of its success. If we can have farmers and creditors come to the table in a swift mediation and come to a swift debt recovery position that can only ensure the financial stability of credit and lenders.
Looking after those who provide credit is very important as well, because we do not have a strong economy unless we have strong banking sector. It is very easy to get on the board of bank bashing, but they actually provide a very important role in our society and in the functioning of our economy and marketplace.
Farmers participating in the Victorian farm debt mediation scheme feel more supported and less vulnerable than they otherwise would be if the scheme did not exist. That is reflected in the consultation process that was undertaken in Victoria. Hopefully, we will see that same confidence in the South Australian scheme. Data from the federal Department of Agriculture and Water Resources states that 90 per cent of farmers in the broadacre and dairy sectors are family owned and operated. Funds for land and capital purchases, such as new equipment, are limited to the viability of the farmer's property and of course their bank account.
As you would know, Mr Deputy Speaker, throughout the 1990s low interest rates meant a boom in lending and an increase in property prices. During the 2000s, when drought hit, loan repayments slowed. Since 2000-01, average farm debt has more than doubled. This has resulted mainly in an increase in the average farm size and working capital debt amounts for nearly 30 per cent of that increase in farm debt.
With larger farms and larger, more specialist machinery being utilised, investment in the agriculture sector is growing thus meaning higher expenditure and outlays for families. Operating expenses in the sector remain high as the costs continue to rise. Debt for broadacre farms in the 2016-17 financial year was on average around $616,900, and the dairy sector was $926,700—almost $1 million. This was an increase of 5 per cent and a decline of 2 per cent respectively in those two sectors.
Since 2011, when Victoria introduced their farm debt mediation scheme, 96 per cent of all mediations reached an agreement between creditors and the farmers. This is well above what was the 75 per cent program target. The voluntary system in South Australia has failed our farmers and this provision of mandatory mediation puts us a step closer to a nationally consistent approach. This bill will help South Australian farmers to be given every opportunity to grow and give them the support required to stay in business.
The previous government, as I reflected on recently, failed to protect the state's primary producers. The 21-day grace period provides farmers with a chance to seek mediation in the new legislation. This piece of legislation should be administratively effective and efficient because every farmer deserves to be treated equally. Denis McMahon of Legal Aid Queensland told the recent federal Select Committee on Lending to Primary Production Customers: People's livelihoods, homes and whole lives revolve around the property. They are part of the community. When things go awry, it's not just one person that's affected; it's generally a whole family, and it can be generational.
Other people within the community can also be affected if the client's business is wound up and other small businesses in towns don't get paid. All sorts of other ramifications might happen. It's also very socially damaging for a lot of people. These hurts don't go away.
That was in testimony to the recent federal inquiry. It is important that we understand what is going on and that it is not just a South Australian issue. It is a big issue in Queensland and obviously there were big drought issues at the time. We need to understand the impact debt, particularly on family farms, has on the stress and mental health of farmers. Also I think there is a lot of stigma associated with a failing business in country regions. If mediation can help reduce that stigma, I think that is very important. Having those debt levels under control is pretty important.
When debt causes stress in farming communities, it is the community that loses, too. With debt obviously comes the tightening of belts. Local groups and sporting clubs are often the first to lose their sponsorship money which is seen as a luxury to many local businesses. The loss of pride leads to the degradation of what makes rural and regional communities so close-knit and strong.
Deputy Speaker, recently I was on a trip with you throughout your wonderful electorate of Flinders, visiting the farmers in Wudinna and talking to local producers in Streaky Bay and Ceduna. Their pride for the community is so important, and we need to help farmers stay on the land and appreciate the community. I have been into the Mallee to places like Peake where they have great farming and proud communities. Things that we can do to support them—
Mr PEDERICK: A premiership side.
Mr DULUK: —a premiership-winning side—are so important. It must be your good work there and the good sponsorship of the member for Hammond. It is absolutely important that we support farmers and regional communities, and that is what we are going to do. Mediation is an important step in helping our farming-dependent rural and regional economies. In South Australia, we need to support our farmers through good times and bad. Farmers do not want to be slaves to the banks nor should they, and this legislative approach helps that mediation lead to a more financially secure future.
By creating a mandatory farm debt mediation service in legislation, farmers have their chance for their voice to be heard, which is so important. It allows there to be a great harmony. This bill brings a nationally consistent approach to our great state. I commend the bill to the house.