Farm Debt Mediation Bill

Mr PEDERICK (Hammond) (16:34): Thank you, Mr Acting Deputy Speaker. You do a fine job in your role at the moment, as you do as the deputy whip and as the member for Newland. I rise to speak to and absolutely support the Farm Debt Mediation Bill. As this house knows, I come from a farming background. My family goes back to 1840, when they settled in Plympton and had a little farm and boot shop, and then they eventually ended up at Gawler River, Angle Vale and then down at Coomandook, where I have lived all my life on the family farm.

I am personally well aware of—and, knowing the seasons, certainly in this role—what can happen if you get a run of bad seasons—in some cases, a family break-up in farms. It can have a really significant effect on your bottom line if, all of a sudden, your debt blows out by an extra 50, 60, 80 or 100 per cent, or even more, for all sorts of different circumstances. Throughout the eighties and early nineties, we saw scenes that I hope we never see again. I remember interest rates were up around 22 per cent. Interest rates are now in the very low numbers, and I often wonder how people can function, even at the moment when we have high wool prices, high sheep prices and pretty handy cattle prices. They have backed off a bit, as I said the other day, and our cropping is going along not too badly, but with a lot of cost.

The cost of machinery and input is just massive on the land. You can have spray rigs that cost $400,000 to $500,000, you can have harvesters of up to $1 million on their own and you can have large tractors costing towards $400,000. Air seeder units—and I obviously have not priced one for a while because I have not actively farmed, as I have it leased out for 13 years—may cost $600,000 by the time you have the bin and the bar to cultivate a section. The old adage is: either get big or get out. That is a bit sad because you lose a lot of history, but I guess it is pretty true.

Certainly, many members who have spoken on this bill understand how it works when you have to put your hand in your pocket: you have to make it work. You cannot get nervous about high six-figure overdrafts or loans, or even seven-figure loans if you are in a big way. There would be plenty of people in this day and age who would be spending over $1 million just putting in a crop—plenty. It is a lot of money to put out, and there is no guarantee that you are going to get it back, and on the land that can compound not just the debt levels but also the stress levels.

The year 2006 was interesting. The good bit was that I got elected to this place as the member for Hammond. However, there was a drought, a severe drought, and I activated early. As a new member, you come in here and you look like a deer in the spotlights, sometimes—I appreciate that because I was there before. I thought, 'What do I do? I've got to help the people, the good farmers and their families, of this state,' so I advocated to get a special exemption so that we could get exceptional circumstances in this state without the normal three-year window of drought needed before it is even implemented. I managed to negotiate that with the federal government after there had been only two dry years, which is bad enough, and we managed to get exceptional circumstances funding into this state.

Some say that only helps people who may fall out of the system anyway, but it also helps a lot of other people. I am not trying to be too hard on those people, but I do agree that, with the other work that has gone on since that time of exceptional circumstances declaration, there is more work going on so that we can get farmers braced for the tough times, build up their productivity, build up their equity and build up their resilience so that they can manage the tough times.

There is a limit, though. There is a limit, because if you have too many dry years in a row, or prices crash or everything just cascades down upon you, whatever you do, no matter how good a manager you are, no matter what happens, you may fall over. Along the way, we need to do the best we can for our primary producers of this state. Primary production has something like over $17 billion produced every year directly, and that also translates to $25 billion, roughly, every year in finished food products, so we need to support our primary producers.

This is a little bit of an aside. I am a bit stunned when I hear about faux meat—fake meat, meat that some people might like to eat and that is their choice—on the meat shelves at Woolworths. I think that is disgraceful.

An honourable member: How does it get called meat?

Mr PEDERICK: Yes, how does it get called meat? It is not meat: it is made out of plants. I am fine with that. If people want to eat fake meat, go to town.

An honourable member: Knock yourself out.

Mr PEDERICK: Yes, knock yourself out, but I will eat real meat. I tell you what, a good steak or some good lamb is really good to tuck into.

Members interjecting:

Mr PEDERICK: Thank you for the help in the background. We have to stick to reality. We have to stick with supporting our producers. I mentioned the scenes we saw in the 1980s. Farmers crawled up windmills when the bailiffs turned up with the police. They went up these windmills and said, 'I am not coming down.' Some even went to the nth degree and said they would not come down and, sadly, some people took their own lives.

I think we have matured a bit since then. Thankfully, interest rates have not got anywhere near that level, but it does worry me that if they ever did we would be in real strife because of the price of inputs—not just the price of machinery that I was talking about earlier but also the price of fertiliser and sprays for the cropping. It is not just for the weeds; it is for the bugs. There is a fair bit of stuff, a fair bit of effort and a lot of money, as I said, with some people spending $1 million, and some people spending $2 million or $3 million on their inputs, just laying it on the line so that they can grow food for this state and this country to export, and for use domestically.

I want to reflect on a rally that was held in Canberra quite a few years ago. This was back in the 1980s, when 45,000 farmers rallied at a national tax summit in Canberra. I reckon that is not a bad job, getting 45,000 farmers together in one place. I have an aerial photo of these 45,000 farmers rallying on the first day of the tax summit at the now Old Parliament House in Canberra in July 1985.

In 1985, the prime minister at the time, Bob Hawke, hosted a national tax summit to overhaul the system in place. It was held in the first week of July, and the summit was to look at a range of proposals, including reducing marginal income tax rates. To do this, the idea of a consumption tax was floated, and farmers in particular were very worried about a consumption tax and its effect on fuel prices.

The 1980s had also seen farmers squeezed by high interest rates, as I mentioned earlier, and other farm costs. So on the first day of the tax summit these 45,000 farmers marched through Canberra in one of the biggest rallies in the capital's history, and the largest ever held outside what is now Old Parliament House. The National Farmers' Federation president, Ian McLachlan, the former member for Barker, gave a rousing speech (this was obviously before he was the member for Barker), where he told the crowd:

We don't want to be subsidised to produce and then subsidised to export, we are not after short-term handouts. But we are sick and tired of subsidising the rest of Australia. We want the government to remove taxes on our productive inputs, we want all the taxes taken off fuel so that we can get down to level terms with [international] competitors.

At the rally farmers came from most states and from places as far as away as Cape York and Perth, with one farmer commenting:

I thought today was a wonderful effort by rural Australia to get here. I came to be a drop in the ocean and I think that's why everyone came.

After the summit, Paul Keating, who was treasurer at the time, fought for the consumption tax, as only Paul would, but the prime minister, Bob Hawke, became worried about the political consequences. The summit showed that a wide range of people, not just farmers, would oppose the tax and in August of that year it was buried. New reforms were announced, such as taxes on fringe benefits, capital gains and the tightening of tax provisions in areas such as farm losses.

Many farmers felt that the Australian farm rally was the real success as it showed politicians what rural Australia could do. As I said, markets currently are not bad, but they will not stay that way forever. Costs are going up—fencing costs, input costs—and you run into some dry years. This year we are a long way from being out of the woods; some people have not had enough rain yet to put in much of a crop. Down my way they were fortunate to get 32 to 40 millimetres a couple of weeks ago, which really has the crops bouncing out of the ground, but we are a long way short of our average rainfall.

I have heard of farmers in the northern Mallee, up towards the Riverland, who have put in thousands of acres and a lot has come up and then died through a lack of moisture. It is pretty heartbreaking. It may be lower input country, but if you have run over 20,000 acres and you have 50,000 to put in, and 60 per cent of the first 20,000 has died, it is pretty heartbreaking.

We need to do what we can. We need to put resilience into agriculture. There are pressures on farmers at the moment, and there are issues, obviously, around live sheep export from what I have heard anecdotally.

We have seen disgusting scenes on television, but one thing I will say about the disgusting scenes is that, if Animals Australia thought they were so disgusting, why did they not put it out in the media when they had the footage instead of waiting six months? These animal activist groups do it every time. I challenge them to take responsibility for their actions, instead of just grandstanding. If they see poor animal welfare practices—and I do not condone poor animal welfare practices—they should release the footage immediately and show that they really do care, instead of just staging media stunts.

We need to make sure we have the right animal welfare practices because, unless you do, there is no profitability in it for the farm market. We saw what happened in 2011, when the live cattle trade was stopped. That did not just impact the poor station owners in the north. I saw some terrible practices on the footage. Not only did it impact those growers in the north, those people who had no other market but to put their cattle on a boat and send it to Indonesia, but it also reflected all the way down to places like Kapunda and other places where the pellets are made for the live export boats.

I can remember probably 30 years ago helping cart small bales of hay—man killers, I call them now. I do not know if anyone would want to handle small bales of hay. I do not even know if the member for Finniss would handle small bales of hay. He is saying no. I am glad he does not because they are terrible things. It is a good thing we have moved forward with bigger bales and round bales. I can remember trucking trailer loads of straw over to what was to be dehydrated fodder at Meningie, which was being pelletised for the live boat trade.

These issues do have far-reaching effects. Certainly, when the live cattle trade was pulled all of a sudden, there were quite a few station-owners who, sadly, took their own lives. Farmers are proud of what they do and they do want good animal welfare practices. We must make sure that the shippers and everyone in the industry—and even if the animals are not going overseas and they are being handled locally—promote good animal welfare practices.

I know of the recent yards upgrade that went in at Thomas Foods in the last 10 years or so. Sadly, they had the big fire in January. They use Temple Grandin style of yards with closed races and that sort of thing so that the cattle or sheep cannot see light and run better off trucks or onto tracks or into the processing area so you can handle them gently. There is no point getting animals stressed. Anyone who has anything to do with animals knows that, if you stress them, it does affect the quality of the meat.

Farm debt mediation is the prime interest we have in this bill. It was developed between Primary Industries and Regions South Australia and the Office of the Small Business Commissioner. Debt mediation is a structured negotiation process in which the mediator, as a neutral and independent person, assists the farmer and the creditor in attempting to reach a mutually agreeable outcome on the present arrangements and future conduct of financial relations between them. This bill seeks to enforce a mandatory debt mediation scheme before a creditor is able to foreclose on a farming operation.

Best farm business management practice recognises that financial planning and financial problems are best addressed at the earliest possible stages. That is why I talked about that business training so that people can get better up to speed to handle their debts and their issues. It is far better than a rescue package at the end where you are just essentially bailing people out.

We have excellent rural financial counsellor services through Rural Business Support. They provide discreet support and advice about farm financial matters. Rural financial counsellors can provide a free, confidential and independent service that helps primary producers with information on government assistance schemes and personal or family counselling where required.

Sometimes, when people find themselves at the end of the road and they are in a situation they are unable to resolve through discussion or negotiation, the mandatory farm debt mediation legislation can help. The new legislation will provide a framework for open communication and relieve the emotional and mental stresses associated with financial issues and ensure South Australia's farmers are given every opportunity to resolve financial problems. Farm debt mediation resolution can also be pursued through the voluntary South Australian farm finance strategy and the Farming Industry Dispute Resolution Code under the Fair Trading Act 1987.

Finally, when this bill goes through this place, as I believe it will, it will put our farmers in this state on a level playing field with their east coast counterparts. Legislation has been in place in New South Wales, Victoria and Queensland since 1994, 2011 and 2016 respectively. This legislation has the support of the banks—they have had their own headaches recently—the financial services industry and the primary industries in these states.

I note that the federal government is committed to a nationally consistent approach to farm debt mediation, encouraging the establishment of a standard set of principles and model legislation across the states. I think this is fantastic legislation. It has taken a while to get to this point. Farmers working with a small business commissioner get that mandatory negotiation up and running to give our farmers in this state a better go. I commend the bill.