'It's way too soft': Father-of-five who lost the family farm to the bank after drought slams royal commission report and demands the banks pay compensation to victims
I have experienced my share of idiocy from banks in my time so I am not the obvious person to defend banks but I do think there is a lack of perspective here.
When a bank makes a home loan it has to prophecy what your finances will be in 15 or 20 years. That's rather heroic. I would not lend anyone money under those circumstances. So banks have to be very self-protective to stay in business at all. With Australian farmers it is even worse. Banks have to predict the WEATHER many years in advance. Nobody can do that, not even the Greenies with their global warming religion. It would be a reasonable view to say that banks should not lend to out-West farmers at all. But they do.
The only protection they have for their funds is the value of the farm concerned. So if the farmer has stopped making his payments it is normal commercial practice to seize the asset and sell it off. But farmers feel mightily aggrieved when banks do that. They seem to want the banks to be fairy godmothers who just keep on shelling out indefinitely regardless of whether the bank has any prospect of getting its money back.
The real fault lies with the farmers -- with rural gamblers. They know they are gambling on when rain will fall and want the banks to finance their gamble.
What the farmer should do after a bad year or two is to lock the farm gates and go and get a job. No historic family farm would be "lost" if they did that. The farmer can come back when the rain falls again and plant a crop, make hay or agist his pastures.
In some cases he might be able to leave family on the property with a shotgun or two and just come home on the weekends. There are a lot of workers who don't get to come home every night. Members of the armed services may not see their families for months
There would be a case to protect farmers from themselves by banning farm lending altogether -- or at least make loan conditions a lot tougher and loans a lot less frequent. As it is, all the recent bank bashing may achieve that anyway. Why would a banker want to risk his reputation by lending to fools who will turn on him when the rain stops?
A farmer who lost it all to the National Australia Bank after a drought has slammed the royal commission report as 'way too soft' and its proposals as 'twenty years too late'.
Father-of-five Bill Mott and his family lost their $22 million estate in Meanderra, in Queensland's Western Downs region, to the bank in 2014, following several poor seasons.
The crop and cattle farmer attended all but one of royal commissioner Kenneth Hayne's hearings and this week scoured the report in detail to see what Mr Hayne had to offer farmers. He walked away disappointed.
'It was way too soft and no where near deep enough so I'm very disappointed with the outcome,' Mr Mott said. 'I think I'm going to be even more disappointed with the way the government's going to deal with it.'
Criminal charges should have been laid and 'examples made', he said, calling for a 'wow, bang' approach rather than just 'bashing (bank executives) about the ears'.
He argued the commissioner, a former High Court justice, was 'not the right man for the job', as his appointment gave the inquiry too much of a legal focus.
Most importantly, he said the report was missing redress for victims of the financial services industry.
In his report, Mr Hayne made criminal and civil referrals for some financial entities, but they were not named, and no charges have been laid against executives.
Mr Hayne recommended three major measures to help farmers:
* the banking code should change so banks do not charge default interest on agricultural land loans during droughts or national disasters
* that banks only call in receivers or administrators for a distressed loan for a last resort, and
* the establishment of a national farm debt mediation scheme
WHAT IS DEFAULT INTEREST?
Default interest is the interest payable on amounts which are not paid when they are due. Mr Mott said he was 'buggered' by default interest after poor seasons on his farm, prior to losing the farm to the National Australia Bank.
Mr Mott said while the measures were no doubt a 'good thing', they were a 'no brainer' and twenty years too late.
The measures came after the commission was told stories of farmers who were hit with penalty interest for defaulting on their loans.
Mr Mott was himself 'buggered up' by default interest, paying a total of $1.5 million to the bank during his ordeal. 'It should be a no brainer (not to charge default interest during drought),' he said. 'When somebody gets into trouble how the hell are they going to get out of trouble if they keep flogging them?
'With farming, almost every case of default is when there is a natural disaster of some kind.
'Farmers are quite conservative people. They don't put themselves out there, but when things get really bad, you've got to spend money to make it.
He said the problem was, simply: 'Our banking system in this country does not adequately provide a service for rural farmers'.
Mr Mott's biggest disappointments were that there was 'nothing' to protect victims from the bank, and there was 'no redress', or compensation, for victims. 'There's nothing there to protect the victims against the bank,' Mr Mott said.
The National Australia Bank came in for particular criticism in Kenneth Hayne's royal commission report
'When you ultimately take out a bank loan, all the paperwork you sign, you sign away all your rights to that bank,' he said.
When somebody gets in to trouble, how are they going to go out if they keep getting flogged?
'If you default, whether the bank has done the wrong thing or you have done the wrong thing, if that goes to court you've already signed away all your rights before you even go to court.
Mr Mott said Mr Hayne did a good job, but the commission should have been run by a panel of eminent Australians, rather than just a former High Court judge
The government has supported the commission's recommendation to scrap default interest charges for farmers.
Agriculture Minister David Littleproud said this week: 'It's time that despicable practice ended full stop because I don't believe the rate the banks charge reflects the actual cost to them'.
The government has also pledged to set up a national scheme to help farmers seek mediation to work out a way for them to repay their loans where possible.
As for Mr Mott, he and his son live next to the farm they used to own. Perversely, it has thrived under new ownership, thanks to a few strong seasons, he said.