O'Connor DamienFARM DEBT MEDIATION BILL (NO 2)Second ReadingHon DAMIEN O'CONNOR (Minister of Agriculture): Thank you Madam Speaker. I move That the Farm Debt Mediation Bill (No 2) be now read a second time.I want to thank the Primary Production Committee for their work and consideration of this bill. I thank farmers and lenders for their support of this bill and their recognition of its importance. Their input will ensure the scheme is tailored to meet the needs of New Zealand farmers.Farm debt has grown dramatically in the last 20 years and now sits at more than $62 billion. The Government knows how important farmers their families and rural communities are to our economy and country and that is why we've developed the farm debt mediation scheme. We want farmers and their families to be on a level playing field with creditors when it comes to talking about difficult and complex financial issues. This bill is about supporting farmer wellbeing which the Government is committed to doing through this bill and elsewhere.I'd also like to take the opportunity to acknowledge our coalition partners New Zealand First for their contribution to this significant piece of legislation.The farm debt mediation scheme's two key objectives are firstly for farmers and secured creditors to constructively and objectively explore options for business turn-around and secondly to provide for a timely and dignified exit for those where few other options exist.There are three parts to the bill. Part 1 sets out the scope of the scheme and which activities debts and actions will be captured. Part 2 addresses restrictions for enforcement action on farm debt while setting out the mediation process. Part 3 outlines provisions relating to farm debt mediators and mediation organisations under the scheme. It is proposed that the preliminary provision set out in Part 1 of the bill and the provisions relating to approving mediation organisations and authorising mediators in Part 3 come into force in February 2020 with the rest of the bill coming into force in July 2020.The committee has recommended that the bill proceed with a number of changes that are designed to enhance the implementation of the scheme some of which I will cover today. I support all the changes recommended by the select committee. The Farm Debt Mediation Bill (No 2) will support a broad range of farmers and growers engaged in activities ranging from agriculture including sharemilking horticulture aquaculture viticulture and apiculture.The mediation process is designed to address the power imbalance between creditors and farmers. This will be aided by the use of an impartial experienced mediator who will create an environment where parties can meet in a respectful and constructive manner. The scheme is designed so that creditors must offer mediation to farmers before they can take action on a default. The definition of enforcement action" has been tightened to recognise the range of actions creditors take to move on a debt and that will now trigger mediation. Farmers can request mediation as they identify the need. The bill has been strengthened to strongly encourage creditors to accept mediation requests from farmers. We know from similar Australian schemes that early mediation brings about discussions that maximise the chance of successful business turn-around and assists the development of lasting resolution of financial issues.I'm pleased to report that New Zealand banks have signalled their willingness to adopt the mediation process and will strive to identify opportunities for early mediation. Minor amendments to the bill make clear that multiparty mediations will be accommodated by this scheme. The nature of farm debt means it often involves a number of creditors guarantors and complex ownership arrangements. Mediation may bring together spouses business partners and guarantors with multiple creditors to plan for the future of the farming business.Mediator cost will be shared equally between parties until a farmer's contribution reaches $2000. Above that in order to recognise the financial vulnerability and stress on farmers going through mediation any additional mediator cost will be borne by the creditors involved in the mediation. The Ministry for Primary Industries is also exploring options available to support financially distressed farmers in meeting the cost of financial and other professional advice that they may need to prepare to ensure meaningful participation in the mediation process. In response to a number of submissions there will now also be an opportunity for creditors to apply to the High Court to take emergency action where there is a significant risk to animal welfare to environmental damage or crop wastage or destruction of property.I believe the bill has been enhanced through the Primary Production Committee—and I once again want to thank them and their process—in a way that respects and preserves the key principles of good faith of cooperation and of balancing of power. These and other changes recommended by the select committee reflect a balanced and careful consideration of a wide range of comments received from submitters on this bill. The changes enhance the bill and ensure it is tailored to the needs of New Zealand farmers and the rural communities within which they live.Just briefly I'll outline some of the background. This issue has been around for a long time. In the 1990s—I have to speak up for Gray Eatwell who was an individual farmer taking on banks at that time. I'd like to mention Janette Walker who in the 2000s was a person who was championing the cause for farmers and debt and stress. For a number of reasons I guess decisions were made to leave it in the hands of the two parties involved in the transactions. But I think we have reached a stage now with a level of debt across the agricultural sector—provided by banks of course two willing parties—that is creating quite a bit of stress and we acknowledge that stress across the sector. If you are a farmer with a huge debt then you're unlikely to stand up and criticise I guess the bank that has loaned you the money. So the reality is that there's an imbalance in discussions when it comes to a position of financial pressure. We have acknowledged that. We've worked with our coalition partners who seized on an opportunity to introduce a bill. We sat down and discussed the bill that was in the House and decided that we could put up a slightly better proposal and that it would be considered by the select committee—which they have done very very carefully. I think across this House we now have wide recognition of the pressures across the farming sector and a way forward for we hope the few farmers who have to undertake a mediation process. But if they do their families now should feel a little more secure in the knowledge that the process is laid down I guess protected by statue and ensures fairness to them—families who have I guess been encouraged to take on debt who have often been encouraged to increase production and who are now for whatever reason facing I guess pressure that the creditor doesn't see as possible to extract from. So we've been left with a big challenge; we have a solution. I'd like to once again acknowledge the efforts of the Primary Production Committee made up of all parties in this House acknowledge our coalition partners and trust that this piece of legislation will be received in the spirit in which it is intended—that is through cooperation we can assist the farming sector into a more secure financial position."