Salesa JennyFARM DEBT MEDIATION BILL (NO 2)First ReadingHon JENNY SALESA (Minister for Building and Construction) on behalf of the Minister of Agriculture: I move That the Farm Debt Mediation Bill (No 2) be now read a first time. I nominate the Primary Production Committee to consider the bill and that it be reported back to the House by 4 November. This is a significant bill for farmers across New Zealand for their families and for our rural communities. Farming is a vital part of New Zealand's economy national identity and rural communities. Farming is a major contributor to our economy delivering more than $45.7 billion in export revenue last year. What's more farmers are often the lifeblood of rural communities providing rewarding careers to the approximately 350000 people employed in the sector. Farmers are entrusted as the stewards of New Zealand's economy and environment. Farmers face many risks outside of their control including climate change biosecurity threats and global trading conditions affecting market prices.Farm businesses also carry significant levels of debt which has been increasing steadily in recent decades. As at March 2019 $62.8 billion of farm debt was owed to New Zealand banks up from $17 billion in March of 1999. That's an increase of 270 percent over 20 years. The Government is committed to supporting the primary sector in a just transition to an environmentally socially and financially sustainable future. The Farm Debt Mediation Bill (No 2) also represents the outcome of the examination of agricultural debt mediation as well as receivership fees charged as agreed to by the Labour - New Zealand First coalition Government agreement for the 52nd Parliament.I'd like at this time to thank New Zealand First for their efforts in promoting this bill. The Farm Debt Mediation Bill (No 2) is an important component of the Government's support for farmers. It'll help mitigate some of the key barriers that farmers and creditors face to effectively negotiating mutually beneficial debt arrangement. The scheme supports farmers involved in agriculture including sharemilking horticulture aquaculture or any activity involving primary production carried out in connection with these. As such farm debt refers to financial arrangements secured against farmland including buildings farm machinery livestock and harvested crops and wool.The bill applies to all secured creditors—both banks and secondary lenders—and has broad support from all major New Zealand banks. It has been created through a well-informed process taking into account a wide range of stakeholder views and lessons learnt from international experiences like the New South Wales farm debt mediation scheme. The Farm Debt Mediation Bill (No 2) will provide for fair equitable and timely resolution of farm debt issues with two key objectives: first for farmers and secured creditors to meet in an equitable manner to constructively and objectively explore options for business turn-around and second to provide for a timely and dignified exit for those where few other options exist. The Farm Debt Mediation Bill (No 2) will require secured creditors to offer mediation before taking any enforcement action in relation to debt held over eligible farm businesses. It will also allow for farmers to initiate mediation with a secured creditor without any statutory restriction other than having a debt secured over an eligible farm business. The balance of power between the parties in lending situations is often skewed. The bill will provide a structured and consistent process for resolving farm debt problems that both farmers and creditors can have confidence in. Mediation is seen by farmers and lenders alike as an effective means of addressing the power imbalance between farm debtors and lenders. This process will be supported by independent and expert mediators with a strong understanding and experience of the rural sector. A neutral and independent mediator will support both parties to understand and have trust and confidence in the process. The bill establishes a standard mediation process of 60 working days. During the mediation period there is a prohibition on enforcement actions related to that debt. The bill recognises the diversity of farmers lenders and farm debt and the importance of getting the right person to mediate. Under the scheme farmers and lenders have combined input into the selection of a mediator with farmers making an initial recommendation of three mediators which creditors then can select from. Stakeholders from across all sectors have recognised the importance of having independent and highly skilled mediators. The bill provides for an approved mediator model based on the family dispute resolution mediation model. This allows for mediation organisations to apply to the administering ministry to approve a mediator organisation if they meet certain terms and conditions. Approved mediator organisations will be responsible for authorising and monitoring the performance of farm debt mediators in line with the standards set by the administering agency. The model provides a light-touch low-cost model for accrediting mediators with an effective approach to ensuring high standards of expertise and subject matter understanding. It also provides for flexibility in the farm debt mediator market. This is key to ensuring the market can grow alongside the demand and keep costs to a minimum. Mediation is a real opportunity to discuss and develop mutually beneficial outcomes. We know that the earlier farmers and creditors have discussions the better the outcomes are for both parties. For this reason the bill places no statutory restrictions on farmers accessing farm debt mediation other than having debt secured over an eligible farm business. We will work with farmers industry bodies and rural professionals to ensure that the scheme is well promoted and understood. Farms are often much more than a business. They are the centre point for a family and for a community. While the bill is focused on facilitating discussions about farm debt the benefits are much wider and include mitigating the toxic stress on families facing farm debt and supporting the involvement of wider family hapū and iwi. Acknowledging and supporting the mental health crisis and the mental health impacts that contribute to and are associated with farm debt will also be addressed. Providing support better animal welfare and environmental outcomes and creating opportunities to improve business and farm practice before they hit crisis point as well as being accessible for financially struggling farmers the system has a light touch administratively allowing it to be implemented with minimal impact on the running lender's current business models reflective of the overarching goal of the suite of initiatives to support the primary sectors into just transition. The Ministry for Primary Industries (MPI) will administer the scheme. Day-to-day responsibilities are cohesive with MPI's focus on and network with rural communities and support for farmers. Officials from MPI the Ministry of Business Innovation and Employment and Te Puni Kōkiri have worked together to ensure that the approach incorporating tikanga is consistent across farm debt mediation and the proposed introduction of dispute resolution in the Māori Land Court. The mediation process has been designed to allow for tikanga principles to be incorporated where parties consider it appropriate acknowledging that tikanga differs across iwi and across regions.To genuinely incorporate Te Ao Māori parties must be at the centre of determining the what" and "how" of tikanga in their mediation process. The bill acknowledges that farm debt is a complex issue taking into account a variety of stakeholders with different levels of understanding of financial issues and differing views and values. The complexity of farm debt has not been undervalued in the creation of this bill and provisions to monitor the system have been taken into account.The farming sector remains vital to New Zealand's growth and wellbeing and it is in New Zealand's best interests that farming businesses are supported in the economy's transition to a sustainable inclusive and productive future. This bill provides an opportunity to level the playing field for farmers and to provide equitable resolution of debt that will benefit farmers lenders rural communities and all New Zealanders for generations to come. I support this bill to the House."