van de Molen TimTIM VAN DE MOLEN (National—Waikato): Thank you Madam Speaker. I think it's nice to see that the last speaker Kiritapu Allan did calm down somewhat by the end of her contribution. It was a rather fiery and farcical start to be honest. The claim that the last Government let Aussie banks run rampant as though there'd never been an Australian bank in this country prior to 2008 and that that has led to catastrophe across the sector is absolutely ludicrous. And actually off the back of that Mr Patterson's claim earlier that any second- or third-tier lenders were bottom feeders is I think a little bit of a harsh way to describe any number of people in the agricultural sector who provide a bit of support and assistance to people getting into potentially their first farm. It's a bit of a rough claim to call them bottom feeders in that instance I'd suggest Mr Patterson.Now this bill is around trying to provide a platform to mediation. And I think the key opportunity here is for those non-bank lenders. Now having spent a number of years in the rural banking space I can absolutely give confidence that banks will do whatever they can to avoid getting in a situation where they're having to sell up a client. That is the worst outcome for both parties. No one wants that and banks will work closely with their clients to try and find any other solution that might avoid that situation. Sometimes that means an early exit for the farmer if cash flow suggests that the equity will continue to be eroded by remaining in business. But alternatively it might mean providing additional support if the cash flow and forward projections show a strong enough position—that actually they can work their way through that and rebuild equity over time. So it's a matter of taking those aspects into consideration and of course the people—that's the third part of it. So it's the cash flow the collateral and the character. You've got to have a clear understanding of those three considerations in any lending situation. And banks have entire departments that work closely with their clients to try and minimise the impact of getting into this situation and then the impact of what that might be on the farmers in the first instance but actually on the bank's position of course as well. So this bill provides a good mechanism for those non-mainstream banks to have the ability to work with the farmers or conversely the farmer to instigate mediation with some of those lenders who may be second- or third-tier lenders but often are family connections. It may be parents or relatives that have lent some money to those farmers to enable them to get into business to get into a farming business they would not otherwise have been able to. And so it's important that we're aware of that. It's not always big banks or rich people lending money to vulnerable farmers.Actually these can be pensioners parents of those farmers who may not have strong cash flow themselves but do have some equity and are able to either borrow against that from the bank and on-lend it to their children or they may provide a guarantee to support the security requirements of the farmers. And so we need to be mindful of that as well. And that would just be one aspect that I would raise around the $2000 cap that has been mentioned in terms of the maximum charge for farmers because if the other party is not a mainstream bank and may be also significantly cash-flow constrained it can be challenging for them to be looking at the situation where they may have to stump up significant mediation costs but may not actually be able to do so themselves. And of course the other aspect around the definition of farmer" which crosses over both lines potentially is in a number of instances where you may have an equity partnership for example and one of those parties in that equity partnership may also be a lender to that partnership. So they are classified as both a partner by being a farmer in the sense of the definition in this bill but also a lender or a creditor to that entity as well. So that creates another line of confusion—that on glancing through this I haven't seen clarified—as to how that would play out in a mediation situation. So I'd be interested to see that. But of course we have seen an increasing amount of pressure being placed on farming businesses. And one aspect that I'd touch on as well is the Reserve Bank's current consideration around what's an appropriate level of capital to be required to be held by the banks. And of course whenever a mainstream bank hears that of course they're going to start reassessing where their risk appetite is sitting in a particular industry. And we're hearing across the board now that banks are being somewhat more cautious in their approach to additional lending. And actually the existing lending requirements—there's encouragement in a lot of spaces to start repaying capital not just interest costs and so that has implications as well. And of course we'd heard already about the aspect of whether hire purchases and other unnecessary debts are potentially caught up under this as well. But at the end of the day it comes back to providing a platform giving a little bit more support whilst already I think there's a broadly appropriate platform in place in most instances for banks—granted there are some exceptions. This really is I think a good opportunity to enable a better process to be established around those non-mainstream lenders. And so on that basis I do commend the bill to the House."