In the wake of the Royal Commission, the big banks have to repair our trust. I suggest they agree to our plan to offer our struggling farmers a safety net.
Farm Management Deposits allow farmers to remove money from their taxable income in good years by depositing it into an account. They can withdraw the money during a bad year and pay tax on the withdrawal. As it stands, there are 49,549 of these accounts, and they represent insurance for 49,549 farming families.
The Coalition Government increased the cap on FMD accounts from $400,000 to $800,000 in 2016. The Coalition also allowed banks to give farmers the chance to use their FMD to offset interest on their loans, much the same as a home loan has an everyday account which offsets interest.
However, no big bank has taken the opportunity. The Australian Bureau of Agricultural and Resource Economics estimated that offsetting for FMDs would save farmers in tough times around $150M a year.
This is a chance for the big banks to regain their standing in the community following evidence in the Royal Commission.
The big banks have been able to provide these FMD offsets since 2016, and time’s up. The big banks need to right their wrongs. Our banks should back our farmers. The only bank to have gotten on board FMD offset accounts is the Rural Bank. I applaud them for it.
Big banks lend almost as much to credit card debt as they do to agriculture in this country.
Agriculture is a much better bet than credit card debt – the sector continues to grow; farmers are becoming more efficient and the reputation of Aussie produce around the world is growing.
I call on the big banks to offer Farm Management Deposit offset accounts and help our farmers manage through the good and bad years. Farmers grow the food we eat – including food for the bankers.