Latest / Best of Business / Richard McIntyre: Federated Farmers spokesperson on the Finance Minister's planned joint inquiry into rural banking

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Richard McIntyre: Federated Farmers spokesperson on the Finance Minister's planned joint inquiry into rural banking · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talks'd be follow
• 0:12
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• 0:16
  Speaker 2: The government has finally asked for an inquiry into rural banking.
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  Speaker 2: Prime Minister Chris lux And says today said that he's
• 0:22
  Speaker 2: asked the Finance and Expenditure Select Committee to dig into
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  Speaker 2: the concerns that farmers have about the way the banks
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  Speaker 2: are operating.
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  Speaker 3: They will joint me work on working through with the banks,
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  Speaker 3: their chairs and their CEOs with a public public inquiry.
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  Speaker 3: And that's really to make sure that we've got competition.
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  Speaker 3: We want to make sure customer service an importantly look
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  Speaker 3: at bank profitability.
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  Speaker 2: Richard McIntyre is the Federated Farmer's National Dairy Chair and with.
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  Speaker 1: Us now hey Richard, hey, Heather, Well, what is the.
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  Speaker 2: Treatment from banks that farmers aren't enjoying?
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  Speaker 4: Oh? Look, it's a whole bunch of stuff. Really. The
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  Speaker 4: farmers are looking at the interest rates of that paying
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  Speaker 4: compared to residential home owners and seeing quite a quite
• 1:00
  Speaker 4: significant difference there and they're asking why is it the case?
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  Speaker 4: Is it fair and reasonable? Are our banks favoring residential
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  Speaker 4: ending rule ending? And also that the treatment of farmers
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  Speaker 4: when they become distressed. You know, there are a lot
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  Speaker 4: of farmers saying, hey, look, I used to have a
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  Speaker 4: really good relationship with my bank. I don't really see
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  Speaker 4: what's changed with my business of anything. I think my
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  Speaker 4: business is in the stronger financial position. But their banks
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  Speaker 4: are putting more and more pressure on them, and we're
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  Speaker 4: seeing some really perverse outcomes there in that respect, where
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  Speaker 4: farmers that you know, you can't see how they're really
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  Speaker 4: risky to the banks or the financial system, to be fair,
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  Speaker 4: are being forced to pay very high interest rates and
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  Speaker 4: in some cases forced to sell up.
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  Speaker 2: How high is the interest rate, well.
• 1:42
  Speaker 4: You know, depending on the farming business. All I'm hearing
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  Speaker 4: there are a lot a lot of farmers paying in
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  Speaker 4: the nine some of the tens. We're having some very
• 1:48
  Speaker 4: high overdraft rates twelve to fourteen percent. And we're also
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  Speaker 4: having farmers that you know, I struggle a little bit
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  Speaker 4: with the current commodity cycle and not manke their profit.
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  Speaker 4: But banks are still demanding to have principal repayments and
• 2:00
  Speaker 4: effect that we're extending the overdraft so that the principal
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  Speaker 4: repayments can be made and therefore essentially changing from say
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  Speaker 4: nine percent interest with turno through to a twelve or
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  Speaker 4: forty percent and straight on the overdraft. And as you
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  Speaker 4: can imagine, that's in no way and the best interests
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  Speaker 4: of the farmer.
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  Speaker 2: Are the banks not just acting in their own base
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  Speaker 2: interests for their own business or is there something else
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  Speaker 2: going on here?
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  Speaker 4: Well, look, there's sitting in behind all of this, you know,
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  Speaker 4: there is a reserve bank regulation. And when we sort
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  Speaker 4: of when we ask a few questions about what's driving
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  Speaker 4: these higher interest rates, the bank's point of the finger
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  Speaker 4: right at the Reserve Bank and say, hey, look it's there.
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  Speaker 4: It's all of their regulation, their capital requirements. They're at
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  Speaker 4: the moment increasing the capital requirements for rule ending in
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  Speaker 4: order to in order for the digitiliant financial system to
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  Speaker 4: withst at a one in five hundred year event, which
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  Speaker 4: is all well and good. But then you talk to
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  Speaker 4: the Reserve Bank and they say, hey, look, their regulatory
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  Speaker 4: settings are fine. It's the banks making excessive profits, and
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  Speaker 4: it's a lack of competition in the real banking space
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  Speaker 4: because we've only got five rural banks, but we have
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  Speaker 4: about eighteen in the residential space. So one of the
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  Speaker 4: things we'd love to look at is what's driving. Is
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  Speaker 4: there enough to competition? Enough competition there, but what's driving?
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  Speaker 4: Only five banks wanting to be in the real space,
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  Speaker 4: but eighteen in the residential space.
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  Speaker 2: Fair enough, Richard beast of luck getting to the bottom
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  Speaker 2: of this as Richard mcintie Federated Farmer's National Dairy Chair.
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