Hype not helpful in bad debt debate

16 Dec, 2014 01:00 AM
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Many of us have spent a great many years fuelling the community’s love of hating banks

WITH public debate raging about bank foreclosures on debt and drought-savaged farm businesses, Cox Inall director Lucy Broad asks whether the media and political cycle is helping or hindering the situation.


LAST week I woke up to the news that the ANZ Bank had announced a moratorium on farm repossessions in northern and western Queensland and north-west New South Wales.

Times are really tough in parts of rural Australia, particularly Queensland, and terrible farm suicide statistics provide a sobering reminder that for many these are literally life and death issues.

The weekend papers told me the ANZ bank has promised to “stop evicting drought-stricken farmers from their land” and “driving people off their farms”, and that “struggling farmers escape eviction as banks back down”.

Without diminishing in any way the seriousness of the problems being faced in some areas of farming, it struck me that as storytellers in rural Australia, many of us have spent a great many years fuelling the community’s love of hating banks.

It reminded me in particular of a story I reported on in the late 1980s for the ABC TV program Countrywide, near the small town of Sealake in the Mallee district of north-west Victoria. It’s the heart of Australia’s southern wheat belt, and a farming family had received a foreclosure letter from their bank.

We filmed the father tramping the streets of Melbourne seeking alternative finance, and put it to the background soundtrack of John Schumann’s “Borrowed Ground”.

We filmed at the farm (with the family’s blessing), while they sat around the kitchen table and explained to the children that they would have to leave; and we filmed the clearing sale as the accumulated equipment of multiple generations of family farming was dispersed.

The family was sad and angry and understandably emotional. The bank was vilified by all and nowhere to be seen.

Dare I say it: it was great television.

The family had come through years of drought in the 1980s, continued to borrow heavily at high interest rates, overcommitted themselves and couldn’t meet the repayments.

The drought support for farmers that did exist was subsequently found to be poorly targeted, and acted as a disincentive for farmers to prepare for hard times.

The government has been trying to get that right ever since, aiming for policies that encourage farmers to take a risk management approach to drought and become more self-reliant. We are still not there.

Around the country in the late 1980s it was an all too familiar scene, and the stories of farm family hardship and foreclosures were often heartbreaking.

The perception of banks was of ruthless, profit making, big businesses, encouraging excessive borrowing at record high interest rates by families who didn’t understand the consequences.

Perhaps there was an element of truth in that.

But now, almost 30 years later, have we really not moved on?

With widespread fear of an imminent increase in farm foreclosures, the banks are being forced by public opinion and government pressure to “get on the front foot”, and in their words “dampen mounting political and community anger”.

In an interview on ABC Radio the ANZ CEO said there have been less than 10 farm foreclosures over the past 12 months. The papers quote Westpac saying there have been four, and NAB seven. Clearly there is a fear of those numbers increasing, but foreclosure is a last resort when all other options have been exhausted, usually resulting in fire sale land prices and widespread grief.

The fact is if any business is not sustainable in the long term, hard decisions need to be made.

Just ask the faces and families behind the empty shopfronts that are now a familiar sight in most country centres, most of whom never make the headlines.

Might it be better to allow those difficult conversations to occur without the influence from community, media and political pressure?

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READER COMMENTS

jaydin
16/12/2014 5:30:05 AM

I appreciate that people in tough financial circumstances need compassion shown, however people (farmers or otherwise) are always able to shop their finance elsewhere. If someone has their loan called in, and no other financier is willing to touch them, maybe they need to actually appreciate they are in a dire financial position. Rather than complaining about their bank (who did support them until then - no one else will touch them remember) they should take control of their position and sell rather than have someone do it for them.
Lesley Keegan
16/12/2014 6:06:42 AM

What don't you understand about farming? Farmers don't borrow willy-nilly. Without knowing the weather forecast for a twelve month period they still need to sow their crops, they still need to feed breeding livestock through drought. They need to keep paying as many wages as possible to keep a stable workforce, they need to eat. Is it ethical for Banks to lend money when property prices are high and then repossess them when they are low. NOT ON YOUR NELLY!!! It's shameful and deplorable. I am not a farmer, I wouldn't have the physical or mental strength for it. Here's to our farmers.
torobrook
16/12/2014 7:04:04 AM

Yes, definitely yes. Hysterical headlines and story content dreamt up by editors and journalists with an eye for sales. Throw in irresponsible populists such as Katter and Jones feeding on discontent and fear. No bank ever forced anybody to take out a loan.
AlphaFemale
16/12/2014 7:24:40 AM

What an ill-informed story, based on and old example and information provided by the banks. The author seems very keen to take the banks' figures as fact, when as we all know they would have the best PR people in the country working for them. Most journalists would be at least a little sceptical. What about doing some real investigating and go out and talk to those who are getting sold up as we speak. Then present those figures and give us both sides of the story. I agree that bank-bashing may not be the best way to go, but a more subtle cooperative approach has already proved unsuccessful
wtf
16/12/2014 7:29:51 AM

The reason these issues are still current is the same problems encountered then, are present today. The problems of many have been smoothed over by inflating their farms value, yet banks still wont give transparency on the figures. Yes benchmarking is available, however it is mostly very localised. With increased leverage derived from fractional reserve banking, interest rate interference and special industry favourites such as housing and the stockmarket, never before has our society being more exposed to shock/crisis. Perhaps margin calls should consider that things don't always go up?
Sam Trethewey
16/12/2014 9:18:08 AM

Great piece Lucy. My article today was along similar lines.
Old mate
16/12/2014 9:52:48 AM

Hey Alpha, you can see this is an opinion piece, not news reporting, right? Also seem to recall Lucy Broad was even mentioned in the Redgum song about "Borrowed ground" for her reporting on banks and farms, seems to be she's earned the right to her opinion ...
Bushie Bill
17/12/2014 5:46:34 AM

Very well done, Lucy, but probably too subtle for the agsocs to get the message. What does Lesley Keegan really expect a commercial profit-seeking, risk-avoiding enterprise, whether it is a bank or not, to do? It is NOT in business to disperse charity to anyone. It is, and always has been, about business. Lesley would have you believe it is acceptable for farmers to borrow to make money and protect an asset but it is not acceptable for a lender to exercise its legal right to do the same. LK cannot differentiate between government handouts and commercial handouts, a real problem for most RARAs.
Bob
17/12/2014 6:19:53 AM

The banks have a legal and moral obligation to act in the best interests of their shareholders.
Evan Jones
17/12/2014 7:37:35 AM

Re Bob, the banks have no morality so the idea of a 'moral obligation' is farcical. I'm staggered at the lack of sympathy for farmers' relationship with their lenders on this site. Critics of farmers and upholders of bank prerogatives seem to have no idea of the nature of bank practices. Banks promise one thing and often do another; incompetence and indifference is prevalent among some managers. Bank lending is not a partnership but a front for a gigantic racket. The legal 'profession' and receivers are in on the scam. And the judiciary is complicit.
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