10 Sep 2018

Farm debt mediation bill needs more work

1:37 pm on 10 September 2018

A bill that would provide for mediation between banks and farms before they are put into receivership or liquidation has been called weak by a parliamentary select committee, and sent away for more work.

A generic herd of dairy cows on a South Canterbury farm.

Dairy cows on a New Zealand farm (file photo). Photo: RNZ Maja Burry

The proposed legislation has been condemned by insolvency specialist John Fisk, but its champion, New Zealand First MP Mark Patterson, insists farm debt mediation works in Australia and would work here.

A farm mediation bill on this subject has been in the wings for almost 20 years but had got nowhere.

A new version was put onto parliament's agenda following a question by Mr Peters in May.

Mr Peters faced no opposition when he asked if a farm debt mediation bill could be put into parliament, so it was proposed by another New Zealand First MP, Darroch Ball, before being taken up by Mr Patterson.

The bill had not yet been drafted at that point.

A subsequently written version has been examined by Parliament's Primary Production Select Committee, whose chairman David Bennett called it weak.

He then asked if Mr Patterson would refer it to Agriculture Minister Damien O'Connor and seek help from the Ministry for Primary Industries.

Speaking outside the committee room, Mr Patterson said he had been asked by the committee to do more work on the bill.

He was also advised to try to get support from Mr O'Connor, which he was happy to do.

"Informally I know he is very supportive, but we needed to see feedback from the select committee first, as well as the departmental report that has indicated there is quite bit of work still to be done on the bill."

Mr Fisk faulted the bill for causing delays in settling insolvency which would only increase the size of the original debt.

He also questioned why farms should be singled out for mediation, separate from other businesses.

Mr Patterson said farmers often had an emotional attachment to a farm, and so often held on longer than they should, worsening their spiral into indebtedness. For this reason, mediation would suit everyone.

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