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Speaker 1: The government has finally asked for an inquiry into rural banking.

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Speaker 1: Prime Minister Chris lux And says today said that he's

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Speaker 1: asked the Finance and Expenditure Select Committee to dig into

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Speaker 1: the concerns that farmers have about the way the banks

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Speaker 1: are operating.

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Speaker 2: They will joint me work on working through with the banks,

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Speaker 2: their chairs and their CEOs with a public public inquiry.

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Speaker 2: And that's really to make sure that we've got competition.

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Speaker 2: We want to make sure customer service and importantly look

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Speaker 2: at bank profitability.

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Speaker 1: Richard McIntire is the Federated Farmer's National Dairy Chair and

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Speaker 1: with us now, hey Richard, Hey, Heather, what is the

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Speaker 1: treatment from banks that farmers aren't enjoying?

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Speaker 3: Oh, look, it's a whole anch of stuff. Really. The

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Speaker 3: farmers are looking at the interest rates of that paying

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Speaker 3: compared to residential home home owners and seeing quite a

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Speaker 3: quite significant difference there, and they're asking why is it

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Speaker 3: the case? Is it fair and reasonable? Are our banks

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Speaker 3: favoring residential ending over rule ending? And also that the

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Speaker 3: treatment of farmers when they become distressed. You know, there

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Speaker 3: are a lot of farmers say, hey, look I used

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Speaker 3: to have a really good relationship with my bank. I

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Speaker 3: don't really see what's changed with my business of anything.

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Speaker 3: I think my business is in the stronger financial position.

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Speaker 3: But their banks are putting more and more pressure on them,

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Speaker 3: and we're seeing some really perverse outcomes there in that respect,

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Speaker 3: where farmers that you know, you can't see how they're

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Speaker 3: really rescued to the banks or the financial system, to

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Speaker 3: be fair, are being forced to pay very high interest

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Speaker 3: rates and in some cases forced to sell up.

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Speaker 1: How high is the interest rate, well, you.

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Speaker 3: Know, depending on the farming business. What I'm hearing, there

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Speaker 3: are a lot of farmers paying in the nine some

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Speaker 3: of the tens. We're having some very high overdraft rates

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Speaker 3: twelve to fourteen percent. And we're also having farmers that

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Speaker 3: you know, I struggle a little bit with the current

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Speaker 3: commodity cycle and not make their profit. But banks are

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Speaker 3: still demanding to have principal repayments, and the fact that

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Speaker 3: we're sending the overdraft so that the principal repayments can

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Speaker 3: be made, and therefore essentially changing from say nine percent

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Speaker 3: interest rate with turno through to a twelve or forteen

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Speaker 3: percent and straight on the overdraft. And as you can imagine,

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Speaker 3: that's in no way the best interests of the farmer.

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Speaker 1: Are the banks not just acting in their own base

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Speaker 1: interests for their own business or is there something else

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Speaker 1: going on here?

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Speaker 3: Well, look there's sitting in behind all of this, you know,

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Speaker 3: there is a reserve bank regulation. And when we sort

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Speaker 3: of when we ask a few questions about what's driving

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Speaker 3: these higher interest rates, the bank's point of the finger

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Speaker 3: right at the Reserve Bank and say, hey, look it's there.

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Speaker 3: It's all of their regulation, their capital requirements. They're at

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Speaker 3: at the moment increasing the capital requirements for rule ending

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Speaker 3: in order to in order for the ugilant financial system

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Speaker 3: to worst at a one in five hundred year event,

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Speaker 3: which is all well and good. But then you talk

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Speaker 3: to the Reserve Bank and they say, hey, look, their

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Speaker 3: regulatory settings are fine. It's the banks making excessive profits.

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Speaker 3: And it's a lack of competition in the real banking

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Speaker 3: space because we've only got five rural banks, but we

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Speaker 3: have about eighteen in the residential space. So one of

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Speaker 3: the things we'd love to look at is what's driving

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Speaker 3: Is there enough competition? Enough competition there? But what's driving

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Speaker 3: only five banks wanting to be in the real space

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Speaker 3: but eighteen in the residential space.

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Speaker 1: Fair enough, Richard best of getting to the bottom of this.

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Speaker 1: Richard McIntire Federated Farmer's National Dairy Chair.

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