Agriculture Minister Damien O'Connor has introduced the Farm Debt Mediation Bill (No 2) to Parliament.
The bill aims to establish a farm debt mediation scheme that will require creditors with security interests in farm property to offer mediation to farmers before taking an enforcement action in relation to that debt. It will also allow farmers to initiate statutory mediation with a secured creditor.
The objective is fair, equitable and timely resolution of farm debt issues. It would provide for farmers and secured creditors to meet in an equitable manner to explore options for business turnaround, and - where they are few other options - to provide for a timely and dignified exit.
The scheme will apply across all secured lenders, including non-bank lenders. Secured creditors of farm businesses will be required to offer statutory mediation before taking an enforcement action in relation to debt secured over farm property (including land, chattels and licences).
Farmers will also be able to initiate mediation, without needing to meet any statutory criteria other than having debt secured over the farm business.
There is no obligation on either party to participate in mediation. However, if a farmer declines to mediate, the creditor will be able to apply for an enforcement certificate, which will allow enforcement action to proceed in line with the terms and conditions of the loan agreement. If the creditor declines to mediate, the farmer can apply for a prohibition certificate, which will prevent the creditor from taking any enforcement action related to that debt for 6 months.
If passed, the legislation will come into force on a date or dates set by Order in Council. Any provision of the Act not already in force 12 months after Royal assent will come into force then.