MPs frustrated by ‘hubris’ of big banks appear on brink of voting for rural banking inquiry

Tuesday, 4 June 2024

ACT’s Mark Cameron says MPs of all colours are concerned there may be a ‘real problem’ with rural banking.

Big banks came to Parliament to paint a rosy picture of the support and love they showed farmers, but MPs were far from satisfied with their self-congratulatory assurances.

ACT’s Mark Cameron said MPs had been left with many unanswered questions, but Parliamentary confidentiality prevented him from saying whether they had voted to begin a formal inquiry into rural banking before the select committee issued a report on the hearings.

The primary production select committee is hearing evidence to decide whether to hold a full-blown inquiry into rural banking after hearing of growing unhappiness among farmers with banks.

Bankers from ANZ, ASB and BNZ presented to the committee on Thursday, telling the MPs they were “trusted advisers” to farmers.

But Cameron, chairperson of the select committee, indicated the banks had not convinced the ACT, National, Labour and Green MPs on the committee.

“Across the Parliamentary divide there was universal agreement that the banks appear to have a degree of hubris, or self-congratulation,” Cameron said.

MPs were not impressed by bankers’ assurances over rural lending claims.

There was “an arrogance we felt the banks were offering”, he said.

MPs plied the bankers with questions, but Cameron said: “We came away dissatisfied by the answers.”

Federated Farmers has led calls for a probe into rural banking to parallel the Commerce Commission’s market study on retail banking.

It says farmers are being put under “undue pressure” by banks, and lending to the agriculture sector is being reduced by banks, which prefer to pour money into the urban housing market.

Farmers feel they are being overcharged for lending secured against farmland compared to the rates urban households pay on their mortgages, and feel there is a lack of competition in the rural sector, Federated Farmers says.

Cameron said: “It’s clearly evident that as a committee we came away quite disenfranchised by the banking fraternity, and I think that mirrors what our constituency up and down rural New Zealand is telling us.”

There were more questions the MPs wanted answers to, he said.

At the hearings MPs expressed frustration at the time allocated to them delve into farmers’ concerns, but Cameron indicated they had heard enough to be worried.

“I think it’s really shone a light across the Parliamentary divide that there is potentially, I stress this point, potentially a real problem,” he said.

Green MP Steve Abel used the word ‘rort’ when talking about Australian bank profits.

A lot of capital was going to be needed for the agriculture sector to invest to become more productive to meet the national target of doubling agricultural exports over the next 10 years, he said.

Capital was also needed as farmers adopted new technologies to reduce climate emissions.

“If we are in a banking environment that does not support that, or appear to be supporting that, that is damaging. It’s damaging for confidence,” he said.

“I think for the future of rural New Zealand it lays a pathway of incredible uncertainty, and that’s the worry.”

Federated Farmers has presented MPs with a report containing some person horror-stories of farmers losing farms when they lose support of banks, despite those farmers having significant amounts of equity in their farms.

Cameron himself spoke during the hearings of a farmer who told him about being defaulted on a loan of less than $100,000 despite having equity of around $5million.

National MP Catherine Wedd quizzed banks on the huge profits.

“This is a nonsense,” Cameron said.

“I maintain in that scenario that gentleman is correct.”

He said he told the story during the select committee hearing to “humanise” the issues farmers were telling MPs they faced.

Farmers also have concerns that banks are not doing enough to support the next generation of farmers to buy farms, including those owned by their parents.

“They are worried about the next generation of farmers coming through,“ Cameron said.

Following the open session on Thursday, there was a closed session in which the MPs discussed what they had heard.

It appears they agreed they needed to dig deeper into rural banking.

“We have a universal agreement on that committee that something is going on. I think it’s incumbent on us as politicians to find out what that might look like,“ Cameron said.

“I think there are more questions to be asked, and we will be asking them,” he said.