Minister for Agriculture David Littleproud has congratulated the Commonwealth Bank on offering drought-stricken farmers the chance to use their Farm Management Deposit accounts as offsets against their mortgages.
Farm Management Deposits allow farmers to take up to $800,000 from their pre-tax profit in good years and set it aside for use during tough times like drought – or to rebuild after.
The Coalition changed the law in 2016 to allow them to be used to offset interest against a mortgage the same as a home owner might have an offset account on their mortgage but no major bank offered customers a product doing this until NAB did so recently following Minister Littleproud’s drought round table.
“I commend CBA on its strength of character,” Minister Littleproud said.
“Yesterday I gave them an uppercut but today they deserve a bouquet. They showed courage and leadership.
“FMD offsets are about the future sustainability of agriculture in Australia. They’re about giving farmers the tools to cope with drought and be better prepared for future droughts. Governments can’t fix everything – everyone has to help.
“Farmers now have real choice. With this announcement by CBA, the previous announcement by NAB and the fact Rural Bank has offered FMD offsets for years, farmers can choose a bank which offers an FMD offset product.
“I said to the banks four weeks ago at my drought round table: time is up. Banks have made millions from farmers and it’s time for banks to help farmers be sustainable going forward. I’m glad NAB and CBA have heard the message on this. My earlier comments stand – if you’re a farmer whose bank doesn’t offer an FMD offset, tell them to take a running jump. Find a bank which does.
“ANZ’s recent announcement of a $1 million dollar donation is commendable but in perspective is around one-six thousandth of its typical full year profit. Westpac’s $200,000 donation is also a good thing but is a percentage of its profit too tiny to even calculate.
The Rural Bank, NAB and CBA now offer farmers the ability to have Farm Management Deposits used as offsets against their loans but ANZ and Westpac are yet to move.
“I hope ANZ and Westpac have announcements coming on this issue,” Minister Littleproud said.