Minister for Agriculture David Littleproud has welcomed all major banks finally coming to the table and offering Farm Management Deposit offsets to their customers.
Westpac and ANZ, the two remaining banks yet to offer the Farm Management Deposit (FMD) offset both made announcements following mounting pressure.
This means no matter which bank farmers are with they will now be able to use the money in their Farm Management Deposit to offset interest on their loans.
Minister Littleproud said he pushed hard on the issue during his drought roundtable in July and the news would be a weight lifted from farmers’ shoulders.
“Westpac and the ANZ finally showed up for our farmers,” Mr Littleproud said.
“Two years ago this government made changes to the law to allow farmers to use their FMD as an offset against their loans and for two years I’ve been a broken record calling for the banks to stump up.
“The banks make billions out of agriculture and for too long the relationship has been take, take take.
“I know farmers dealing with drought have enough on their plates. For those farmers who were looking seriously at changing banks this has taken away that stress.
“Australian farmers have more than $6 billion in FMDs so if all banks offer FMD offsets on farm loans, this could save farmers potentially $240 million a year.
“It’s been a long time coming, but we’re here now and farmers will be better off for it. I thank the banks for joining us on that journey.”
Farmers are allowed to have up to $800,000 in an FMD. This means they could roughly save tens of thousands of dollars if their bank offers an FMD offset.
Farmers can put pre-tax income into the FMD during good years and pull it out during bad years, choosing to pay tax on it then.
NAB was second to come to the party over a fortnight ago, some two years after Rural Bank showed leadership in offering FMD offsetting accounts. CBA followed suit last week and Rabobank made its announcement three days later after previously ruling out the idea.