FEDERAL Minister for Agriculture David Littleproud has called on the big banks to help farmers manage drought and tough times by offering offset accounts for Farm Management Deposits.
FMDs allow farmers to remove money from their taxable income in good years by depositing it into an FMD account. They can withdraw the money during a bad year and pay tax on the withdrawal then.
There are currently 49,549 FMD accounts in Australia and the Australian Bureau of Agricultural and Resource Economics estimated last year that offsetting for FMDs would save farmers in tough times around $150M a year.
Mr Littleproud said the only bank to have gotten on board with FMD offset accounts is the Rural Bank.
“I applaud them for it.”
The Coalition Government increased the cap on FMD accounts from $400,000 to $800,000 in 2016. The government also allowed banks to give farmers the chance to use their FMD to offset interest on their loans, the same as a home loan often has an everyday offset account which offsets interest from the home loan. However, no big bank has taken the opportunity, a statement from Mr Littleproud’s office said.
Mr Littleproud said this was a chance for the big banks to regain their standing in the community following evidence in the Royal Commission this week.
“The Coalition Government created laws in 2016 to allow banks to offer an FMD offsetting product, yet none of the big four banks bothered to create one.
“The big banks have been able to provide these FMD offsets since 2016, and time’s up,” he said.
“The big banks need to right their wrongs.
“Our banks should back our farmers,” Mr Littleproud said.
“Big banks lend almost as much to credit card debt as they do to agriculture in this country.
“Agriculture is a much better bet than credit card debt – the sector continues to grow; farmers are becoming more efficient and the reputation of Aussie produce around the world is growing,” he said.
“I call on the big banks to offer Farm Management Deposit offset accounts and help our farmers manage through the good and bad years.
“Farmers grow the food we eat – including food for the bankers.”