MPs for loan-swap probe
Marlborough-based MPs Colin King and Steffan Browning support a call for the Primary Production Committee they sit on to consider investigating loan swaps.
Mr King, National's MP for Kaikoura electorate, said he welcomed Labour primary industries spokesman Damien O'Connor's request for a loan swaps inquiry because it was time the issue saw the light of day.
"I have had too much experience of the outrageous behaviour of financial institutions," he said.
"Unfortunately the capitalist system has a sharp edge.
"Anyone who has been through the mill in agriculture knows people can be pressured to take short-term options around financing that lead to long-term pain," he said.
Farmers bought the loan swaps as a kind of insurance against rises in interest rates.
But when interest rates fell, the swaps had the effect of locking them into interest rates that were in some cases more than 10 per cent on their loans.
A spokesman for the ANZ-National Bank said interest swaps were one of several products businesses, including farms, used to manage interest rate risk.
Customers were advised to get independent advice before entering a swap to ensure they fully understood the product and its suitability for their business, he said.
Green list MP Steffan Browning, who is based in Marlborough, said his party was concerned that farmer indebtedness was limiting their ability to meet sustainability targets.
"If farmers face troughs in returns, the exchange rate is not doing them any favours, they are paying a large amount of interest to foreign banks and we are wanting them to improve sustainability at the same time.
"It's a struggle," Mr Browning said.
He would like the request widened to look at general rural debt in general.
Neither MP had heard from anyone affected by loan swaps but would welcome contact.
Mr O'Connor has asked that the committee be briefed on loan swaps and asked to consider an investigation.
"There was a significant investigation in the UK and so I'm sure that the banks will be unenthusiastic about one here," he said.
"But it is important for our economy that we have a healthy relationship between the farming sector and the banking sector."
An inquiry could be started before March, he said.
Meanwhile, New Zealand Winegrowers advocacy and trade general manager John Barker said the group could support members with concerns if the Commerce Commission decided to investigate loan swaps.
"This is not something Winegrowers has an official position on," he said.
Growers and wine companies had not directly expressed concerns about the loan swaps, but this was not to say there was not a problem, he said.
It could be difficult for people to raise issues which dealt with their personal financial situation.
"If it's being investigated and our members express concerns and want us to represent these to the Commerce Commission, we would have to look at that," Dr Barker said.
The commission has started a preliminary inquiry into loan swaps, before deciding whether to start a full investigation.
The Marlborough Express