Citizens Electoral Council of Australia

Media Release Thursday, 10 April 2014

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://cec.cecaust.com.au

Isherwood on WA farm crisis:

Destroy the banks’ death grip on farmers with Glass-Steagall, a national bank, parity pricing

Citizens Electoral Council leader Craig Isherwood today declared that the only way to save the family farmers in WA’s wheat belt is to bust up the banking system that is systematically annihilating them.

Isherwood was responding to ABC Landline’s 6 April report on farm foreclosures in WA, which revealed the high interest rates of 13-17 per cent that banks were imposing on the debt-laden farmers. Landline reported the case of Peter Repacholi’s 102-year-old family farm at Kondinin, which CBA-subsidiary BankWest has foreclosed on after last June whacking up the interest rate on its $3.5 million debt from 8.5 per cent to 13.62 per cent.

This is one of around 300 current cases of the banks cutting off credit to farmers in the wheat belt; it is the latest crisis period in a long-term assault on family farms, that has seen the number of family farmers in the WA wheat belt alone collapse from 20,000 to just 4,400 in 25 years, reducing once-vibrant local townships to virtual ghost towns.

“The banks are intentionally driving family farmers from their land,” Isherwood charged.

“They are acting like loan sharks, justifying their usury by reappraising the farmers as high risk.

“The truth is,” he said, “it is the banks which pose the high risk—to all Australians. Australia has the world’s single most concentrated banking system, centred in the Big Four and Macquarie, which are lending like mad into the black hole of the property bubble that is warping the entire Australian economy.

“The banks are so addicted to the multi-trillion dollar derivatives betting they do on mortgages, they are starving the rest of the economy of credit. [Click here to read "Memo: The Great Australian Mortgage Bubble" (PDF)]

“This is not just a crisis for farmers, it is a crisis for all Australians, because it is destroying our national food security. The corporate agribusinesses that take over their land do not provide food security: only family farmers are committed to producing food every year, to being good stewards of the land so they can pass it on to the next generation, and to supporting their local communities.”

Isherwood said the only way to save Australia’s family farmers is through a Glass-Steagall banking separation, national banking and parity pricing.

Glass-Steagall

A Glass-Steagall banking separation is the only way to break the concentrated power of the Big Four banks, and Macquarie Bank: split the banking conglomerates into retail banks which take and lend deposits, completely separated from all forms of risky investment banking, stockbroking and insurance. This will cut off the derivatives gamblers from the deposits that have fuelled their frenzy of speculation, freeing up those deposits for normal lending, including to family farms and businesses.

National bank

It is in the national interest for credit to be available for the priority areas of economy, especially food production. A national bank, owned and run by the government, can direct credit where private banks won’t. For instance, a national bank could easily refinance the $70 billion of total Australian farm debt ($14 billion in WA), with long-term, low-interest credit. Australia’s original national bank, the 1911-1959 Commonwealth Bank, financed much of the early development in the wheat belt, including the construction of the roads around Merredin so soldier-settlers after WWI could transport their wheat. The CEC has drafted legislation for a new national bank called the Commonwealth National Credit Bank.

Parity pricing

The long-term solution for family farmers is a parity-pricing scheme that ensures the return to producers covers their costs of production. The U.S. instituted a parity-pricing scheme in 1941, to both guarantee food security in WWII, and to boost national income. The architect of the scheme, Carl Wilken, proved that every dollar earned on farms generated $7 in national income—the highest multiple of any sector. Parity pricing worked so brilliantly that farm borrowing dropped dramatically, because the farmers were able to finance their crops and production from farm income. This is known as the Golden Era for U.S. agriculture. It was the Wall Street banks which pressured Congress to end the scheme in 1952. [Click here to read a 4-page pdf file recounting the U.S. parity-pricing scheme.]

Isherwood concluded, “The farm crisis, not just in WA but nation-wide, is rightfully provoking more and more people to call for a different banking system. Glass-Steagall, national banking, and parity pricing are the essential elements of that system.

“The CEC is leading the fight for these solutions—join us.” //pubs/pdfs/Mortgage-Bubble-Memo-Web.pdf

Click here for a free copy of the CEC’s pamphlet Glass-Steagall NOW!, which exposes the danger of a banking collapse in Australia due to derivatives gambling, and a free copy of a speech by U.S. farm leader Frank Andres explaining the need for parity pricing.

Click here to join the CEC as a member.

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