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Friday, 10 May 1985
Page: 1734

Senator WALSH (Minister for Finance)(11.04) —I do not intend to speak for very long, but I think it would be appropriate to make some comments with regard to what Senator Jack Evans said. The references to the very heavy lending that some foreign banks have made to Third World countries and the possibility of repudiation or default of those loans have no relevance to this debate. The foreign banks that will be allowed to operate in Australia or be substantial shareholders in banks in Australia are required to have a separate corporate identity from their foreign cousin or sibling, and they will be subject to exactly the same prudential controls as are other Australian banks-prudential controls which, incidentally, were strengthened by the Reserve Bank only this week.

Frankly, I could not understand Senator Evans's comments about foreign banks and currency fluctuations or speculation or manipulation, and I could not understand them for a number of reasons. To the extent that that could possibly happen, it could happen with or without the changes proposed in the Banks (Shareholdings) Amendment Bill 1985 because Citicorp Australia Ltd, to take one of the banks he mentioned, has operated as a merchant bank in Australia for some time and has been able to do all of the things Senator Evans apparently believes that it has done. Alternatively, if he chooses to disregard that point, he seems to me to be arguing that the influence of foreign banks will be not only malevolent and powerful, but also retrospective. That is, the prospect of substantially foreign-owned trading banks operating in Australia will cause the currency to fluctuate retrospectively.

The argument I found most difficult of all to follow, if one accepted the conspiracy theory to that point, was that the foreign banks, by buying up Australian assets when they realised they would be given an opportunity to have substantial shareholdings in Australian banks, had caused the Australian dollar to depreciate. I would have thought that it would have the opposite effect. However, it is clear that the Bill will be passed and I propose that we proceed to that stage.

Question put:

That the Bill be now read a second time.