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Wednesday, 26 November 2008
Page: 7387

Senator BOB BROWN (Leader of the Australian Greens) (4:26 PM) —It would be good and kind of the minister to indicate when that later hour is. However, let me take this opportunity to flag the opposition that I and the Australian Greens have to this legislation being railroaded through the Senate in the next 36 hours. There has been no inquiry, there has been no reference to the Australian public and there has been no assessment of what the cost to Treasury might be, either as a direct result of the bill or should the circumstances for which the bill is being put to the Senate—that is, to deal with a default on a major borrowing overseas—come about. The objection that I have is that this is the wrong way to go about things. Senator Coonan said that the opposition has been pursuing this outcome for about six weeks, and I accept that. But the fact is that the government has said, until the last week or so, that there is no need for this legislation. Now suddenly there is a need for the legislation. In that circumstance, there is a need for the Australian public to be acquainted with the legislation that is being passed on this hill and to have input, because there is not one Australian household that is not potentially affected.

This bill is to use consolidated revenue—or, if there is not enough money in consolidated revenue, the government is to go out and borrow the money—to pay for an overseas borrowing by one of the banks that they are failing to repay. In other words, the public purse becomes the guarantor of the private operator. We will hear argument in the coming 36 hours that this is necessary for the banks to be able to compete in the international market. The Financial Review today, in a piece by Matthew Drummond, says that the banks are eager to get in early and test pricing power. They are all in the starting blocks and they are waiting for Friday to roll around so that they can go onto the market and borrow at a much lower rate.

In the absence of a Senate inquiry, I will be asking of the government—and this is important; this is why I am speaking now—in the committee stages of this bill to provide the Senate with the figures on how much the government will raise through any imposition on bank lending that gains the favour of the guarantee in this legislation. I will also be asking the government to indicate to the Senate how much advantage the banks can be expected to get from this guarantee going through this place—that is, what difference it will make to their ability to borrow overseas—and the conditions of that borrowing, in particular, of course, with respect to interest rates.

This is a piece of legislation that will be obscure to much of the public because it looks complicated. But, in effect, it is simply a means of the government guaranteeing the banks when they borrow overseas—and, on the long-shot chance that one of those borrowings fails, the public picks up the tab. When the public picks up the tab, that means money that otherwise might be available under consolidated revenue or through borrowings for hospitals, for schools, for public transport, for security, for the environment or for tackling climate change will instead go to make up for that defaulting bank loan—which means the defaulting bank. This is legislation which, logically, will encourage more risky borrowing overseas. It is legislation which will increase borrowing overseas and therefore, logically, the potential for default.

It is no good for the government or the opposition, which is claiming credit for this legislation, to argue, that the chance of a default is ‘infinitesimal’—a word I had put to me yesterday—because this whole piece of legislation is predicated on a bank defaulting on an overseas loan. If that potential were not there, there would be no legislation. Therefore, it is wagering the public good, the public purse, against a mistake by the private sector, the banks, in borrowing overseas—by borrowing in circumstances where a default not only was possible but also became a reality. So it is a very clear case of the Labor government putting on the line the public wellbeing as a backup for private enterprise, which we are told needs less government regulation not more. This is socialising the risk of the big banks. It is as simple as that. And it deserved much more scrutiny than we are getting here today.