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Thursday, 25 June 2009
Page: 4248


Senator FIELDING (Leader of the Family First Party) (9:34 AM) —I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

Banking Amendment (Keeping Banks Accountable) Bill 2009

One of the great Australian dreams is the dream of owning your own home. Thankfully, we live in country where for many people, dreams do come true. Over the past four decades, the rate of home ownership has remained remarkably stable, with approximately 70% of Australian households owning or in the process of purchasing their own home.

However, while home ownership levels in this country have not fallen like in many other parts of this world, housing affordability has certainly not improved. Australians are paying more for their homes, and they are going into bigger debt than ever before. In only the past ten years, the average new loan size has grown by 93%. Even more disturbing, mortgage repayments are chewing up a bigger part of family income and according to the last annual figures provided by the Real Estate Institute of Australia and Deposit Power, this now accounts for a massive 38% of the family paycheque compared to only 24% ten years ago.

The massive liability which loan repayments pose for families means that the standard variable home loan interest rate set by the banks is of enormous importance for most Australians. Given the huge consequences which a change in this rate can have on a family’s budget, one would hope that the banks would exercise this discretion with great responsibility. One would hope that a sense of good corporate citizenship would be the overriding consideration for the banks in setting this rate. One would hope that the banks would not exploit the Australian people and fix interest rates at a level that further increases their whopping profits at the expense of ordinary household income.

However, as has been only too clearly demonstrated over the past few years, this is not the case.

When the global economic crisis struck last year, the Reserve Bank acted quickly to slash interest rates and provide some welcome relief to home owners under financial stress Cheers from Australian home owners, however, quickly turned into dismay with the news on several occasions that some of the major banks would not be passing on the full interest rate cuts. This has become an all-too familiar pattern with the banks which are only too happy to put their hands out for help from the Government, but are quick to turn their backs on Australians in times of need.

These are the same banks that currently enjoy a Commonwealth Government Guarantee on all money deposited in their accounts. A guarantee that enables the banks to enjoy lower borrowing costs and keep their profit margins stable. A guarantee that has helped the four major banks to increase their market share in home loans from 57% to 72%, and which has led the Chairman of the ACCC, Graeme Samuel to recently concede that competition in the banking sector was not intense or vigorous enough.

It is a guarantee which is being paid for using hard-earned tax payers dollars. It is appalling that taxpayers should be asked to help prop up the banks with the government’s bank

guarantee and then be slugged again with higher than necessary mortgage repayments. It is a slap in the face to every Australian family.

It is for these reasons that this Bill is necessary.

The Banking Amendment (Keeping Banks Accountable) Bill 2009 that Family First is introducing will keep the banks accountable for the movements in their standard variable home loan interest rate. Under the Bill the major banks will need to satisfy the Treasurer that their decision to withhold an interest rate cut or to put up interest rates beyond the Reserve Bank’s official interest rate changes is not contrary to the public interest. If the major banks do not satisfy these criteria and they insist on moving their interest rates nonetheless, they will lose the commonwealth guarantee which they currently enjoy. Banks need to understand that government assistance comes with responsibility.

This same approach is currently employed in relation to the private health insurance companies. The Government forces these companies to seek approval for health premium increases, so it surely makes sense that we force the big banks to seek approval for interest rate changes that are not in step with the Reserve Bank.

The past actions of the major banks have demonstrated that they cannot be trusted to do the right thing by hard working Australians. They have become a law unto themselves for far too long and it is the Australian people that have paid the price through higher than necessary mortgage repayments. It was revealed recently that the banks are making $450 a year more from each average home mortgage than they did before the global financial crisis, while at the same time, crying poor that they can’t afford to pass on the full rate cuts of the Reserve Bank.

That profit represents the fear, uncertainty and toil of hard working Australians desperate to preserve the family home they have worked hard to achieve. Yet the banks have the gall to say they can’t afford to help Australians at this critical time by passing on a rate cut.

Hard working Australians are sick of the big banks crying poor. In April this year the National Australia Bank posted a half yearly profit of $2 billion, a massive profit despite the global financial crisis. The question has to be asked why these banks insist on not passing on Reserve Bank interest rate cuts, when they make massive profits on the back of a taxpayer guarantee. More and more Australians will lose their jobs putting their homes and families in jeopardy but the banks refuse to help them because they are too busy raking in their profits. It’s insulting to hard working Australians trying to keep a roof over their heads.

This Bill will remedy this injustice. It will send a clear message to the major banks that they can’t have their cake and eat it too. If they want the Australian people to help them, they must be willing to help the Australian people in return. Australians have had enough of the greedy profiteering while they are left struggling to pay their bills.

Family First is committed to keeping the major banks honest and accountable, and this Bill is just one step amongst a whole package of measures that must be implemented to force the banks into line.


Senator FIELDING —I seek leave to continue my remarks later.

Leave granted; debate adjourned.