Bob Katter (Kennedy, Independent) Share this | Hansard source

I move:

That this bill be now read a second time.

In both of the recent cases, the seconders have had aeroplane delays of three and four hours this morning. Mr Speaker, I thank very much the member from South Australia, and the member from Victoria who has now arrived. It is rather interesting that we were nearly two hours late getting in last night and two others have also been late getting here this morning.

I do not wish to go over all of the issues that we have canvassed previously, but I start off with the one that is simple, that everyone can understand—that is, recourse lending. The government have said there is no need for a full and far-reaching inquiry. Each of the banks have come along and said 'mea culpa.' They admit to doing the wrong thing. But this government have decided that they are not going to do anything about it. They just gave the banks the opportunity to say, 'We're guilty, we're sorry and we won't do it again,' and we are going to trust them.

Let's look at whether the banks have irresponsibly loaned money to people. I think most of us have heard about the movie The Big Short and have read the book The Big Short, where the person who personally made $2 billion out of what happened in the GFC started checking out the lending practices. One of the first accounts that he looked at was a strawberry picker of Mexican descent on $40,000 a year. The banks had given him $790,000 to buy a house. Clearly, he could never meet those repayments.

If that situation had existed in Australia, the banks would foreclose and the house would be sold for, say, $500,000 instead of the $800,000. The Australian banks would then go to the Mexican worker and he would be a debt slave to them for the rest of his life. These people can take bankruptcy but most people do not even know what bankruptcy is. The ordinary, knock-about sort of person does not know the implications of bankruptcy. So the banks keep the $300,000 on their books and this poor wage slave will have to work for the rest of his life to repay it. Of course, the banks play a rather interesting game here.

They take the bad debt and get the tax benefit, but they keep the asset on their books. That issue alone should warrant a searching inquiry. I can speak with some considerable authority because the cabinet of Queensland gave me primary responsibility, not ultimate, for the Bank of Queensland, and we had to take some very tough decisions. One of them led to the chair of the Bank of Queensland 'leaving'—and I choose my words carefully. I was attributed with sacking, according to the front page of The Courier Mail. Whatever the case may be, he left because he did not believe that we should back the sugar industry in Queensland. He believed it should be left to the tender mercy of the banks and he said 30 per cent of the industry had to go—the biggest industry in Queensland in every sense except for the monetary value of exports. Coal is bigger in a monetary export sense. But, in every other sense, it is the biggest industry in Queensland. It is the biggest employer. It is the base industry for every single city north of Brisbane. The sugar industry is a considerable element of the economy, if not the state's driving economic imperative. It is our fourth-biggest agricultural export industry and has been for most of Australia's history. Queensland has been about coal, cane, cattle and copper, but cane has always been the predominant industry.

Let me go back to the proposition that 30 per cent of the industry should go. We had a lower cost structure than Brazil, so we were going to be the last man standing. It was considered by the cabinet and by all parties concerned, including Sir Leo Hielscher, that we go in and rescue the industry with two per cent loans with no repayments for a few years and pull the industry through, and I think all bar about four per cent of the industry was pulled through. It is a very cyclical industry and the price doubled in that time period. We went to commercial interest rates from two per cent up to about 8½ per cent and we made about $300 million profit. That left the person who had been the chairman of the board looking extremely stupid, which was very appropriate, in my opinion. Get a handle on this: one-third of the greatest industry in the state of Queensland was going to be abolished by a person who did not know much about what he was talking about. It was not only saved but the public purse made $300 million profit out of it. That is good government, and I praise Sir Leo Hielscher and William Gunn, the Treasurer, and I do not praise myself.

So I have experience in these areas. If I had to make that decision again now, I would not make it. Brazil has moved to ethanol—we cannot possibly compete; they are cross-subsidising from the ethanol pool. I make the point that these are considered judgements upon the economic realities that one faces in banking.

Having said those things, let me return to recourse lending, because this is just the most clear-cut case. This poor person in Australia paid the average price for a house in Sydney—let's be conservative and say he paid $800,000—and it was sold out from under him for $500,000. He owes the banks $300,000. He is a fitter working for the council in Sydney, he has a $300,000 debt and he has no house. He has to pay $40,000 a year for a house for accommodation because he does not have a house now, and he has a $300,000 debt to pay off. If he were an American, the $300,000 would be written off. After all, who would know whether a fitter on $72,000 a year is going to be able to repay a mortgage of $800,000? Would this 24-year-old fitter know that or would a bank know that? Who is the most culpable in making this criminally irresponsible loan? The bank, of course. What does the bank lose? Nothing. They have the house, they get their money back and they get this poor bloke as a debt slave for the rest of his life thrown into the bargain. And he has to keep his mouth shut because he has been under duress and signed all these agreements where he cannot open his mouth and say what has taken place. In America they call it jingle mail—'Sorry, Mr Bank, I can't pay you. Here are the keys to the house. Bye-bye. I leave with no debt.' The fitter I speak of lost his house and lost the money that he put in the house, quite rightly, because he was irresponsible as a fitter and turner in borrowing that money, but the bank has been infinitely more irresponsible.

Again I speak with authority. For five or six years of my life before I came into this place I was mining and running cattle, but I also had a very lucrative insurance agency. If we sold contracts that the clients could not fulfil, we would be sacked. We would lose our agency; we would lose our business—and quite rightly so. It was our duty to see that that person could afford to pay the $50 or $60 a week, as it then was half a century ago, because he would not know, but I was paid to know as a professional in this field.

There is no responsibility placed upon the bank to make a responsible loan. They get away scot-free and they have skinned the poor beggar who borrowed the money for $200,000 or $300,000—that is the way this works out—and they have skinned the public purse as well. We have had numerous of these cases, and it gives me no joy to say that another day out of our lives was lost last week with another person who wanted to do away with himself.

This comes from a discretionary punitive power that the banks have, and I know because I got hit with this myself. I was considered an at-risk proposition, for a number of reasons that I will not go into, so the banks put a 2½ per cent discretionary punitive charge on me. Then, because I was in an at-risk industry—it was during the days of the cattle collapse—they put another 2½ per cent on me. Because I was in an at-risk area, as we were going through a long period of drought, they put another 2½ per cent on me. Then they insisted upon certain charges, which put another two per cent on. The official rate was 17 per cent; I was on 27 per cent. (Time expired)

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