House debates

Monday, 4 November 2024

Private Members' Business

Banking and Financial Services

11:58 am

Photo of Garth HamiltonGarth Hamilton (Groom, Liberal National Party) Share this | | Hansard source

I move:

That this House:

(1) notes that:

(a) on 15 November 2023, the Australian Prudential Regulation Authority (APRA) announced it was investigating tighter liquidity and capital requirements for smaller Authorised Deposit-Taking Institutions (ADIs);

(b) in making this announcement, APRA did not provide any evidence to justify this change, had failed to consult with industry, provided no evidence to support the change in policy, and did not consider the impacts on competition in the Australian banking sector;

(c) the Australian banking sector is subject to considerable prudential regulation and is intelligent in its approach to ensuring the banking sector's resilience to financial market stress;

(d) the changes would have required smaller ADIs on the Minimum Liquid Holding (MLH) regime to change their liquidity and capital composition, and re-value liquidity risk over both short and longer periods;

(e) on 24 July 2024, APRA announced it would implement two of the three proposed changes;

(f) APRA will not proceed with changes to a phase-out of the bank debt securities, pending a holistic review of the MLH regime in 2025, ensuring smaller ADIs can continue to compete;

(g) these changes presented a real risk to the smaller banking sector, particularly those ADIs on the MLH regime which would have been subject to tighter liquidity requirements and reduced capital;

(h) the changes would have resulted in less competition, less access to capital and higher costs for consumers; and

(i) mutual banks and credit unions play an important role in our economy and communities; and

(2) acknowledges that:

(a) APRA's proposed requirements will have a significant negative impact on smaller banks;

(b) competition in the banking sector is important for the economy, consumers and for strong markets; and

(c) unnecessary Government regulation will further erode competition in the banking sector and hinder efforts to bolster Australia's economic dynamism, particularly at a time when banks are managing 130 new regulatory changes.

In brief, overregulation is a cost, and I'm calling APRA out for this. Their proposed changes, made in November 2023, would have done exactly that. We have good regulation. We have a strong, secure and stable banking sector. When we go down the pathway of overregulating that sector, we reduce competition and we pass on costs to mums and dads and consumers out there. We must call that out.

I commend the House Standing Committee on Economics for its strong work in getting to the bottom of this, pointing out exactly what APRA was trying to do and pointing out that this was an issue we needed to act on. I commend the government's attention on this detail as well. We cannot allow a regulator to make provisions that will hurt Australians, particularly in a cost-of-living crisis.

The very last point I want to make here is that small banks matter. APRA, you need to take care with the regulation you bring through to try and make small banks compete on liquidity with big banks; you will not get an even playing field.

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

Is the motion seconded?

Photo of Bridget ArcherBridget Archer (Bass, Liberal Party) Share this | | Hansard source

I second the motion and reserve my right to speak.

Photo of Scott BuchholzScott Buchholz (Wright, Liberal Party) Share this | | Hansard source

The time allocated for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for a later hour.