Bob Brown (Tasmania, Australian Greens) Share this | Hansard source

The Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009 confront us in the Senate with how we are custodians of some $2 billion upfront of public money that will be matched by an equal component coming from the four major banks together in Australia, at a time when there are other huge demands on the government to help people dealing with the recession—not least small business, which has nothing to gain at all from this legislation. The Commonwealth carries the majority of the funding requirements and also most of the risk. Where I say ‘Commonwealth’ there, I effectively mean taxpayers. This bill could potentially expose taxpayers to a $28 billion increase in debt. That is because, added to the initial $2 billion—which is seeding the loan to the entity which will be made up of the four banks and the Commonwealth to then ensure that developers and others who may face a default from an overseas lender are able to get the money to continue with their development—is a $26 billion loan guarantee. That $26 billion is a guarantee from the Commonwealth—that is, the taxpayers—and not from the big four banks. Moreover, the Commonwealth is funding up to 93 per cent of the loan facility, and therefore the risk, compared to 1.6 per cent of the debt funding carried by each of the four commercial banks. In other words, their risk is potentially tiny compared to the enormous risk that the taxpayers of Australia could end up taking under this legislation.

What is more, it is not very clear and has not become clear through the process of the Senate inquiry as to how necessary the Australian Business Investment Partnership arrangement is. It may have appeared, early in the recession, much more urgent. There was a lot of talk about defaults or bank closures overseas and the drying-up of foreign investment potential, but that has somewhat eased in the meantime. In its statement on monetary policy this month, the Reserve Bank itself had data showing that foreign bank lending in the private sector has been maintained throughout the economic crisis. So the alarm bells which were sounding and which triggered this idea from the government, and therefore the legislation, have not led to the crisis that may have been expected. While it is probably the case that some banks are reducing their lending activity, the industry stakeholders have not given convincing evidence to the Senate inquiry to provide for us here, who now have to deal with this matter, conclusive argument that other banks or other sources of funding cannot be found without putting the taxpayers’ dollar at so much risk.

The other problem the Greens have with this legislation is that the fate of the public money that is put up through this mechanism will effectively be decided by private sector bankers without parliamentary oversight. We know that there is an arrangement for a board to be made up of private sector representatives, one from each bank and one from the Commonwealth. I hasten to point out that, yes, we know that each member will have the right of veto on the money being used to facilitate loans to applicants. But really why not have at the outset a board made up of at least four Commonwealth representatives to match the four from the banks? After all, they are putting in $2 billion upfront, even though the banks at the end do not face near the risk that the Commonwealth does. Anybody familiar with boards will know that if you have a like-minded or like-interested fellow member on a board you can function much better very often than if you are there by yourself. So we have an amendment which would change that board arrangement to bring it up to eight: four representatives from the Commonwealth and one from each of the four banks.

The lending criteria have not been released for public comment and there is no parliamentary oversight on developing those criteria in this legislation that I can see. The immediate question is why there should not be. Why should we not in the Senate, for example, as watchdogs of the public interest, be able to be informed and keep an oversight on quite an enormous amount of public money and the decisions being made about it by the proposed board? The Australian Business Investment Partnership’s annual reports to parliament will not include details of who has applied for or who has been granted loans. We might read that in the financial press or we might not. The parliament therefore will not have a say in how the money is used or who is getting access to it—not even a retrospective say, unless we happen to read it in the press. That is unsatisfactory. I know that there will be some people crying commercial confidentiality. I notice that President Obama is giving that short shrift in the United States, this idea that the private sector, even when a recipient of billions of dollars of public money, can remain translucent at best, if not opaque, rather than transparent, as is expected of money going into the public sector. The quid pro quo for large amounts of money like this coming from taxpayers’ pockets and being directed, through parliamentary decision, to a board which then can allocate the money on to commercial firms is that those commercial firms have to be open about the business enterprises which are being facilitated in such a way.

At a time when we are expecting and the government is predicting eight per cent plus unemployment within 12 months, it is hard to get a handle, reading this legislation, on what sort of job generation, let alone what sort of job guarantee, comes with the apportionment of $2 billion of taxpayers’ money and a potential $26 billion further money put at risk. The Australian Business Investment Partnership has been developed to support investment in the construction sector, it is said, but it will be focused on refinancing projects which have already been built or which are under construction. This raises the question of which jobs are going to be saved or created through the use of these public funds, and indeed what weighting is being given to employment factors in making decisions about these loans. We are very used to the biggest of corporations presenting themselves as being in the business of job creation when in fact they are not; they are in the business of creating a maximum bottom line, a maximum profit, and very often at the expense of jobs.

The loans will be potentially available to all businesses which need refinancing of their commercial property due to the withdrawal of a foreign bank. But where are the employment benefits of providing loans to investment companies who may own those properties? They are hard to see. Certainly, I have seen nothing from the government to give us some feelgood outcome from this legislation with regard to the creation of jobs for Australians who may be desperately seeking them in the heart of a recession.

We are told that one purpose of the Australian Business Investment Partnership is to boost confidence in the construction sector and therefore investment and employment in new projects. But an easier and more transparent way to achieve this outcome is through direct government investment in public infrastructure. We do not have to go to a private sector with no report-back to parliament, where decisions are going to be made for the commercial good of some very large companies—some of them international corporations—without an eye on the social dividends and what comes back to the taxpayer for the expenditure of this money.

I flag that we Greens will move an amendment in the committee stage relating to the salaries of chief executive officers who are in companies—either the banks facilitating the use of this large amount of taxpayers’ money, or the developers, particularly in the construction industry, who may be the recipients of between $2 billion and $28 billion of public largesse. Some of those involved—I can give you the figures for 2008, Mr Acting Deputy President Marshall—include Mr Mike Smith of the ANZ Bank, who last year was paid $6 million; Mr Norris of the Commonwealth Bank, who got $8.66 million; Mr Stewart of the National Australia Bank, who got $4.28 million; and then, when we go beyond the banks to potential recipients of loans, Mr Frank Lowy from Westfield, who was reported, on 29 March 2008 in the Australian Financial Review, to be on $15.88 million annually. You can move from there right down to Mr Paramor of Mirvac who was on $2.8 million. I have also had my attention drawn to the Adelaide Advertiser of Wednesday, 18 March, with the heading, ‘Rio sacks 14,000 workers and pays a retiring boss $15 million’. This is, of course, Rio Tinto, the international corporation, which has drawn so much attention because of Chinalco’s interest in having a controlling interest in that particular company.

President Obama has moved to limit the executive payments where public largesse is involved to half a million dollars. Germany and Sweden have legislated for similar arrangements, and other countries are continuing to look at clipping the wings of some of the more, to quote the Prime Minister of Australia, the Hon. Kevin Rudd, ‘obscene’ payments being taken by some of the more greedy of CEOs in Australia. I, for one, do not want to see taxpayers’ money—potentially hundreds of millions of dollars of it—being lent to or facilitating corporations which, by the very nature of getting such largesse, may not have managed their affairs as well as they could have and who have CEOs on multimillion-dollar packages which will be draining some of that taxpayers’ money straight into their Rolls-Royces or their newly purchased multibillion-dollar homes or whatever.