Steve Fielding (Victoria, Family First Party) Share this | Hansard source

The global financial crisis is upon us. It is an insidious disease which is spreading to every part of the economy and requires urgent treatment to contain it from spreading further. This treatment so far has come in the form of two major stimulus packages—one in December last year and another one in February. The government has drawn down into billions of dollars of debt to try and shore up the economy and prevent the crisis from affecting Australians further.

Family First has voted for both of the stimulus packages. We have supported the government because the financial security and welfare of Australians is something which we believe demands bipartisan support. We have not, however, at any stage agreed to write the government a blank cheque. On each occasion Family First has scrutinised the packages to ensure that the best outcome was being delivered for all Australians. We fought tooth and nail with the government in February because we did not believe the stimulus package did enough for the hundreds of thousands of Australians who were forecast to lose their jobs. This led to the government incorporating our Get Communities Working scheme into the package, which will invest $200 million into creating jobs for local communities. This is just one example of where proper scrutiny of the government has led to better outcomes for everyone.

There is little question that government intervention is required if we are to soften the impact that this recession will have on Australian families. But the money available to be spent is not infinite. And the money should not be spent recklessly. That is why it is crucial that, for every dollar we spend, we make sure we are getting the best bang for our buck. The government has again come before parliament, this time asking for a cheque of a whopping $28 billion. This money, we are told, is intended to provide loans to the commercial property sector where foreign banks are no longer able to provide money for refinancing. The $28 billion is to be used by the big four banks in partnership with the government as they create a new corporation, which is to become the bank of last recourse, commonly referred to as ‘Ruddbank’.

This proposal raises enormous concerns. First and foremost, it will expose Australian taxpayers to an even greater debt than we are already facing. Twenty-eight billion dollars is a lot of money. It is not $28 million; it is $28 billion. Future generations have already been saddled with a multibillion-dollar debt, and the prospect of adding another $28 billion to that amount poses an incredible risk. We have already been told that the future interest repayments on our enormous debt alone are expected to reach $3 billion a year. That is $3 billion that Australian taxpayers need to fork out just to service our debt, and the government is asking us to potentially increase this even more, by another $28 billion. This is not something that Family First takes lightly and it is not something that Australians should take lightly.

The government has sought to give assurances that ABIP, or the Ruddbank, is only a temporary measure, that there are strict controls over how money will be lent and that the money is only intended to be for the commercial property sector. But, looking at this legislation, I cannot see any of this. In fact, what the government has said and what the government has actually contained in the bill are two entirely different things. The government told us that the creation of ABIP is for the purpose of refinancing commercial property assets in the event that there is an exodus of foreign banks from the marketplace. This has been the government’s message from day one. But, when you actually take a closer look at the bill, you will see hiding in there clause 7(2), which allows ABIP ‘to provide financing in other areas of commercial lending’. In essence, this gives ABIP a licence to lend money in the commercial market for almost any reason it sees fit. Has the government been deliberately misleading?

It is for these reasons that I have put forward my own amendments. There need to be greater safeguards on how taxpayers’ money can or should be spent if the legislation does get up. Quite frankly, the Rudd government’s ‘trust me’ approach just does not cut it, especially when the other members of ABIP whom we are expected to trust are the big four banks. Family First is proposing three amendments. Firstly, ABIP will be limited to providing refinancing only for loans relating to commercial property assets in Australia. This will ensure that taxpayers’ dollars are spent only for the purpose for which ABIP was created and are not used by the government and the big four banks for whatever purpose and in any way they choose.

Secondly, any loans made by ABIP must satisfy lending criteria which, at a minimum, are just as strict as the lending criteria applied by any other commercially competitive bank. In other words, if no other bank wants to pick up the loan because it looks as if it is going sour or down south, ABIP should not be giving them money either. The question of whether or not to give a company a loan needs to be based on solid fundamentals like LVR and the interest coverage ratio and not whether or not it is good politics. Without these amendments, there is a greater risk of something going wrong, and if the government in partnership with the big banks gets it wrong then taxpayers will end up footing the bill. We need to be sure that the companies asking for the money are genuinely cash-strapped because of a genuine liquidity crisis and not because they are mismanaged or bad investments. We need to make sure of these things before we dole out billions of dollars. We have seen in the past decades the terrible losses endured by the states when they gambled with the public purse on investments that lost heavily and put them horribly in debt. This led to the collapse of the State Bank of South Australia in 1991 and put the state $3.15 billion in debt. Now we are talking about $28 billion, almost 10 times the amount in South Australia. The last thing we can afford is for the Ruddbank to turn into the ‘Dudbank’.

Finally, Family First is seeking to ensure that the term of any loan will be limited to a maximum of three years. The government has clearly stated that ABIP is only a temporary measure, and this amendment will certainly confirm this. Whether or not funding from ABIP will be genuinely needed or will artificially prop up an oversupplied marketplace still remains a huge question. There is still the question: is there a real need for the Ruddbank and why should taxpayers end up footing the bill to prop up commercial ventures? What we can say with certainty is that a failure to impose proper controls on a proposed bank is reckless and irresponsible. It is a risk that Australians can ill afford. Family First cannot support the ABIP bank in its current form.