Barnaby Joyce (Queensland, National Party) Share this | Hansard source

I rise tonight to endorse the comments of my colleague Senator Ryan on the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009 and to be specific in a number of areas. The first area is the government moving itself into a contingent liability on a very specific sector of a market. Having had some experience in banking, I think it is peculiar that you would say, ‘I only want to expose myself to one sector of the market, that is the commercial property market, and I am only going to expose it to the extent that other people do not want to take those deals on board, and then I will use the government to underwrite it.’ That is strange.

We have heard in reports that people have said that the foreign banks will leave, so I have been following that through. The Royal Bank of Scotland was said to be leaving. I have a letter from the Royal Bank of Scotland saying it has no intention of leaving. Apparently we have no foreign banks who want to leave. So why are we doing this? It becomes another contingent liability that sits on board for all the Australian people and they are just mounting up. You have this ridiculous debt building up. It is heading towards $300 billion. In fact, if we go through the forward estimates, the total liabilities are now half a trillion dollars. That is exceptional for Australia—it is bizarre—and then you are adding to that these contingent liabilities. You are underwriting the subprefecture debt of the states of $150-plus billion. The possible contingent liability, though I think it would be as safe as houses, would be $600 to $800 billion of the commercial banks.

Now we have the proposition of potentially another $28 billion contingent liability. If you keep taking on contingent liabilities, what happens in the end? If you guarantee every child in the district, in the end one of the children goes bad and you actually have to pay the money. People say that is extraordinary, but it is not. We have had the Tricontinentals and we have had the experience of the Bank of SA, so these things do happen. First and foremost, why are you taking on a contingent liability which, with greater foresight, there is no need for? If there were foreign banks leaving you could mount a case, but that is not happening. In fact, the only one you could cite is the Royal Bank of Scotland, and I have a letter from them saying they are miffed that the insinuation was put that they were leaving, because they are not. They are hanging around and there is a market place out there willing to deal with this, so you should at least keep a spread on this.

I do not know why we have this exemption under section 51(1) of the Trade Practices Act. Why this one entity, which probably has more reason than most to be covered by the Trade Practices Act, is all of a sudden exempted from the Trade Practices Act is a peculiarity in the extreme. You have the four major competitors in what is more and more a centralised market working together in the same room, saying: ‘We can keep an eye on all these deals as they come in and get knowledge of where the strong and weak areas of the market are. Then we can take that information on the regional banks’—like the Bank of Queensland—‘and the overseas banks and use it against them.’ If these deals go into this Labor inspired Ruddbank, the Australia Business Investment Partnership, at some point they will have to come out, and do not think for one moment that the person who is sitting in the assessment process who has an allegiance, an alliance—a future—with one of the majors will not take that information back to where he came from and say, ‘Touch that deal; don’t touch that deal.’ These are the issues that jump off the page and make you question why we are going down this path. It seems highly ill conceived.

In the short run there are no foreign banks leaving us. In the long run you are picking up a contingent liability and giving someone, for no apparent reason, an exemption under section 51(1) of the Trade Practices Act, and then we have the specific exemption of the government’s nominee under the Trade Practices Act. What sort of oversight have we got on this? This will set up another one of those government appointed mandarins. You say, ‘He will be beyond reproach,’ but it just does not happen. They come under political pressure. A politically appointed person is subject to political pressure. I think we have to be a little bit more honest about this and acknowledge that people have in the back of their mind, no matter what their appointment, the fact that they are an appointee of the government and therefore do not try to upset the government too much. Every time you go to Senate estimates you see that in fine form. People go out of their way to keep the government of the day happy, and it always surprises me how quickly they can change their allegiances.

Suncorp, for instance, are getting out of the commercial property market at this point in time. Why? Probably because they are in trouble in the commercial property market. I do not know why, but they have made a strategic decision to get out, so Mr Rudd is putting the Australian people in. Who benefits from this? Why don’t we have the small business farming bank? Maybe they have a good reason to have a bank of their own. Then we could have the fishermen of the gulf bank, and then we could have the local Greek cafe bank. Why do we just pick one sector of the market and say: we are going to do something extraordinary for these people—and we are talking tens of billions of dollars extraordinary!

You have to ask: who are the beneficiaries of this? Which group of people is likely to benefit from this? The answer is the people who can use this to bargain with domestic banks and foreign banks and say: you will give us a deal or I can go somewhere else—and they would be the large property developers, quite obviously. If you follow the smell you will get to who inspired this little pearl. Obviously you also have the major shopping developers who are midway through programs, as well as the major commercial property developers who, in most instances, have highly unionised workforces. So it becomes a nexus of beliefs and structure. That is fine, but do not use the nation’s money for it and say, ‘The sky’s falling; therefore I’m going to set up a bank.’

We do have a major financial issue before us at the moment, but Mr Rudd has shown this peculiarity over the last 18 months or so to use it as the bullbar on a whole plethora of ridiculous ideas, and we have to pull this up. Day by day we have got ourselves as a nation into more and more of an immense financial pickle, and it is because of the current management structure that we have. That is how we ended up here. Of course there would be an element of debt and we would probably be heading towards a deficit, but not on the trajectory that the Labor Party has us on.

At Senate estimates back in February, Mr Hyden from the Australian Office of Financial Management said that we would have the $200 billion facility for our nation fully drawn by 2012-13. It will be basically fully drawn, I would say, within the next eight to nine months, so we are out by about two years. Because this is so recent, you cannot blame anybody else for this but yourselves. In the budget you brought forward nothing that actually deals with the issue in a substantive way. It is a budget that clearly fails to grasp the nettle. You say you believe the circumstances are dire, but there is nothing in the budget to suggest that you are going to take action to deal with them, and so this becomes yet another straw to add on.

Quite obviously, in any assessment of our nation’s credit position, all contingent liabilities have to be taken into account by the credit assessment agencies—they have to look at it—and, every time you take on a contingent liability from a source that is outside your control, you have faith in the fact that it will not come unstuck. If, for instance—since we have underwritten the banks—there becomes, by reason we do not know, some mechanism that starts to cast doubt on that, it would immediately go onto our bottom line. You cannot think that you have an infinite capacity to underwrite every issue, every nebulous cause that pops up. In the end, the underwriting itself would start to lose meaning. You can only create a contingent liability for so many things before your contingent underwriting of that issue is without effect. So taxpayers are at risk because of this and, in the long term, every person who borrows money in Australia is at risk, not exclusively because of this but, with the way the Labor Party does it, because of a whole basket of ridiculous decisions. It all adds up to a bad outcome for any person who is borrowing money because the underwriting of the government starts to call into question the quality of the credit and the capacity for it to keep its rating. If it starts losing its rating, the price of credit goes up and then it goes up for everybody across the board.

There are a few things you have to look at. At the very least there should be a continual review process on exactly where this is going with competition issues. There should be an expectation, tabled in both this chamber and the other place, of a report from the ACCC clearly spelling out exactly what the competition issues are and holding these people to account. There has been some musing about that but I have not seen it. Maybe it is going to turn up; I do not know. These are the sorts of things that should be there. I still would not support the legislation, but it is surprising that there is no ongoing contingent monitoring process. In the future how do we sell to other sectors that are just as relevant as the commercial property market what they are going to do for finance? They are just as worthwhile as anybody else.

What we really want to know is: where was the inception of this legislation? It was incredible. I think there were about four days between the Prime Minister talking about the issue and this legislation turning up. Did it come to the Prime Minister in his sleep one night or did he have discussions with a range of people to inspire the creation of this bank? Who were those people and what did they say? Maybe, in the past, you would have said that you should not ask those sorts of questions, but I ask all those questions of our Prime Minister now that I have heard that he had dinner with the fifth highest official of the Communist People’s Republic of China and the only way we found out about it was through the Chinese news. Since that event, we ask questions on everything about our dearly beloved Prime Minister. So where was the inception of this? You have to come clean; we have to know: who were the discussions with and where was the dinner party where this was conjured up?

It terrifies me that our nation walks towards half a trillion dollars in liabilities—those are your own budget figures, your own forward projections. When is the penny going to drop that we just cannot go on like this?