Nick Xenophon (SA, Independent) Share this | Hansard source

Senator Arbib, I am grateful for the contributions that Associate Professor Zumbo makes in the field of trade practices law. The suggestion from Associate Professor Zumbo is that there ought to be monitoring and reporting by the ACCC on the exemption that has been provided to ABIP and that there should be a report, preparation of a competition impact statement and ongoing monitoring by the ACCC of this.

My impression is that the ACCC has not had enough input into this. I understand, given the urgency of the scheme and the intent of the legislation, why there is an exemption but I also think it is important to have a monitoring mechanism. That is why I will be moving amendments with respect to monitoring this. I am pleased that in my discussions with the government they broadly supported that principle. It does not stop ABIP doing what it is intended to do but it does have that level of scrutiny and transparency, which I think is important.

I have also raised with the government the broader issue, which is not directly relevant to this particular bill, of there being broader, systemic scrutiny by the ACCC of exemptions, and I look forward to the government’s response in relation to that, because I think it is overdue. We need to have a good look at the exemptions to the act that are granted. After all, the Trade Practices Act is intended to protect consumers, to enhance competition and to do so in the public interest. My concern is that there have been a whole range of exemptions without appropriate scrutiny by the ACCC. I look forward to what I hope will be the government’s comprehensive response in relation to that.

In the committee inquiry the issue was raised of the unintended consequences of this bill. There was an interchange between me and Mr Peter Verwer, the CEO of the Property Council of Australia, who raised a concern about moral hazard. He asked: could the legislation have the unintended consequence of encouraging foreign banks to get out of the market by virtue of the asset value being maintained? I understand that Mr Verwer has resiled from the position that he put to the committee. He has further reflected on that and he has made that very clear to me and publicly.

I have also had discussions both with Treasury and with Mr Ahmed Fahour, the interim CEO of ABIP. I am satisfied that the intent of ABIP is to be there as a last resort, as a contingency measure. Mr Fahour said in his evidence that he would hope this contingency facility is not used but that it is there to give a level of confidence to the marketplace so that we do not see a fire sale of assets. Mr Fahour made the point that liquidity is a key factor in decisions that are made by foreign banks or any other member of a syndicate in determining whether they stay in or out. I believe that, based on the evidence and on the structure that is proposed, there will be that level of confidence, which will provide a level of comfort so that we will not see fire sales and so that liquidity will be propped up. I think that that, on balance, is the right approach. The right thing to do is to ensure that we have, with appropriate safeguards, a mechanism to allow for lending of last resort on commercial terms if foreign banks pull out of the property market.

I want to comment briefly on Mr Fahour as interim CEO. Whilst the primary concern of this legislation ought to be the government’s structural mechanisms, it is interesting to note that Mr Fahour is involved. Even the critics of the ABIP proposal would have to acknowledge the contribution and the reputation of Mr Fahour as a former CEO of NAB Australia and his reputation in the banking sector. The government has been lucky to secure his services, given his track record in the banking system. I have had extensive conversations with Mr Fahour about the issues of governance, structure and the commercial viability of loans for commercial property. I have been reassured by the fact that Mr Fahour is interim CEO, and he has been helpful in providing information to me.

One of the issues raised by Mr Fahour was of administration, of making ABIP work. He expressed the concern to me that, if you outsource the administrative functions of ABIP, there could be issues. My concern is one of a potential conflict of interest in the decisions that ABIP makes. That is why I will be moving an amendment, following my discussion with Mr Fahour, that the Export Finance and Insurance Corporation be involved in assisting ABIP Ltd—as agreed to between the EFIC and ABIP—in financing arrangements, with respect to borrowing money and doing such things as are incidental to making ABIP work. Given the role of the EFIC and the fact that it has commercial expertise similar to that which ABIP will have, the EFIC would be the appropriate entity for ABIP to go to. You would not have the conflict of interest issues that you might if it were outsourced to the private sector, and EFIC is up and running and already in place. I would urge senators to support an amendment along those lines. To me that seems a very pragmatic and sensible way to deal with these particular concerns in terms of having ABIP up and running.

I indicate that—subject to seeing the amendments regarding the commercial viability of loans, the lending criteria being commercial and the safeguards for taxpayers, as well as indicating my support for the executive remuneration amendments of the Australian Greens—I support this legislation. I want to make it clear that I believe the government has, as a result of the Senate committee inquiry process, acknowledged the issues of competition policy and exemptions from the Trade Practices Act and the need to monitor that. With the government clarifying the issue of ASIC’s involvement, the Auditor-General’s involvement and governance issues with respect to ABIP, I believe that this is a prudent way forward. I hope that, as a contingency measure, ABIP is not used. It is a short-term measure whilst we go through these quite turbulent economic times. I support the second reading of this bill.