Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Was the shareholding in the bank primarily to establish this fund, or was it around bailouts of banks from the GFC or from other situations? Perhaps, Minister, I could get you to explain that in a second. But I just wanted to make this really clear: from the Greens' point of view, this is an entirely new thing for the Australian government. We have no details about the investment mandate here today. As I mentioned before, you also haven't been able to provide us with any of the macro details around the market we're looking at—market failure and exactly who this fund is going to be targeting. On top of that, it's widely recognised—it was reported on, for example, by Adam Creighton, who has been mentioned in here today already, at The Australian and by Jennifer Hewett—that this is not a traditional area of business for the banks; that was the first thing they reported on in their media reports. They're not investment banks; they're retail banks. They have owned stockbroking companies and they've had online share companies, but there's a reason that they're not investment banks.

We've seen Glass-Steagall legislation introduced in the US to break up banks to make sure that they're not both investment banks and retail banks, and there's a very good reason for that: it's to reduce the risk to the system. The concern here—which has been raised by those who are already in this market providing equity capital, be it private equity capital or be it public equity capital—is that this is essentially a backdoor way of facilitating the Australian banks, who are already very big and powerful and have significant market concentrations in their existing areas of expertise. This is a way now of backdooring an investment bank platform or revenue stream. That's essentially what they're going to be. They are going to be long-term—patient, as you call it—private equity investors, which is a role that's played by investment banks. I don't even know—and I'm sure you'll answer it if I ask you the question—how it's going to work when the banks or the government want to sell their shareholdings in these SMEs that are going to be invested in. I don't even know how that's going to work, and maybe that's something I could ask you to elaborate on.

But why are we creating a whole new revenue stream for the banks? This is not an area they've traditionally focused on, and there's been a good reason for that. I will accept that National Australia Bank has done some work in small business lending. The definition of small business can be varied, but we know it's a small turnover amount, or a number of employees. I've owned a small business. My wife owns a small business at the moment. We're talking about maybe six-figure revenue streams or potentially seven-figure revenue streams. What you're talking about here is potentially a $100 million revenue stream. So, you are providing the banks with a new source of revenue, a new source of market power, a new source of concentration. I ask the chamber: what could go wrong? What could possibly go wrong in helping our retail banks now become investment banks?

This is a very serious issue that I don't think we've had addressed here today. There's a good reason that the Glass-Steagall legislation was enacted in the US, and there's a good reason that our banks have not become investment banks. I see this as a back door for them becoming investment banks. We know the fund could potentially grow to $1 billion. I don't think it's going to stop at $1 billion. I'm sure that if this kind of business model is to their liking then we're going to see a lot more of it. Saying that, Minister, we know that it's been reported that both ANZ and Westpac have been particularly sceptical of this fund. We don't have the details of how it's going to work. It's never been done before. I just want you to address those issues, please.