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

I expect that questions can range widely. I have two amendments. For the purpose of debate, if the committee wishes, I will move the first amendment, which is for a sunset clause. By the way, we are dealing here with a two-page bill. I move Greens amendment (1) on sheet 5672:

(1)    Page 1 (after line 10), after clause 2, insert:

2A  Sunset

                 This Act ceases to have effect on the second anniversary of its commencement.

Talking about prudence, I think it is a very prudent thing that the parliament should have to review the function of this extraordinary piece of legislation, particularly in view of the fact that we are not having a Senate inquiry or the opportunity for the public to feed into the legislation. I note that in the second reading speech the minister said:

On 12 October, the government took action to stabilise and promote confidence in Australia’s financial system by instituting a broadly based deposit and wholesale funding guarantee.

If that were the case on 12 October, how come this legislation is now put on the Senate without the time to deal with a proper analysis of it? There is something very, very wrong with a process where suddenly the government puts this legislation into the Australian parliament in the second last week of the sitting year, votes against there being any Senate inquiry into the legislation and insists not only that it pass the Senate but that it do so by tomorrow—because the minister says in his own speech that Friday is the day that the banks get the benefit of the guarantee that is involved.

If the Committee of the Whole will permit it, I will ask a series of questions. I will take them in order so that we might facilitate the quickest passage of this process in the committee. The first of those questions is: which of the regional banks or credit unions spoke to the minister about this legislation or asked for it?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I can indicate that there has been broad consultation with the Australian Bankers Association, the ABA, representing the banks—what are known as the ‘big four’ and the regionals—and Abacus, which represents credit unions and building societies. I am not able to indicate the extent, number et cetera of individual one-to-one meetings. They were certainly not with me, Senator Brown; I have had no involvement. I took it to mean meetings with the Treasurer and/or the Prime Minister. Both those organisations support this legislation.

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

I ask the minister whether he might, by the conclusion of the committee’s deliberation, furnish the committee with a list of the specific regional banks, credit unions or building societies which approached the government asking for this guarantee legislation. He has made a feature out of the fact that it is not the big four banks; it is right across the board, and I hear him talking about the representative organisations. But this is a matter that is so pressing that the government has voted down a Senate inquiry into it. It has to be through by Friday. I ask the minister to produce any evidence that shows that regional banks or those building societies or credit unions approached the government asking for this particular facility.

I turn to my second question. I know New Zealand has been mentioned as having this facility, and I ask: is that legislated? Then I ask: which other countries in the region have legislated in a parallel fashion?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I can inform the committee that New Zealand has not legislated in this way.

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

I thought not.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will get to New Zealand and I will come back to that, but there are some special circumstances for Pacific countries. I know firsthand, because I have discussed this issue with economic ministers of the Pacific nations. As to other countries, say in South-East Asia and Asia, we will have to take that on notice and we will come back to you with the specific arrangements. We are aware in general that there are some guarantees of types in some of the Asian countries, but we will have to come back because we do not have those details here.

Let me return to the circumstances of New Zealand and the Pacific nations. If you look at the New Zealand banking system, Senator Brown—and I will be tactful—you see Australian banks predominate. They have Kiwibank, which is a New Zealand state-owned bank that the previous Labour government established, but, other than Kiwibank, the banking system is predominantly Australian owned and operated. So there is a strength for New Zealand in an indirect sense, given that the banking system is dominated by Australian banks.

I could make a similar comment about the Pacific countries. I attended the Forum Economic Ministers Meeting in Vanuatu three or four weeks ago, and this issue was raised. ANZ and NAB dominate the banking systems of those particular countries. They were broadly pleased by the actions of the government because they gave an indirect guarantee to their banking systems in the Pacific, which are dominated by Australian banks. In the Pacific generally, there is a bank out of PNG and I think there are a couple of French banks in New Caledonia. I am not sure of their particular status, I have to say, but in general the Pacific countries are appreciative of the actions of the government because of the indirect guarantee, which helps their financial system. They do not have significant non-banking sectors in those countries. There are some insurance type products—properties and trusts—but they are not significant in the context of their economies. That is as much information as I can give you at the present time.

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

I take it from that that the minister discussed this potential legislation and the wholesale funding to be guaranteed with those specific banking representatives four weeks ago, including the New Zealand banking representatives or interests. I am aware of Kiwibank, of course, because Mr Jim Anderton, a former minister, went to an election, two or three elections ago, in New Zealand to have that established as a people’s bank in some reaction to the takeover of so much of the banking system by the big four Australian banks. I do not resile at all from calling this an initiative of the big four banks, because I have seen no evidence of and heard no evidence to say anything other than that this is primarily to facilitate their interests. I ask the minister if he could elaborate on what he told those banking organisations in the Pacific about this legislation that we are dealing with today.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

My reference to the meeting of economic ministers in Vanuatu was not in respect of this legislation.

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

Oh!

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You drew that conclusion. Frankly, I do not see how you could. But anyway—

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

We are talking about this legislation.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You asked me about the situation broadly, about guarantees in other countries and what they are doing. They were well aware of the actions taken by the Australian government back in October. Obviously, I did not discuss this particular legislation. We discussed the guaranteeing of banking, credit unions and building societies in the broad in Australia and the implications for those Pacific nations. I have indicated what those implications are.

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

We have established that New Zealand has not, in fact, passed similar legislation. I asked the minister about the UK or other countries that have passed legislation parallel with this, guaranteeing overseas borrowings.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will come to New Zealand first and then I will go to the UK. It is a contractual guarantee in New Zealand. It is implemented through a deed of guarantee entered into by Her Majesty the Queen in the right of New Zealand, acting by and through the Minister of Finance on 11 November. The appropriation for guarantees is already in public finance legislation in New Zealand. Section 65ZG of the Public Finance Act 1989 already provides appropriation for any guarantees entered into by the Minister of Finance.

In the UK, it is a contractual obligation. The guarantee was implemented through a deed of guarantee entered into by the Commissioners of Her Majesty’s Treasury on 13 October of this year. The appropriation is in banking legislation. An appropriation is available in legislation. The appropriate provision was put in place in the temporary legislation enacted to nationalise Northern Rock. Because of the circumstances around the probable collapse of the Northern Rock bank in the UK—I think that started in January—and the issues there, they actually had a broader remit, which they have used. So they have the appropriation authority.

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

There are 200 countries around the planet and that is a short list of two, which have come to have, in legislation, backing for a process that we did not consider until now. My next question to the minister is: how much will Treasury raise from the fees to be paid on the guarantees? What is the forward estimate on that?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Just in response to your earlier question, No. 2, I will have Treasury prepare a summation of the forms of guarantee and the way in which it is being done in a range of other countries around the world. I cannot give you the full world list but we will do our best to get you a list. I will take it on notice. You obviously want some detailed information, and we will give you as much as we reasonably can in the next week.

In respect of the revenue raised, I just make the point that it is not a revenue-raising exercise. It is very difficult to estimate, because it will depend on a range of factors: what institutions will apply to be covered, the value of the liabilities they want covered, deposits and/or wholesale funding, and how institutions administer the large deposit scheme vis-a-vis their clients. So any estimate—and this is why we have not done an estimate—would be highly speculative and highly unreliable. I think it would be reasonable to say in ‘due course’—after presumably some months of operation—we will obviously have a revenue figure which would be provided.

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

It is quite extraordinary that we are dealing with legislation and the government cannot give an estimate of the revenue raising. But I am sure we are going to find the potential risk that is incorporated in this legislation. Difficult as it might be, the worst thing you can do is to come to a parliament with legislation saying ‘we have no idea and we will tell you after the event’. We are here as legislators who are responsible for knowing what we are getting into with legislation, and the minister ought to have that information available. I go to David Crowe’s piece on page 7 of today’s Australian Financial Review. It says:

Banks with an AA rating will have to pay a fee of 70 basis points on debt raised overseas when they draw on the guarantee on wholesale funding. Institutions with an A rating will have to pay 100 basis points while those with a BBB rating will pay 150 basis points.

“It is proposed that where an institution has a split rating, the predominant rating is to be used,” Treasury said. “If there is no predominant rating the lowest rating is to be used.”

I ask the minister: is that observation or that assertion correct? If it is correct, has he had any indication from any bank that it required this legislation to enable it to proceed to borrow overseas? If so, could he outline the degree of borrowing anticipated by that bank or by any banks or financial institutions which approached the government?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

On examining the David Crowe figures that you quoted from the Financial Review, I believe that they are consistent with the figures identified in the scheme rules.

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

I think the minister was diverted but I thank him for confirming that. My question was: did any financial institution, particularly the four big banks or their representatives, in talks with the government indicate that they would be using this guarantee? If so, were they asked what their anticipated borrowing would be? If not, why not?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am informed that, to this point, there are 16 institutions that have indicated they will be using the facility. No figures have been given yet as to the extent to which they will be entering into borrowings in, for example, the wholesale market.

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

Were they asked for those figures and could the minister furnish the committee with the list of the 16?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Once their application goes in they will be providing the figures—ongoing.

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

Yes, I know that. But I have to anticipate the public risk that is being put upon us through this legislation. I am asking the minister, firstly, to provide the committee with the list of the 16 who have indicated that they will avail themselves of the guarantee in this legislation. Secondly, I ask: did the government seek from any or all of those 16 the extent of anticipated borrowings? We have to thank the Financial Review for quoting an estimate of $88 billion as to forward borrowing by the big four in the financial year 2009. So I do not think it would have been too difficult to get from the banks—at least those who were in the starting gates for Friday—the anticipated borrowing on the market for which they wanted, and are going to get, a guarantee.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It is not easy to ascertain as of, say, today or Friday because the banks—or anyone who goes into the wholesale markets—will have to make their commercial decisions about the extent to which they go into those wholesale markets, depending on the circumstances that exist at that time, which may well be different from those of, say, today or last week. The other factor is the issue of customers to whom the guarantee and the sorts of provisions are provided. We cannot give an accurate figure. We cannot give a figure, Senator Brown, at this point in time. In respect of the 16 institutions, I am told it is on the website. If you have any particular problems accessing the names, let us know and we will get the names of the 16 for you.

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

For the benefit of the Senate, which is bereft of the committee to look at this, the minister might put in Hansard the website address. I ask again: did the government ask any or all of the 16 institutions what their anticipated borrowings using the guarantee would be in financial year 2009?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Www.Guaranteescheme.gov.au is the website address. What was the second part of your question?

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

Did the government ask any of the 16, or all of the 16, what their anticipated borrowings would be using this guarantee?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am told there have been discussions in the broad with financial institutions about what they would be doing. But, as I have already indicated, it is very difficult for them to give precise figures, for the reasons I have given you: they have to make a commercial decision on the day—for example, in the world financial market—about where they will go, and that may change from day to day.

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

You didn’t ask, did you?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

In the discussions it became clear that there were very valid reasons why they could not provide precise figures, let us say, as of last week. For the reasons I have outlined, we do not have those precise figures.

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

Cap in hand, the government, at the pleasure of the financial institutions, failed to ask the obvious question: what is the anticipated borrowing and therefore, for the public interest, what is the degree of liability, using this guarantee, that the public is to be exposed to? It has not asked that question. We now wait for the institutions to use this facility and to go and borrow—after they have filled out the application form upon which the guarantee relies—and then for the government to provide the public with an account, growing, no doubt, of the degree of exposure which it has as a result. I would have thought it very prudent indeed for the government to have got an estimate. The minister resorts to the terminology ‘precise figures’. Of course we know that those would not be possible, but an estimate is very, very possible indeed, and this committee ought to be having one.

The Financial Review—this is again today—says that the banks are eager to get in early and test the pricing power of this new arrangement. I ask the minister: what will the arrangement be worth to the banks in terms of the advantaged position they will be given, and how will that advantage manifest itself?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I would stress that we are not just talking about the big banks. There is a capacity for any of the financial institutions who put in an application and have it approved to access necessary capital, necessary borrowings. That is important, and we have outlined the importance of that. I can give you an update. There are 19 current applications received, with five approved on the website. Those are the latest figures that I have just been given.

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

Are those applications non-specific or do they include the amount of anticipated borrowing that is involved?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

In terms of the five approved, the advice I have received—but we have to check this, of course—is that it is for the deposit guarantee, not for the wholesale funding.

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

We are talking here not about the deposit guarantee, unless of course it is the above $1 million deposits—

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Yes, that’s what I’m talking about.

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

The minister indicates that that is what is being indicated. My interest—let me state this now; if it was confused in the minister’s mind before, I do not want it to be in future—is about the wholesale borrowing facility.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

That’s as I’ve taken it.

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

Okay, but there is no indication from any of the 16 banks—and I presume that they include all four big banks, but let me know if that is wrong—of an intention to use the borrowing guarantee that is inherent in this legislation.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

As I mentioned—I gave an update—it is 19 applications received, and I do not know whether it is one or all of the big four.

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

Are any of those applications for borrowings as against deposits?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I do not have that information, but I am happy to provide it to you on notice.

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

Yes. We should have that information. I just want to go to a section of the minister’s unread second reading speech. It refers to the website www.guaranteescheme.gov.au. The second reading speech says:

The Government will provide six-monthly reports to the Parliament on the Guarantee Scheme’s operations, including:

• the extent of the liabilities covered by the guarantees;
• whether any calls have been made …

Thank goodness the government is going to tell the parliament if the executive moves in to make good a failed bank loan. The speech continues:

• the payments, if any, made by the Commonwealth under the guarantees.

Thank goodness, again, that this government is so publicly minded that it is going to actually inform the parliament if it takes from consolidated revenue millions—potentially hundreds of millions—of dollars to pay a loan for a bank default.

That brings me to the question of why the government considered that a recall of parliament for such an extraordinary situation was not the appropriate way to go. What was it about the deliberations in cabinet, if indeed the matter was dealt with in cabinet—I presume that the legislation was—that caused it to come to the conclusion that the Australian parliament was second rate to either the requirements of the banks lobbying the government or the greater wisdom, as it must be assumed here, that the government thought resided in the executive, rather than in the parliament elected by the people of Australia?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

It goes to certainty. We have an appropriation on the passage of the legislation that will have been approved by parliament—

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

How much?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Let me finish the answer. Unfortunately, in international financial circles, Senator Brown, where they would not have the same understanding of the parliamentary process in Australia as you or I, and the particular nuances of our parliament and the way it operates—and particularly the Senate—the best way to ensure certainty is to take the approach that we have presented in this parliament, via an appropriation.

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

International finance does not understand the nuances of the Australian parliamentary system, so sideline it. What an extraordinary admission that is by a very able minister, I might say, because that is the truth of the matter. I am very sad that why we are here today is to hand away the parliament’s authority to deal with national crises. A default by one of the banks would be a national crisis and the parliament ought to be recalled.

The minister says in his second reading speech that the banking institutions did not think parliament could be recalled fast enough, so they did not want parliament involved, and the government has obliged. Again, I object. This parliament is here to represent the interests of the Australian people. It is bad enough that we do not have a Senate committee inquiry into this matter, because that has been voted down by both the big parties. But it is worse that the outcome is going to be a situation where it will be up to the executive—that is, Mr Rudd, Mr Swan and one or two other members of cabinet—to decide when and how they are going to use public money to make up for a default, a failed loan, by an Australian banking or finance institution which has unwisely borrowed overseas. That is the heart of this matter. This is a public guarantee for private incompetence. This is a public guarantee for a mistake made by the private sector. That is what is ultimately being arranged here. The parliament is left aside. I will come to the Greens amendment on that in a moment.

I want to ask the minister something before I get to the matter of the wisdom of the sunset clause. Yesterday the Senate passed a motion calling on the Prime Minister to specify the measures he is going to take against executive salary excesses by tomorrow week and what action will be taken. Now we are dealing with the banking sector in Australia. We have seen the extraordinary tens of millions of dollars given to some executives in that sector in Australia in the last 12 months, totally outside any reasonable payment for any person. That is some 80 times the take-home pay of the Prime Minister of this country. I defy any banking institution, Macquarie Bank included, to justify that sort of self-organised largesse at the expense of deposit holders and taxpayers generally. I ask the minister: could he outline to this committee what it is that the Prime Minister is going to do.

The Prime Minister has spoken strongly against executive greed in both domestic and international forums—most recently at the G20 meeting in Lima in the last week. So what action will be taken? Here we are, acting on behalf of the finance houses and the big banks, giving a public guarantee to a private risk. I ask the minister: where is the quid pro quo here? Wasn’t this a very good opportunity to say that finance institutions that are going to be advantaged by this guarantee and take it up ought to have their executives be decent about the amount they take out of those finance institutions? The Prime Minister says that he is going to act on it—he has not—but it is fair enough for me to ask at this point: what action is he going to take?

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Parliament is not being sidelined. The fact that we are here dealing with this legislation indicates that the parliament is not being sidelined, Senator Brown. There are a range of accountability matters, issues, reports et cetera that have been outlined in the second reading speech. Secondly, you continue to refer solely to banks. It is not just banks we are dealing with; it is in respect of credit unions and building societies as well.

Thirdly, you refer to a public guarantee for private incompetence. I would just point out that we do not face the situation in Australia that is faced in the US or the UK, for example. There is a big difference between a guarantee and a bailout. We have seen bailouts in the US, the UK, Iceland, France, Italy and Germany. There is a very different set of scenarios and outcomes in those countries where they had to bail the institutions out. They have had to nationalise them or force merge them—and ignore their competition laws in the case of the UK—or provide them with funding to remove the toxic assets. It is very different—they are bailouts. In referring to the Australian circumstances, I think it is overly strong to say ‘a public guarantee for private incompetence’ in the Australian context.

With respect to the executive pay issue—I am sure Senator Brown is well aware, as Senator Coonan is; I think we debated executive pay in another context when the Senate last sat, in the last sitting week—APRA has prepared a set of principles which ensure that short-term risk-taking behaviour is not rewarded. APRA is considering how to best link those principles to capital requirements. The G20—the major 20 economies of the world—have endorsed work on executive salaries and have worked, at the urging of this government, to have the International Monetary Fund and the Financial Stability Forum consider these matters. We will provide the Senate with an outline of the government’s initiatives in this area next week, as per the Senate motion.

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

We can hope that it is not as wishy-washy as that outline. It is not just a matter of risk-taking behaviour—which, by the way, this legislation encourages; it is also a matter of there simply being no warrant, on a planet which has a billion people starving, for people to be taking home $5 million, $10 million, $20 million, $30 million or $80 million. It is disgusting—and the Prime Minister said so, but where is the action? I have had three or four motions in here to do something about this, and they have been voted down by both of the big parties each time. I think we are hearing a lot of words but I do not think we are going to see real action to curb the ability of executives to have $20 million taken out of the Australian public’s domain—private or public—for the private gain of people who are in executive positions. I believe in the free enterprise system, but it is out of kilter. It has got itself into trouble. We are here because of this neoconservative viewpoint that small government is good government. We are here putting in place public guarantees for the private sector. It is legitimate that, at the same time, we put some regulation on the more excessive of the corporate executive salaries and bonuses that we have seen some executives taking out of the public largesse in the last 12 months.

We have had very little information and no statistical information at all—zero statistical information—presented to this committee about the impact of these guarantees. By the way, the minister just said that we are offering a guarantee here, with the implication that that is where it stops. You offer a guarantee because you expect that there is some chance that there will be a default. This legislation is a result of the threat of a potential default coming down the line. We are here to guarantee the banks and the financial institutions against a default coming down the line. The very fact that the government guarantee—which means the taxpayers’ guarantee—is being put in place will encourage more risky behaviour, but it will lower the cost of borrowing overseas.

I ask the minister: where is that saving going to manifest itself in lowered interest rates, in the removal of some of the extraordinary costs that the banks have put onto transactions by the Australian public or in some other way? Of course, again, we will get no definition on that matter. We will get a general statement that they will be able to borrow more cheaply. Will it be more commensurate with the gains that this legislation gives? What I am asking is: the public is being put at risk to give the banks the ability to borrow more cheaply, but where is the government guarantee that that gain will be passed on lock, stock and barrel to Australian businesses and borrowers? Of course, we are not going to get that. I wonder if the minister and Senator Coonan, for the opposition, would indicate whether they support the Greens move to ensure that the parliament deals with this matter again in 24 months time through the sunset clause amendment that I have put forward.

I would just ask if the government or the opposition might comment on this amendment, the sunset amendment, which would have this act cease to have effect on the second anniversary of its commencement.

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I will make a very brief comment, given the hour, and just indicate to Senator Brown that, whilst I appreciate the sentiments behind seeking a sunset clause, if you think it through, obviously this act and the operation of the act need to stay in place for the life of the guarantee. The amendment does not contemplate any provision for the act to continue so long as there are deeds of guarantee in place, so it would not be appropriate in those circumstances for the opposition to be supporting a sunset clause of the kind contemplated.

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

I might ask the opposition: is it 63 months? How long does the deed of guarantee stay in place? Would the opposition be amenable to me adjusting this sunset clause to coincide with the expiration of the deed of guarantee from the date of the commencement of this legislation, or are we really facing an endless guarantee for borrowings overseas by the institutions?

Question negatived.

Well, there was no support for that, but I will now move Greens amendment (2) on sheet 5672:

(2)    Page 2 (after line 28), at the end of the bill, add:

7 Minister to make statement to Parliament

        (1)    If the Minister borrows money in accordance with subsection 6(1) then the Minister or the Minister’s representative must, within 3 days of taking that action, make an explanatory statement to each House of the Parliament.

        (2)    If either House of the Parliament is adjourned so that it would not otherwise meet within the time referred to in subsection (1), the Presiding Officer, shall summon that House to meet, in spite of anything contained in the resolution of adjournment of that House.

        (3)    In this section, Presiding Officer in relation to a House of the Parliament means the Presiding Officer of that House within the meaning of the Parliamentary Presiding Officers Act 1965, or the person who is deemed to be the Presiding Officer of that House for the purpose of that Act

I add, again, that this bill is in fact two pages. The description of this amendment is ‘accountability to parliament’ because that indeed is what it is. This amendment to the bill will ensure that parliament—although it is disempowered to do anything about it—is at least recalled in the event of the executive, or the minister, being required to borrow money from consolidated revenue or in some other form to pay for a loan to a bank which the bank has defaulted on, and all of the consequent turmoil that would come from that. This is simply to involve parliament, at least to the extent of being able to debate the situation were that to occur.

This is not a frivolous amendment; it is a very important democratic check on the executive. We could have the situation where a bank defaulted in December and parliament was not due to sit until February or March, with $100 million, $500 million or indeed billions of dollars or tens of billions of dollars being required from the public purse to make good that default—with quite extraordinary public turmoil and alarm about it. I think it would be most settling to have parliament recalled to deal with that matter and to support the executive if it were doing the right thing.

I am not here to support the idea that the executive ought to be the arbiter of what happens in all national situations and that the parliament simply legislate to facilitate that—in other words, for itself to be sidelined when issues of great national importance come along. This amendment does not take from the executive its power to make good a guarantee if there is a default, but it does require the parliament to be recalled to discuss that. If the government has confidence in this legislation, I think that it would have the democratic decency to ensure that the parliament was recalled automatically under this amendment in those circumstances.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

Could I just briefly say that, in the second reading speech, I have already covered the accountability reporting type mechanisms. Senator Brown, in the very unlikely event that these circumstances occurred, I would be amazed if the minister—the Treasurer in this case—did not make a report to parliament when parliament came back on a scheduled sitting.

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

Then it is a good amendment and it ought to be acceptable to the government. We are dealing here with a guarantee for an amazing circumstance—a default on a loan. I am now testing the government to have a guarantee for an amazing circumstance—that is, that the minister, or the executive, does not recall parliament. Do you see the logical flow-on? Or is it that the interests of the banking sector are more important than the democratic interests of this country and that the same logic does not flow on for the need for the democratic watchdog of the executive, which is the parliament, to be called into action when this circumstance arises? Do we not need a guarantee here that the executive will recall parliament? In my experience, the one thing that executives do not like is parliamentary scrutiny. Governments more and more, when they have been in the saddle, like to get out of parliament as much as they can. On behalf of the Greens, I am proposing that, in the extraordinary circumstances outlined where there is a default and then in the extraordinary circumstances—which the minister thinks unlikely—that the executive did not recall parliament, it is recalled.

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I will just briefly indicate the opposition’s position. I have listened very carefully to Senator Sherry’s remarks in relation to transparency and I have listened in silence to Senator Brown’s questions. I do think it is appropriate that I indicate that our position on the amendment is that we will not support it, not because I do not think that transparency is important—I could raise some issues in relation to it—but because I am firmly of the view that a provision to summon parliament to come back if it is adjourned and for the Presiding Officer to summon the House to meet, in spite of anything contained in the resolution of adjournment of that House, is not necessary to ensure transparency. To the coalition, summoning to meet seems to be a bit excessive.

Question put:

That the amendment (Senator Bob Brown’s) be agreed to.