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

At the request of Senator Milne, I move:

That the Senate is of the opinion that, rather than punishing the unemployed, sick, elderly, students and families, revenue should be raised through applying a ‘public insurance’ levy on the big four banks that are too big to fail.

We have had some great first speeches in this chamber in the last three or four weeks, and I have noticed that the term 'free market' has been used on occasion by different speakers. Today we are dealing with a proposition that we levy banks for a leg-up that we gave them during the global financial crisis. The global financial crisis was probably one of the most significant financial crises in the history of markets. It is a classic example of why markets are not actually free. Certainly in conceptual and theoretical terms there is no such thing as a free market.

It is an assumption that we often make in economics and in finance in order to build models, but the reality, as we saw with the global financial crisis, is that markets fail. Markets can have significant volatility, and that can pose systemic risks to our financial system, our economy and our way of life.

If markets perfectly priced risk and perfectly priced goods and production then, in theory, we would have a free market. I am not going to lecture you much longer on the theory of free markets, but markets fail—unless you would like me to, Senator Polley! I would be very happy to put my university lecturer's cap on.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

That would be good.

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

Markets fail, generally, for three reasons. Firstly, markets fail because they do not have perfect information. If they do not have perfect information they cannot properly price goods and services when they are produced. Secondly, they fail because sometimes we get externalities—that is, a negative or even a positive external benefit to production—that are not factored into the costs of the goods and services produced. An example that we often use in this chamber is climate change. If you believe that carbon dioxide, as a by-product of electricity generation, impacts global warming then you need to price that cost into the electricity market. Hence, we had a price on carbon to begin with.

The third reason markets fail goes back to discussions around property rights and what is called the 'free rider problem'—that is, people and businesses tend to take a free ride on the back of common property et cetera.

The GFC showed us that we were not necessarily managing our system. The system in Australia was managed much better than—as we saw with some of the collapses—other financial markets around the world. I do not know whether you can remember, in 2008, the week Lehmann Bros collapsed. I remember it very vividly. I was teaching Principles of Finance and International Finance at university at the time. It became a fantastic case study for my students, in the years following, on what went wrong and why it occurred.

I describe it a bit like the Y-wing fighters from Star Wars dropping a torpedo into that sweet spot of the Death Star, which set off this enormous chain reaction all around that world. But that sweet spot was the mortgage securitisation market in the US—a highly risky set of products that had been bundled. There were all sorts of failures around the pricing of risk and the derivatives that we use to manage those risks.

The problem was that we all lost confidence. We all lost faith in the system. Everybody panicked. There was a panic; people were rushing to take their money out of the banks. We had a shockwave that went around the world. Trillions of dollars were wiped off global stock markets, off the values of assets. Economies that had been chugging along nicely for hundreds of years—with hiccups along the way—actually looked as if they were going to go under. We saw four or five years of hardship in places like Greece and other countries, which were trying to pull themselves out of this mire. Some of them have not done that yet. So the repercussions of the GFC are being felt all around the world.

We have been through these crises before. We know how to react to them. There were a lot of good people around who suggested that we immediately moved to mitigate the risks. One of the things that we did in this country, as occurred in other countries, was to make a deposit guarantee in our financial system—not just on terms deposits and savings deposits, but also, at the time, on wholesale funding for banks. The government stepped in and said: 'Don't panic; it's not going to be the Pyramid Building Society all over again, where everyone is rushing to take money out of the banks and stick it under their pillows. We'll guarantee you. The taxpayer, if we have to, will foot the bill if you lose your money.' That helped calm the system, and there is absolutely no doubt at all—it is the reason that we are proposing this motion—that the banks benefited, as did depositors, creditors and the financial system itself. It restored confidence. Those who understand pricing risk, know that in finance it really is all about confidence. There is no magic wand when we look at pricing risk; if there is uncertainty we get higher risk, and when there is more certainty lower-risk premiums tend to change the prices of assets et cetera.

At the end of the day this worked well. It was brought in by the Rudd government. Acting Deputy President Sterle, you can correct me if I am wrong, but I am fairly sure that it was former Prime Minister Kevin Rudd who brought in the guarantee. Like some other things that Labor did, to their credit, they managed to stabilise the system during what was probably the worst financial crisis—certainly in living memory for us in this chamber and probably for all time.

If you went and asked people around the country, a lot of them would say: 'Why don't you take money off the banks? Why don't you tax the banks? They make billions of dollars in profits. In fact, the amount of money they make is ridiculous

They charge all these fees; we hate the banks making all this money.' Every time they release their profit figures, politicians from both the federal and state levels make comments about the banks. The average Australian is distrustful about the amount of money the banks make; nevertheless, there are also superannuation investments in those banks and they are important in terms of underpinning our own wealth. We do want a healthy banking system that functions effectively. However, we also want the banks to pay back the amount of taxpayer money that they benefited from when we stepped in to stabilise the financial system. The taxpayer in this country, the Australian voter, stepped in to foot the bill and cover their risk. That does not mean we had to physically put in the money, but we said we would. This has given the banks a margin benefit in terms of their wholesale and retail funding—they have been able to get funding at a lower rate because they have been a lower risk proposition. That is all about that risk premium thing I mentioned earlier.

This is not a Greens idea, although we are proposing this issue today—this was put up by the Reserve Bank in a discussion paper and also in a submission to the Financial System Inquiry that David Murray is conducting. It has been discussed in estimates—I remember asking Treasury about this at the last estimates. The Reserve Bank is saying that a levy would help pay for a fund that will protect their own depositors in the event of a banking collapse, and they have estimated the margin benefit at around 0.2 per cent, or 20 basis points. They have basically said that this should be paid back to the taxpayer—this is the benefit that has been conferred on the big banks in their wholesale and retail funding.

The United Kingdom has implemented a bank levy on the deposit guarantee. That is a very similar thing. We know that in the UK alone they are expecting to raise about $3 billion Australian this year from the collection of their bank levy. So this is not a radical 'let's tax the banks because they make too much money' Greens idea—this is a very sensible, rational proposition that government had a role to play in stabilising the banking system and we need to now get that money back. Taxpayers covered that risk and that led to a benefit for the banks, and it is only fair that that money should be used to spend on schools and hospitals and on policing and on all the issues we debate in this chamber.

What would a bank levy be worth? There are different estimates, and the Greens have had their own estimate prepared. Recently a submission by the Customer Owned Banking Association to the government's Financial System Inquiry included an independent analysis and it put the annual value of the effective subsidy the banks have received through the deposit guarantee at between $2.9 billion and $4.5 billion. If we work out the number of years the banks have had this subsidy and find a value that we are comfortable with, we are talking about pretty serious money. The Greens sought advice from the Parliamentary Budget Office—and I give a plug to my predecessor, Bob Brown, who worked with Senator Milne here in the chamber to get a Parliamentary Budget Office for those in opposition to price their policies. The Greens have made significant use of that service. The numbers we got back indicated that a 20 basis point levy, or 0.2 per cent, on all assets valued at over $100 million held by the big four would raise $16.8 billion over the four years to 2018-19. That would not allow deductibility of levy payments against company tax by the banks. That is our view of what a straight payback would be. Let us be honest, $17 billion is a lot of spondulicks. We could all do with some of that to help run this country. We have been arguing over much smaller amounts in individual policies in this chamber in the last few weeks. This will be coming from banks that make, collectively, tens of billions of dollars each year in profit, which goes back to their shareholders. Remember, the Reserve Bank, obviously the UK government and their institutions over there, as well as submitters here have said the banks have benefited from taxpayers in this country and they should pay them back. It is that simple.

The question is, do we have the political courage to stand up to lobby groups like the Australian Bankers Association, who have had some recent additions, I have noted with interest in the last week, including an employee from Mr Hockey's office. They are unashamedly saying they lobby hard for the benefit of their members—that is what they do; they are out there to protect the banks and make sure the banks make as much money as possible. It is black and white. We need conviction in here to say to the banks, 'Listen, you blokes do pretty well—give us our money back.' That is the proposition we are discussing here today. Although there is a lot of detail around it, it is not really a controversial or remarkable suggestion unless you understand how effective the banks are at lobbying this government. I notice Senator Dastyari is in the chamber, and he would well understand the lobbying power of the banks and the Australian Bankers Association following the Senate's FoFA inquiry and its ASIC inquiry. Once again, the Australian Bankers Association said that they had a deal, which is probably one way to describe it, but certainly numerous discussions, with this current government before it came to office about amending the FoFA regulations before 30 June, and of course if that was not done it would have impacted on the bottom line of the big banks and the big financial services companies and would have impacted on their vertically integrated business models. The government did deliver that for them, as did the Palmer United Party.

What we also are going to have to discuss in here is whether we are prepared to stand up to the banks and say, 'Give some money back to the taxpayer—money that benefitted you—so that at the end of the day you are cost neutral. You made this money and got that extra margin because of the guarantee. It lowered your risk and helped price your risk. It is time to give it back to the taxpayer.'

The levy drives competition and stability, without hitting customers, and would make a significant yet fair boost to national revenue. There has been a lot of work done around the changes to the competitiveness of the system, but we believe that it would be a win-win. We also believe it is fairly and squarely in line with economic theory, in this case because the market has failed. I want to make that very clear. The GFC was a market failure. The whole system lost confidence and the government had to step in to restore that confidence. If you believe there is a role for government in correcting for market failures, and the Greens do—that is why we wanted to price carbon and we are happy with regulations—the government needs to calculate what benefit they conferred onto the banks and the banking system and ask for it back.

I think the too-big-to-fail concept is something that everyone is familiar with. If the banks had failed, the consequences would have been dire, not just in this country, but all around the world. Luckily, we got through this crisis—or we are nearly through this crisis. I would say that it is still well and truly washing through even the US economy today. Certainly, consumption and investment has not seen the giddy heights it did pre the GFC, and unemployment is still very high. This is probably because people still feel gun-shy. There is still a confidence crisis around investments in some asset classes. I think the damage it did to the mortgage market and housing market in the US has severely impacted a lot of places in the US, particularly the low-income parts. And, of course, if it impacts your wealth it impacts the way you consume and the way you invest. The US economy was heavily reliant on consumption—it was nearly two-thirds of US GDP when the US went into the crisis.

At the end of the day I hope that we have learnt from the GFC. We now know that these types of bank levies can work to stabilise the system. If we do not ask the banks to return the benefit we gave them, I think that is unfair. The principle of this is well and truly in line with fairness. It can be supported by rational economic theory. It has been supported by a number of stakeholders in financial markets. It makes a lot of sense. I would hope that everyone in this chamber would see the benefits of it and understand that sometimes we do have to find revenue. It is not just about cutting costs, like we have seen in this budget. What we have debated in this chamber is the fact that in the current budget we have taken money off those who can least afford it—we are talking money off pensioners and the sick. We have talked about this a lot. Let's take some money off the big banks. Let's take some money off them in line with sound, rational policy, which is exactly what this is. I recommend that everyone agree with this.

Matthew Canavan (Queensland, Liberal National Party) Share this | Link to this | Hansard source

I would like to compliment Senator Whish-Wilson for a very considered speech. This is a very important topic. It goes to the security and safety of our financial system. However, I do take issue with the senator for the fact that he does not seem to have dealt with the full details of this motion.

When I spoke earlier in the Senate I referred to the Burke and Wills expedition, but I did not quite get to finish my remarks, because other senators wanted to have time. So, bear with me while I draw a bit of a long bow, because I want to get this on the record. I read a book by Sarah Murgatroyd on Burke and Wills. The book had a great description about how the expedition started out. I quote:

Luxuries were well catered for: a large bath tub, a cedar table with two oak stools, and 45 yards of gossamer for fly veils. Yet the party took just two sets of field glasses, two watches and only 12 water bottles. Were 12 sets of dandruff brushes and four enema kits really necessarily? There were six tonnes of firewood, 200 kilograms of medication for the camels and horses, and enough ammunition to win a small war.

Why do I bring that up here? It is that just as the Burke and Wills expedition was very overloaded—it was one of their big problems—this motion, too, is way too overloaded.

It is always a good idea to travel to Queensland, as Burke and Wills were doing, and it is always a good idea to debate financial regulation, Senator Whish-Wilson, but it is not a good idea to overload your motions with too many ideas. I note that until the very end of your comments you had barely mentioned the first part of this motion, so I think it is worth reading out to the chamber that the motion we are discussing in general business this afternoon is:

That the Senate is of the opinion that, rather than punishing the unemployed, sick, elderly, students and families, revenue should be raised through applying a 'public insurance' levy on the big four banks that are too big to fail.

My reading of that motion is that you are considering that we should be using a too-big-to-fail levy, if you like, to fund other types of expenditure, in this case largely social security type expenditure. But that is not what your previous comments went to. When you spoke about creating such a fund and charging such a levy on the banks, what you were talking about was in fact a 'rainy day' fund. It was that we should build up some kind of capital reserves for the government, such that if the worst were to happen—and let us all pray it will never happen—we would have some resources there to offset the damage and carnage that would ensue.

You cannot spend a rainy-day fund while the sun is shining and still have a rainy-day fund. If the whole purpose of what you want to do is to put aside some funds for when something might go wrong, you cannot spend that money before that event happens. That is what the Greens are suggesting we do here. I was listening to Senator Whish-Wilson quote the RBA. He said that the RBA had suggested this idea to the financial services inquiry chaired by David Murray. I agree with him. It is not a crazy idea in and of itself. The RBA and other eminent economists have suggested it. I wrote down their quote which said that this fund will build up a fund that will help pay claims in the event of a default. I do not believe that the RBA went on to say—and I have not read their submission so I will stand to be corrected—that the fund will help build up a fund to help pay for benefits to the unemployed, the sick, the elderly, students and families. That is not what the fund is for. That is not what the RBA has suggested to the Murray inquiry. It is certainly not what other economists have suggested either.

What we are seeing here today is the sequel—the mining tax sequel, right here. I have listened for the last few years and the Greens have constantly referred to the mining tax as an endless pit of funds to fund all kinds of weird and wonderful ideas. Whenever they are on the ropes in a media interview about how they are going to fund high-speed rail and how they are going to fund universal dental care, they can always just say, 'We are going to tax the mining companies.' That is the common response from people. We have seen over the last few years that that was a completely misguided dream. I remember hearing the Leader of the Greens—who is here in the chamber now—at the Press Club in February last year make this comment:

Labor refuses point blank to fix the loopholes in their dud of a mining tax… It is foregoing the revenue needed for key reforms including implementing Gonski and dramatically increasing funding to our public schools, fully implementing a National Disability Insurance Scheme, expanding Denticare or building high speed rail.

All of those five promises were going to be funded by the mining tax. Admittedly, the Greens preferred Rudd's original resource super profits tax—what a great name that was. I had forgot about that—who came up with that? That was a fantastic name—10 points. That tax, we know from Treasury estimates through FOI documents, was going to raise $100 billion in its first 10 years—as it was proposed. Obviously it never made it into law. It was planned to raise $100 billion in 10 years. Senator Milne had made all these promises from that mining tax. Gonski was about $5 billion a year at the time. It has since changed, but at the time it was about that. So that was $50 billion over 10 years. The NDIS was about $75 billion over 10 years—and that is quite conservative. Denticare, or universal dental care, would be about $55 billion, and of course—I think from an Ernst and Young study—the high-speed rail is $100 billion. All of those promises add up to $280 billion. They were all going to be funded by a mining tax of just $100 billion. In one paragraph we had a black hole of $180 billion.

We are now seeing the sequel to this process. Over the next few months we are probably going to have a debate from the Greens that, 'Well, the mining tax has gone, and that proved to be a bit of a false dawn, but we still want to spend all this money on all these programs. We still want to have a high-speed rail and we still want to have our ice-cream and our cake and all our dessert as well as everything else. We are going to have to find another rich daddy to come and pay for that,' and that is now going to be the banks according to the Greens. The financial sector can help pay for it.

About that time or just a year or two before Senator Milne made those comments, you might remember that Ken Henry, the former Treasury secretary, once said that there was not a computer big enough in Treasury to cost the Greens' policies. I think we are seeing the same example. No costings have been presented by Senator Whish-Wilson on this process. He mentioned some estimates of what the levy could raise but, as I said before, this is not a motion only about a deposit insurance levy. Apparently it is going to be used to fund all these other things. But there are no costings about exactly how much he wanted to spend on all these other things. But we are used to that from the Greens.

I want to seriously engage with the issues that Senator Whish-Wilson has remarked on. As I said in my opening remarks, it is a very, very important issue. I do not believe it was fully dealt with or fully explained by the senator in his previous remarks. He is right in that a few years ago we made the decision to introduce a Financial Claims Scheme, a large-scale deposit insurance scheme, at the height of the global financial crisis. I agree with him that it was the right thing to do—an unfortunate thing to do but something that was necessary. For decades we were very lucky in this country to not have to rely on a deposit insurance scheme like other countries, but the scale and speed of the global financial crisis necessitated change. At the time I think the coalition was a little concerned about how large the deposit insurance was in its initial form—originally a million dollars cap, which was much, much higher than other countries. However that has since been reduced to $250,000 on every deposit account, which is in line with the United States, so it is not too far out of whack.

What Senator Whish-Wilson did not refer to in his remarks is that the former government did not just roll out this without a plan to fund the Financial Claims Scheme. The then Treasurer Wayne Swan decided we would not introduce a deposit insurance, as exists in the United States, and as the senator said, exists in the United Kingdom, but that we would fund it through an ex-post levy. Not an ex-ante levy, but an ex-post levy—and that was not mentioned in the senator's remarks. What that means is that we have decided with the Financial Claims Scheme that—God forbid—if the worst happens and there is a default in a financial institution, we would seek to recover the costs of the deposit insurance from two sources. Firstly, from the remaining assets of the financial institution that becomes insolvent but, by definition, if they are insolvent those assets will not be enough. To fund the remainder at the time we would put in place an ex-post levy, a levy on the financial sector on what is remaining. It will eventually be funded by the financial services sector if we were to get to that spot. If we were to get to that place—and let us hope that we never do—it will still be a charge to the financial sector. Of course the financial sector knows that. It is publicly available. They will factor that into their decision making because they know that, if there is a default or a failure, they will be up for a charge.

The other thing that I do not think was mentioned by Senator Whish-Wilson is that, while he is right to say there is a market failure here and, to use some jargon, a moral hazard, we do not just have the tool of levies, either ex post or ex ante, to deal with that market failure. The other way we seek to deal with that market failure through our system is prudential regulation. We require all of our banks, insurance companies, building societies and credit unions to put aside a certain amount of capital against the liabilities that they have on their balance sheets—that is largely their deposits. Depending on the riskiness of those liabilities and the assets they hold, they have to hold a certain amount of capital.

Those prudential requirements are changing at the moment. The much maligned Basel II process, which some say helped cause the global financial crisis, is coming to an end. There is a new set of prudential regulations coming in through Basel III which will change a lot of the risk weightings for banks, will require financial institutions to adjust their positions and which we hope will help other countries avoid what we saw in the global financial crisis.

We in Australia did not face the crisis that other countries did. Some might argue that it was because of our superior level of financial regulation. I am a bit sceptical of that. I think we do have a very good financial regulatory structure, but we should never be complacent and think that what happens somewhere else cannot happen here. So there is a case to make sure that we continually improve that in a methodical and careful way, because these are very serious issues.

That is why the coalition government has established the financial system inquiry, as Senator Whish-Wilson mentioned, chaired by David Murray. We are serious about making sure that we look at all of the issues that are involved to ensure that we make the right decisions, that we make no sudden changes and that we think through all of the ramifications, perverse or otherwise, of any change. The financial system inquiry released its draft report a month or two ago. It dealt with the issues that are before us in this motion. I want to quote a little bit from that because I think it helps explain the issues that are involved. The Murray inquiry said:

Currently, the FCS

the Financial Claims Scheme—

is post-funded. This means that, if it were activated, the Government would initially pay out claims and then recover those funds from the assets of the failing institution. If that was not sufficient, the remainder would be recovered through a levy on the rest of the banking sector, which could be delayed until the crisis was over to avoid exacerbating the situation.

An option, as Senator Whish-Wilson has suggested, is to charge authorised deposit-taking institutions an ex ante fee, or prefunding, for the Financial Claims Scheme. The IMF recommended this in a recent report that the Murray inquiry quoted from. This is very important to understand so that we all know what could happen here if we introduce something like this.

The Murray inquiry went on to say:

However, an ex ante model—

that is, a levy in the form that Senator Whish-Wilson is proposing—

would impose a cost on the financial sector. In particular, industry would need to pay a fee that would likely be passed on, at least in part, to depositors in the form of lower deposit interest rates or higher fees. This would be the case even if there was no need to activate the FCS. By contrast, the current ex post funding only imposes a cost on industry if the guarantee is needed.

Let's be very clear here: if we were to introduce such a fee and do what Senator Whish-Wilson has proposed, it would impose a cost on our financial sector. It would lead to the higher fees that Senator Whish-Wilson was complaining about. It would possibly lead to lower deposit rates for consumers. There is no free lunch here. Somebody would have to pay for this. So we should be very careful before we even consider implementing something like this.

Because we are being careful, we have put in place the Murray inquiry. That is why we are taking this step by step. It is regrettable that the former Labor government did not follow such a careful process. They had years to think about this issue. I believe the Financial Claims Scheme was introduced in early 2009. They did do a review of it, admittedly, and reduced that threshold, as I have said, from $1 million to $250,000. But they did not take the opportunity of that review to introduce an ex ante levy. What did happen, though, is that, just before last year's election—surprise, surprise!—the Labor Party announced that they would, in fact, introduce an ex ante levy. Convenience of convenience, they not only introduced a levy; they used the levy to help reduce their bottom line and reduce the deficits they accumulated and could no longer escape from because the pre-election forecast outlook was about to come out. The real figures were about to come out just before the election, so at the last minute they introduced this fee to help offset the massive spending and deficits they had presided over in a final and futile attempt to cover up their mistakes.

There were two mistakes with that decision. The first, as I said earlier, was that this decision should not have been made in such a rushed way. It was sprung on the financial sector. Nobody knew it was coming. It was very much the mining tax mark 2 because the affected parties had absolutely no knowledge that they were going to be up for such a charge. The second problem with the Labor Party's approach was that it should not have been used to fund the general revenue. It should not have been used to go into the underlying cash balance to go above the line, in the jargon of accountancy, because it was, as I said in my remarks at the start of this contribution, to offset any potential future problem. It was a rainy day fund. It was an insurance pool. It was not something to be used to fund general expenditure, which was what the Labor Party tried to use it for.

I am very confident that the coalition government will not follow the approach of the Labor Party; we will go through these things in a methodical way. We will not be supporting this motion, because we cannot use such a fee, as I said earlier, to fund all these other things that have not been costed or thought through. We will not make rushed judgements on this issue. We will wait for the Murray inquiry findings and consider them in due course. At this stage, my understanding is that the coalition government has no plans to introduce such a fee, because it would be a cost on the financial consumers of this country. Given our strong levels of prudential regulation, given that some of those regulations are currently being strengthened and given that we already have a mechanism to fund the financial claims scheme in an ex post way, it is probably something that we do not need.

I conclude by saying that I give credit to the senator for bringing this forward. I have some sympathy for him having to sit in the Greens party room. I think this motion would have been much better designed if it did not have the preamble, which smacks of green ideology and wanting to be all things to all people. This is a very serious issue and we must to approach it in a mature way. I thank the Senate for hearing my contribution to this debate.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I thank Senator Canavan for his contribution in this debate. Clearly, he has thought about and worked on these matters, and he brings a level of experience and thought to the debate. In some areas, I agree with him; in others, I disagree. It was fantastic to learn tonight that Senator Canavan has read a book recently and I think that sharing that fact was especially meaningful.

I am sympathetic to this motion, but I will not be supporting it and the Labor Party will not be supporting it. The premise of what Senator Whish-Wilson has proposed is very interesting. The motion raises the question: if we are going to have the level of social services and social welfare that we want to have as a society, who should be paying for it and where should the pain be shared? Our society has decided that our banking sector is too big to fail. If the banking system is in trouble, the government of the day will intervene and take whatever steps are necessary to protect the banking sector, which begs the question: do banks have a greater responsibility to contribute to the finances of the nation?

I think that Senator Whish-Wilson was saying in his contribution there should be a separate debate on the concept 'too big to fail', on the role of government in the banking sector and whether government should or should not be involved in propping up these kinds of institutions. Largely, as a society, we have made an economic and social decision that we do not want a banking sector that can fail. As a result, when these difficult decisions need to be made, there is a tendency of government to make these decisions. If the big banks and the banking sector are going to get the benefit of being able to rely on the government in difficult periods to shore of their risk profile as institutions, then at what point should they have a responsibility to provide more during the good times?

I think that this is an interesting idea and there is certainly merit in discussing it. The reason I am not supporting this motion is that we have not given careful consideration to the issues of at what point do we move towards a system of greater taxation, levies or charges on the banking sector and of how that system would pay for other needs.

However, I do agree the Greens on the point that Senator Whish-Wilson made about the Abbott government's twisted priorities, which have been on full display in this budget. They are an unfair, unjust and often unbelievable demonstration of a corrosive ideological crusade to punish the poor, the unemployed, pensioners, students the sick and families. This week we saw an attack on superannuation. Those opposite decided to turn on hard working employed Australians. Even the children of war veterans will be hit.

Senator Canavan tried draw some inferences on how the Labor party, when in government, dealt with issues of banking, taxation and the placing of levies. He tried to present the government as following a calm, sensible, rational process. When it comes to banking sector reform, we sat in this chamber and watched over a period of one hour a deal done on regulation for the provision of financial advice. In a spectacularly embarrassing move, the member for Fairfax from the other place sat in the public gallery and watched the minister read a letter that had been signed minutes earlier as part of a deal done in a hallway outside. Yet we are being told that is how we should be making policy and that is how we should be making banking reform. Those opposite claim to have an incredible history and ability in this area, because they have palmed off a series of difficult decisions to one review being led by David Murray and now say on every issue 'We are going to wait for the report'. We all know what is going to happen: they will get the report, they will sit on it for another three or four months—maybe even a year— they will leak out little bits of it that they want to leak out, and, then at the end, they will adopt a very small part of it.

Frankly, I share the concerns that Senator Whish-Wilson has aired in this place and in others about the entire review process as it is currently being conducted. You really have to question whether David Murray is the appropriate person to head that kind of inquiry. The current CEO of the Commonwealth Bank, Ian Narev, says that in his opinion and in the opinion of the bank and in the opinion of the lawyers, the financial misconduct that occurred in Commonwealth Financial Planning goes back to when Mr Murray was CEO of the bank. And then we say that the person who is going to conduct the financial system inquiry is the person ran the bank when improper actions began, as the bank itself states. Senator Whish-Wilson has made these comments previously, and I echo some of his sentiments. You really have to question whether this is the appropriate system and the appropriate pathway.

The banking sector in Australia should be congratulated on having a very successful year. No-one should begrudge them that. I have been heavily involved in public inquiries into the conduct of Australia's big banks. I am on the public record delivering some heavy criticisms of their behaviour. I expect that, in relation to the inquiry that has just begun, I will probably have more to say. But, at this point in time, I do not think a public insurance levy is the right way to handle these concerns. No-one should begrudge the banks their profitability. We are talking about a figure of around $29 billion for last year. My criticism of the banks is not that they have been incredibly profitable; they have a right to be profitable. We want them to be profitable and we want them to be strong. But the behaviour in some sections of the Australian banking sector is deplorable. There has been wilful ignorance and malpractice. As for admissions of wrongdoing, we sat through inquiry hearings where the Commonwealth Bank came along and lied. They lied about what had happened. They covered it up. They will claim they did not know. They will claim the evidence got changed. But, frankly, either they did not know what was going on within their own organisation or they were lying and got caught, and each alternative is horrible.

For too long, other banks—I do not want to go into the business of naming them all—have allowed some really horrible financial planning practices, done in a vertically integrated model. They have propped up, supported and bankrolled a handful of crooks, criminals and con men who have pushed products that in a lot of instances the banks knew were not good products; they knew they were damaging and they knew they were high risk. They knew this because they priced it themselves at 18 to 22 per cent in some areas. Then financial planners vanished and collapsed, and some of them went to jail. Some of them were able to bulletproof themselves. The banks started calling in some debts that should never have been provided in the first place. While the banks may not have committed any crime, and in many cases they acted well within the law—I am not making an accusation that they did not—their behaviour was not conscionable when they knowingly put people in a position of such high risk with financial planners that they knew should not be doing this.

Now we have the CBA open review process. We are looking at somewhere in the area of 400,000 customers. I share the concerns of others in this regard. We have a sector that has been massively protected by government. The government took really strong action when those in the sector were having a difficult time. Obviously they did it for the public good. If the banking sector are going to be the beneficiary of public good, what is the responsibility of the banking sector when it comes to contributing to Australian society?

Labor has a strong record of sensibly regulating the banking and financial sectors. We are highly proud of the broad public consultation that we conducted with financial experts, academics, lawyers and consumer groups, and of course the banks and financial service providers, to put together the Future of Financial Advice package of reforms. In coming weeks we will have a large debate in this place on legislation to repeal those reforms. Labor's financial advice reforms were essential consumer protections. By watering down the best interests duty, by removing the opt-in provision, by scrapping annual fee disclosure statements and by allowing for the return of previously banned forms of conflicted remuneration, what the government is doing is really worrying. Elements of the banking and financial services sector have argued for minimal regulation. But one person's regulations are another person's protections. It is even more deplorable that sections of the banking and financial sector have consistently argued against regulation when you realise that this is the same sector that has massively benefited from the protections provided to them during the global financial crisis.

We will have a debate about the reforms to financial planning advice. But what Senator Whish-Wilson is proposing in the motion he moved today goes to a somewhat different space—that is, whether there is a greater role for the banking sector to put more money in, whether a levy should be placed in some kind of rainy day fund, as Senator Canavan was referring to, or whether that money can be spent and used by government. That is a fine debate to have and a healthy debate to have. We should be having that debate and more people should be participating in it. I do not believe we are in a position, right here, right now, to predetermine that debate and say, yes, that is the path we should be taking. I think we should be having contributions. I think we should be hearing what people have to say.

I was interested to hear some of the figures that were being quoted by Senator Whish-Wilson, and I think if the opportunity arises to place them on the public record then that would be an appropriate thing to do. I think using the Senate committee process over time to explore some of these ideas in more detail would be a very appropriate way of having some of these conversations, having some of these debates and being able to nut out some of these figures. And I do not think it is unhealthy for us to ask the question, at what level should there be a greater burden on the banking sector? How do you create that in a way that is not just going to be passed on to Australian consumers? We do not want a situation in which you are simply creating a levy or a form of taxation in one way or another that simply ends up being passed down the line to consumers.

So, I think it is very healthy for us to have that discussion and to hear the different views. And I am sure that the Australian Banking Association and others will have very strong views on this, which they are entitled to have, and the banks will have strong views on this. I think that will be a more appropriate path for us to have a detailed discussion about this, rather than simply saying that at this point the Australian Senate is of one particular opinion. The truth is that we are not of that opinion yet. But that does not mean we cannot debate it, that we cannot share some views.

I do want to say that I share the concerns that were raised. I think it is an interesting debate to have—to say that if we as a society want to have all these social programs then naturally there is going to be a question about who pays for it and how. And we should within that debate have a look at the Australian banking sector, a sector that has particularly benefited from the goodwill of government over the years. I think what Senator Canavan was saying earlier about the role of APRA, about prudential standards, is an important one. We have an incredible system. Our prudential regulators do a fantastic job. But that does not negate the fact that when bad international events happen, when we start moving towards very difficult environments, then there still will be a role for government to step in. There still will be a role for government, as has consistently been shown, to do what it can do to protect the Australian banking sector. And if that is something that is now being priced into the risk associated with the Australian banking sector, then, frankly, there may be a greater responsibility for the banking sector to financially contribute to pay for it. I have been making a slightly different point: that it also gives them a greater responsibility as to how they behave as corporate citizens and the extent to which things like financial advice reforms—how they do their financial planning and the role banks play and have consistently played in propping up some questionable financial planners—are related.

In conclusion, I do not believe that now is the time, the place or the right environment to be making the kinds of declarative statements that this motion seeks to make. But that does not mean that there is not a greater role for the Australian banking sector. And it certainly does not mean that there is not a role for the Senate to be scrutinising these ideas, to be participating in this debate and to be presenting alternative views.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I would like to know when the best time is to take on the excessive profits of the big four banks. We have just heard from Senator Dastyari that it is something we might consider in the future. So I put to the Labor Party: where are you going to raise the revenue if you are not going to take it from the poor and the sick, as in the unemployed? The Greens have no intention of taking any money from them. So, if we do not agree with taking money from those people, where are we going to raise the revenue?

It is time we actually had a serious debate about revenue. I have reached the conclusion that in Australia we are not living in a democracy anymore; we are living in a plutocracy. We are actually experiencing government by the wealthy and the wealthy corporations. The word 'plutocracy' comes from the Greeks, and it is about wealth and power. And the wealth and power in this country are being exerted by the corporate sector, by the big banks, by the big polluters, and they are exercising their power to maximise their wealth and profits and greed at the expense of the community and at the expense of the commons. That is, the wellbeing of people and the environment are going west to maximise the profits of the big end of town. And if there is an area where the big end of town is profiting in the most extreme manner, it is the banks. The big four banks' annual profits are to hit a record of $30 billion. This is the most excessive bank profit anywhere in the world, and it is the big four in Australia that are making this money—$30 billion. Yet the government is saying, with the Labor Party now supporting them, that we should not take the money from the big banks so that we do not take it from the poor and the sick with the Medicare copayment, leaving the unemployed with no support, taking it from pensions, taking it from people who cannot afford it. No, we should keep on allowing the big banks to maximise their profits!

I want to go back to the global financial crisis, because that was the time that the Rudd government was in power, and the coalition opposed the stimulus package—the coalition opposed it. Part of the supports at the time was to support the four big banks, to guarantee them. They were too big to fail, and we needed to guarantee them, and that is what happened. But that guarantee is now key to them having this collective $30 billion by the end of the financial year, and it involves taxpayers taking on significant amounts of risk by underwriting potential losses in the event that these banks fail. As a result of this, the guarantee has reduced the risk profile of the four big banks. They can now borrow and have their credit much more cheaply than their competitors do, which helps to inflate their profits to the current level.

Not only is this producing these massive profits but it is unfair to all the other institutions in the banking sector. All the other smaller banks do not get this benefit—Bendigo Bank, Adelaide Bank. All of the small banks and other financial institutions and credit unions do not get this same benefit. A benefit provided by the Australian taxpayer has allowed the big four banks in Australia to maximise their profits. It is uncompetitive with the smaller banks in the banking community. The big four banks are amassing these mega profits and returns their shareholders and the government is saying, 'We need to raise revenue and therefore we are not going to go after the big banks to get it. Instead, we are going to go after the co-payment for the sick, we are going to go after the elderly, we are going to stop the unemployed being supported and we are going to after students and charge them more for their loans and we are going to go after families with family benefits. We are going to do all that so that we let the big end of town continue to maximise their profits.'

We heard from Senator Canavan that this was some sort of Greens costing. Well, no. Contrary to the coalition's view, the Greens actually worked to get the Parliamentary Budget Office established so that opposition parties of all persuasions and independents had a reliable source of costings. Senator Dastyari might like to know that it has been released publicly. The Parliamentary Budget Office has costed what this levy would produce for the Australian community. This money could be put into government funds so that you did not have to go after the sick and unemployed. In fact, you would get $16.8 billion over the forward estimates.

That is not me saying it. That is the Parliamentary Budget Office looking at the Greens' proposal to put a levy on the big four banks. Not only would it return $16.8 billion, but it would bring about a much more competitive banking environment, because it would bring the big banks more into line with the smaller financial institutions and other banks in Australia. There is the argument that, 'The big four will just pass on that cost to their customers.' Well, if they do, then the other banks will be more competitive with them. It creates a better, competitive banking environment. I want to put very firmly on the record that the Treasurer has been out there saying, 'But the Greens have not put any alternatives on the table.' Yes, we have. We have said the big banks. It is the Treasurer, Mr Hockey, and it is the Minister for Finance, Senator Cormann, who do not like the alternative. Just because they do not like it does not mean it is not a valid alternative.

Let's talk about what the big banks have given us back for the fact that we, the community, have guaranteed the four big banks in Australia. What have they done back? Let's start with the Commonwealth Bank. There was the shocking scandal where they ripped off the community with the commissions. What about ANZ? Well, a class action was taken against them because of their excessive late fees. This is why I say we have got a plutocracy in Australia: Senator Sinodinos worked for the National Australia Bank as the managing director for government; education; carbon solutions—which must be a five-minute job because he apparently does not believe in climate change— institutional banking and business banking Australia. He came from the National Australia Bank and into the Senate and what did we get? The FOFA so-called reforms. It was big banks trying to get commissions back on the agenda. That is what they wanted; they wanted their commissions back. They did not like the fact that the reforms that were put in place were not allowing them to maximise their profits. In the light of the disgraceful scandal from the Commonwealth Bank, it is appalling that the banks had that on the agenda. But it came back into this parliament and, what's more, the coalition have delivered that for them. How is that not just a revolving door between the Liberal Party and the big banks getting it back into the parliament and getting their commissions back?

Except this time they are not called commissions, they are incentives! It is just like bribes. We do not have those in Australia; no, we do not have bribes! We call them 'facilitation fees'. A facilitation fee is legal, but a bribe is not. The commission would be a bad thing, but an incentive would be a different thing altogether! The community is not stupid and the community is not fooled by this. The community sits back, gets the bill on the table and looks at their son or daughter who is trying to get to university, who has to face greater fees if the deregulation of university fees goes ahead—which we will not be supporting. They are looking at their son or daughter who have gone through university and are facing bigger costs in servicing their debt. They talk to their kids because the banks have charged them excessive fees if they have been late with their credit card payments. Here we have all that happening and at the other end of town we have this massive celebration.

Let me talk about ANZ on another matter for a minute. They tell us all they have special guidelines about respecting people in communities. There is ANZ's approach to human rights guidelines—guidelines to which ANZ professes to adhere. What a joke! They are also signatory to a global ethical banking code. But we discovered that when they went to Cambodia—there is a massive expanding market for Australian banks in Cambodia—and helped to finance Phnom Penh Sugar. As a result of an investigation, it was discovered that this company employed child labour and was involved in military-backed land grabs, forced evictions and food shortages for local families. What's more, the company was owned by a minister in the corrupt Hun Sen government in Cambodia.

When a light was shone on this, ANZ got out of it, but ANZ is refusing to pay any compensation to the people whose land was grabbed and whose houses were bulldozed. I am afraid that when we come to ethical banking codes and when we come to respecting people and communities, it does not stretch to the activities of the companies which they get involved with in Cambodia. That is just one example.

I just want to continue in relation to where we need to take this. On the issue of a fund, Senator Whish-Wilson when he spoke about this said that the Reserve Bank actually backs the idea of a levy and it is the Reserve Bank's proposition that it would go into a fund. It is not the Greens' proposition that it would go into a separate fund; it is the Greens' proposition that it would be a revenue stream for the government so that we raise money from corporations that can afford to pay since they make super profits—and no-one doubts that the four big banks in Australia are making super profits. They themselves announce record profits relative to banks anywhere else in the world year after year. We know they are making super profits. Why would we not take some of them and put them into health, education, community services and the sorts of things that support people who are doing it tough because they happen to be unemployed or happen to be sick?

The parliament has a responsibility to propose where the money should come from, and the Greens are very happy to do that. Senator Canavan has to recognise that what we are proposing is fully costed by the Parliamentary Budget Office and is a proposition for revenue raising. I put to this Senate that the only reason that Labor and the coalition will not support this is that they prefer to see the big end of town happy than to take money from them and provide necessary services.

That comes back to my point that we in Australia are no longer a democracy. Increasingly, there is a revolving door between big corporations and politics—people leave politics, get a position in business, go back into the administration of their political party, mega donations are made and then the parliament delivers for those corporations. You only have to look at ICAC in New South Wales to see this has happened, with both Liberal and Labor politicians taking kickbacks for approvals. These are appalling scenarios. I turn my attention to Mark Vaile, a former leader of the National Party and chair of Whitehaven, which failed to make proper offsets for the environment, but was not taken to court for it. The Commonwealth decided not to proceed with a court action on that, and so Whitehaven is going ahead with its Maules Creek mine. Mr Vaile just sold $440,000 worth of shares, and it is estimated that the remaining shares in his portfolio in Whitehaven coal are worth $5 million. This is a former National Party head. What does that say about life in rural and regional Australia that the National Party is supposed to stand for? I say that it is time—

Michael Ronaldson (Victoria, Liberal Party, Minister for Veterans’ Affairs) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order. Senator Milne has reflected on other senators in this chamber today and is making outrageous accusations of impropriety against other people and former members. I appreciate that Senator Milne has had a bad week, but it does not mean—

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Get to your point of order, Senator Ronaldson.

Michael Ronaldson (Victoria, Liberal Party, Minister for Veterans’ Affairs) Share this | Link to this | Hansard source

That she can use the licence in this place to attack others in the way she has.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

Thank you. I will ask you, Senator Milne, to be aware of the need to not reflect. Senator Sinodinos is a case where you have. Would you continue but would you also be mindful of that?

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. As I was saying, even the Customer Owned Banking Association has supported the idea that our current support for the big banks is an effective subsidy that has an estimated annual value of between $2.9 billion and $4.5 billion. Supporting the big banks in the way that the community and the taxpayers do is an effective subsidy valued from $2.9 billion to $4.5 billion.

There is a very strong case that, if you are going to get revenue for the budget in a reasonable way, you should put a levy on the big four for general revenue. Consistent with the International Monetary Fund's advice, that levy should be set at a portion of the advantage received by the big four banks. That is why we are proposing a 20-basis-point levy on their assets. We note that the UK has a banking levy, which is forecast to raise about $3 billion by the end of this financial year and was increased several times previously. The conservative government in the UK is very happy to have a bank levy for raising revenue, which is returning $3 billion, and the conservatives in the UK are more than happy to see that increase. Why is it that people in this parliament are not prepared to see a bank levy returning that kind of support to the budget?

There is no budget emergency in Australia. How can you say there is a budget emergency when you refuse to take a revenue stream that is staring you in the face? How can you suggest that you cannot find ways to raise money except by imposing a co-payment to go to the doctor, except by telling the unemployed that they can live on nothing and except by telling students they have to pay ridiculously high fees as a result of deregulation or increasing the rate of interest on their loans? This levy would bring competitive pressure to bear on the big four with regard to the other banks, and so I do not believe that they would be able to pass on the costs in the way that people critical of this levy are suggesting. It is squarely in line with Australian values and fundamentally about giving the banks and their customers a fair go across the board. The levy mirrors, as I said, similar levies in Europe. It raises substantial amounts of money. As far as I can see, there is no financial or moral argument that can be mounted against raising revenue from the big banks.

I am yet to hear from anyone in this Senate the reason that would not be so. This does not change any arrangements or oversight of the banks. It is not about undermining the regulatory environment. It is simply saying that a percentage of the support that we give to the big banks should be returned to the taxpayer by way of a levy and that that would provide very welcome revenue to government to deliver health, education and the support services that the community needs. The government says, 'No, we do not want a revenue stream that is staring us in the face. We would prefer to take this money out of the pockets of the community, the sick, the young, the elderly and the pensioners.'

Yesterday, we let them have another revenue stream from the mining tax. We could have fixed that to make billions. But no, the parliament decided not to fix the mining tax to get the billions from the Gina Rinehart's of this world. No, they can maximise their profits and push for abandoning the minimum wage so that they can just sit there in absolute greed. That is what it is.

Senator Ronaldson, I know that you do not like the idea of Gina Rinehart being described in that way, but I will say it because that is the truth of it. You are letting those people get off the hook while at the same time freezing the superannuation contribution out for seven years. Women, particularly those in their fifties, will be stuck on 9.5 superannuation guarantee percentage out for the next seven years. That means, into retirement, they will never get the benefit of the 12 per cent that they should have had from the superannuation contribution. This was delivered by the leader of the Palmer United Party who, himself, is a coal magnate. He got rid of the mining tax and the carbon price—another multibillion-dollar revenue stream.

All that the coalition—the Abbott government—has done is to say: no to a revenue stream from the big polluters, no to a revenue stream from the big miners and no to a revenue stream from the big banks. Instead, they can all maximise the profit, the wealth and the power that the government has to extract the money from the community. (Time expired)

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

I rise today to speak about the proposal for a levy on the big four banks. This debate is not only about whether we are prepared as a nation to impose a levy on one of the most profitable industries anywhere in the world but also about the sort of country we want to be. It is a debate about our national priorities. It is a debate about whether we truly believe in the fair go. It is a debate about political courage and vested interests. It is a debate about whether we want to continue to attack the poor, the sick, the old, the young or whether we want to address the revenue side of the ledger in this country. We have a choice. We are faced with the choice now. The choice is: are we going to cut spending—and what goes along with that is cuts to some of the vital services and supports that make this the country it is today—or are we going to radically alter what it means to live in a modern, prosperous Australia? I understand that if you believe that we are indeed faced with a budget emergency, that there is very little role for government, that people are slackers and that they do not have a job because they lack initiative and drive, then you would choose the path of cutting spending. I, personally, do not take that view and neither do my colleagues in the Greens.

Before we look at whether we need to cut spending, let us look at a few facts. I was fortunate to chair the Commission of Audit inquiry. As a result of the evidence that we took from academics, economists, unionists, business leaders and so on about the state of the nation's finances, spending and revenue, a very clear picture emerged. The picture is that, for two decades now, Commonwealth spending has been very stable. Far from being bloated and inefficient, our Public Service is very lean and efficient. The number of public servants in this country has been decreasing steadily over the years.

Our spending as a proportion of GDP is lower than it has ever been. I will say that again: the amount of money we spend through the services and supports that we provide to people is lower than it has ever been. In fact, it is lower than most other comparable countries. The same is true of our tax take. We are a very low taxing country. As a proportion of GDP, we are one of the lowest taxing countries anywhere in the world. At the moment, our tax take is lower than what it was under the Howard government.

The issue here is: are we prepared to take a sober look at these facts and recognise that far from the requirement to slash spending—because of some confected budget emergency—we need to look at the revenue side of the ledger. There are a number of areas that we could do that on. Before I get to the issue of a levy on the big four banks, why not take on the issue of huge subsidies to the fossil fuel industry: the $8 billion subsidy in the form of the diesel fuel rebate—that is, $8 billion over the forward estimates, a huge handout to the big end of town; the depreciation benefit is worth billions. There are a number of other areas that people have mentioned, such as the super tax concessions and the huge subsidies to the private health insurance industry. We are now seeing the proposal to float Medibank Private. There are a number of areas where savings are to be made and they do not involve cutting the services and supports that define who we are as a modern nation.

So the facts say that the spending is under control and the problem is on the revenue side of the ledger. That is why we have adopted a policy to impose a small, a modest, levy on the big four banks. Let us be very clear about this. These are some of the most profitable banks anywhere in the world. We have got a forecast of a $30 billion profit by the end of this financial year. Let us not forget that that is underwritten by the taxpayer, because the big four banks know that, if they were to achieve serious losses, it is the taxpayer who would make up the shortfall

It is effectively a huge subsidy and, as we heard earlier, it is a subsidy that is worth somewhere in the vicinity of $4 billion. The result of that guarantee, that subsidy underwritten by the taxpayer, is that the big four banks dominate our market. It means that the smaller banks do not have the capacity to borrow money as cheaply as the big four banks.

So why not impose a very small, 20-basis-point levy on the assets of the big four banks? If the choice is between a modest levy—recovering, in a sense, some of the cost of the effective subsidy being provided to the big four banks—and slashing spending on health, slashing spending on education, depriving young people who are unable to find a job of income support when they most need it, attacking superannuation and so on, why not choose to impose the levy? That is what this is about. This is not just a debate about a levy on the big four banks; it is about the choices we face as a nation. It is about what the role of government should be.

The Greens believe that there is a role for fair and just taxation and we believe that the role of government is to invest in education, not to strip money away from health care. We think the role of government is to invest in our young people, in skills and training, and to ensure that they have the support they need when they are unable to find a job. That is the role of government. If it is not, what are we doing here?

A levy would be win-win. It would not just be of benefit in raising revenue; it would be good for the banking sector itself. It is in line with Australian values, it gives customers a fair go and it is in line with what has been done right around the world—a similar levy has been implemented in the UK and in other European countries. It would give us better competition in the banking sector. It would go some way—not all the way, but some way—towards equalising the wholesale funding advantage that government gives to this hugely profitable sector.

Like anybody, I want a strong financial sector, a strong banking sector, because I know that is important for our future prosperity. This proposal is no threat to that. It just says that, due to the current economic environment, and because we have such dominant players in the market—where their dominance is being underwritten by, effectively, a cheque from each and every one of us—it is about time they paid a little back. It is win-win: more competition in the banking sector and more revenue to pay for the services we want. If we are talking about an end to the age of entitlement, an end to corporate welfare, why not do this? Why not acknowledge that the subsidy exists? We should recognise it and take steps to ensure that our banks are no longer the beneficiary of this corporate largesse—the same way we should be eliminating the enormous subsidies to fossil fuel industries, to private health insurance companies and to other areas of the economy.

One of the problems with proposals like this—and this has become true of many other reforms—is that it will evoke a concerted campaign from the banking sector telling us why the sky is going to fall in, why this reform is going to send mum-and-dad shareholders to the wall, why it is not possible. That says everything about the role of vested interests in this place. Australian democracy faces a huge issue at the moment. We are seeing it play out with the state government in New South Wales—this nexus between vested interests, the big end of town and decision makers. Decision making has been clouded by those relationships and it means that, when faced with choices—between, say, introducing a barrier to someone going to see their doctor and a reasonable revenue measure—governments, and particularly this government, will always side with the big end of town ahead of the ordinary person. That is one of the great tragedies we saw with this budget.

We are being told that government cannot afford to do the things that people want. We are being told that health care needs to be cut. We are being told that young people need to pay more for a university education. We are being told that we cannot afford to contribute as much into our superannuation as we were promised. We are being told that somebody who cannot find a job should be cut off income support for six months. We are being told that, if you need to have a blood test, the only way you can get it is by making a co-payment. We are being told that, if you want to see a radiologist, you are now going to have to pay for it—even if the doctor orders the test and insists that it is urgent. But none of that is written in stone. There is no law of nature that says that the only way you can balance the nation's books is by slashing spending and by continuing this sustained attack on the people who can least afford it. There is no law of nature that says that.

We are faced with choices. This government is making the choice to ignore the great opportunity it has at the moment to impose a very small revenue-raising measure on the big banks. In doing so, it is choosing not to side with the ordinary people. We will not stand for it; the Australian Greens will not stand for it. The reason we are having this debate at the moment is to demonstrate that there are choices, that there are constructive alternative proposals that could move this country in a fairer, more caring and more compassionate direction. Do you know what the good news is? The good news is that is exactly what people want.

The reason this government did not put its proposals to cut health care, education and so on in front of the Australian people before the last election is that it knew those things would be deeply unpopular. That is why it did not have the courage to forewarn the Australian people that it had this budget lined up—one of most brutal, vicious and cruel assaults imaginable on the most vulnerable people in our society: the poor, the young, the sick and the old. That is why we are having this debate at the moment: to show that we have a choice, to show that, in a caring Australia, we have a choice. Our choice should be to impose a levy on the big four banks.

Stephen Parry (President) Share this | Link to this | Hansard source

Order! The time for the consideration of general business has expired.