Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

Six years ago, in June 2011, I gave a speech to the Australian Bankers Association. They are not necessarily good friends of the Greens, but it was a speech I gave in the context of the world responding to the GFC and the growing revenue problems that were facing the government. I said that there was one thing we could do that would help level the playing field between bigger banks, which get the benefit of a big, implicitly 'too big to fail', subsidy from the public purse, and their smaller competitors, which would also generate some money for the public purse. Back in 2011, on behalf of the Greens, I called for a levy to be imposed on the big banks. We said: if we impose a levy on the big banks only, and do not make it an across-the-board levy that applies to every bank, we will limit the ability of the big banks to pass it on to customers—because if they try to do that people can just walk down the road to another bank or credit union that has not had the levy put on them—as well as generate a return to the public purse. At a time when government had been saying that the only way to get the budget back into balance was to attack people on welfare or perhaps cut funding from schools, we said: 'No. There is a better way of doing it. Stand up to those big banks that are making world-leading record profits.'

Why do the big banks make world-leading record profits? There are a number of reasons. One is the oligopoly that exists in Australia. The second, and most important, is the four pillars policy, which is effectively a too big to fail policy. What that means is that the government says: if any of the big four banks get into trouble, we will step in and bail them out. It means that the big four get to go overseas and borrow money more cheaply than their smaller counterparts because they know they have got government standing behind them, and that helps entrench their market dominance.

We saw this in practice during the GFC. When all of a sudden no-one could borrow money from anywhere, what did the government do? The government said to the banks, 'We'll stand behind you and guarantee your wholesale funding.' But they actually gave the big four banks a cheaper rate than everyone else. The big four banks during the GFC—everyone will remember who was in government then—got a cheaper rate than everyone else. As a result, the big four came through the GFC with a greater market share than when they went into it. They were able to take over a couple of smaller players. They came through with a greater market share and barely registered a blip on their profitability. The government stood behind them when times got tough and proved that in this country we have de facto public subsidies of the big four banks. The big four banks make a motza because the government, whether they are Labor or Liberal, stand behind them as a way of helping out.

Wouldn't every business in this country love to have the government standing behind them as guarantor every time they go and seek funds to expand their business? You do not get this in tourism. You do not get the government willing to help you out if you find yourself in a tight spot when there is a financial crisis or things get tough. You do not get it in manufacturing. But you do get it in the finance sector, for some reason. You do get it if you are one of the big four banks. That is why they have such a stranglehold on this place and that is why back in 2011 the Greens were the first to propose that we put a levy on the major banks.

At the time, we tried to get the other parties to agree to it. We tried to get Labor, who were in government at the time, to agree to it and they said no. They said they would only consider levies that applied across the board, to which we said: 'That way you can just pass it on to the customer. What is going to stop them passing it on to the customer?' We tried to get the Liberals interested in it, and they said: 'The Greens always want to go and tax the big banks. We need to do other things to balance the budget. We can't keep attacking the big banks.' They did not mention that, on the side, the big four banks were some of the biggest donors to their electoral campaigns and that also there was a revolving door between members of government, their staff and the big banks themselves—a practice that continues to this day.

But a good thing about this place is that a good idea will always have its time, because the pressures of declining revenue for the government have been too big to ignore. The government told us for a couple of years that there was no revenue problem; there was only a spending problem. But anyone can see that if we are to fund the services that Australians rightly expect we are going to need to deal with the revenue side.

In exactly the same way, before the last election the Greens were the only ones calling for legislation to protect penalty rates in law, in the event that the Fair Work Commission cut them. We were howled down by Labor and Liberal at that stage. We were told, 'Don't move to protect penalty rates in law, because it's not going to happen; you're not going to get a cut in penalty rates from the Fair Work Commission.' According to the Leader of the Opposition aliens might land from outer space sooner than penalty rates being cut. But we said, 'No, there is a need to protect penalty rates in law.' We were howled down at the time, but it turned out that we were right and that people's pay in this country was under attack.

Then, as it became apparent that parliament had to do something, Labor came in behind the Greens' position. I welcome that. It was not the position they took to the election, but it is good to change your mind when it means you can protect workers, especially when you can protect young workers. So I am equally pleased that the government has finally been mugged by reality and has seen the light and realised that there is a case for standing up to the big banks. There is a case for saying, 'You're making world-leading record profits; you're making them in part off the back of public support; the public is entitled to a little bit back.' There are fairer ways of balancing the budget than what the former Prime Minister did at the time that we were arguing for the bank levy. The former Prime Minister, the member for Warringah, said, 'No, I am not going to have a bank levy—I am going to increase the cost of people going to see the doctor; I am going to put up the cost of going to university; and I am going to cut funding to schools and hospitals.'

That was there alternative back then. The people and the parliament stood up to him and his government then, and said, 'Go back to the drawing board—there is a better way of doing this.' We changed the Prime Minister, and it took a little while but we changed some of their policies as well. Some of those measures to try and balance the budget and raise the revenue that is needed continue, unfortunately, and in this budget, of which this bill is a part, we are having to fight with the government deciding that they will attack universities and students to try and raise revenue.

This bill is an admission that the Greens were right. This bill is an admission that you can stand up to the big banks and ask them to pay a little bit more, and the world will not end. In fact, it will mean that there is a bit more space in the budget for to pay for schools and hospitals, and you do not need to take the axe to the young, the old, the sick and the poor. We are disappointed that the government has not adopted our original proposal, because our original proposal would have raised significantly more than what is being proposed here. Our original proposal would have brought in around $2 billion to $3 billion a year. Our original proposal was based on what those arch-Marxists, the IMF, thought was a fair place to set the bank levy. The IMF said, 'Yes, there are these things called too-big-to-fail banks; yes, they do deserve to have to pay a bit more. Set a levy at around two-thirds of the implicit subsidy they get, and you will not only level the playing field, you will make sure that the banks don't engage in risky behaviour because they know, or they think they know, that they have the government standing there behind them.'

If we had set the levy on the basis of a bit of rigour and logic and guidance from the likes of the IMF, we would be raising substantially more, and it would put us in line, on average, with the kind of levies that are in place elsewhere around the world. It would not have been that big a stretch. If we are going to stand up to the big banks, let's do it properly; let's do it at the level that others have recommended. If we had done that—if this bill had taken the full Greens proposal and run with it, instead of just half picking it up—you find that we probably would not have to be cutting university funding in this budget. We would not have to have a Medicare freeze that continues for a fair bit longer than the government would have us believe. We would not have to have people on Newstart continuing to live below the poverty line. We could give people on Newstart the pay boost that they deserve rather than leaving them in a poverty trap. Had the government had the courage to do that, not only would the budget be in a better position but everyone in this country would be.

As I say, the government has been mugged by reality. They have been mugged by the budget reality. They have been mugged by the reality that the big banks are in an incredibly privileged position. But they have also been mugged by another reality, which is that the public has decided enough is enough. The public is crying out for politicians who will stand up to powerful interests and make them contribute their fair share. Again, it is clear in this respect that the banks have been getting away with murder, financially speaking, and that they have been making massive profits off the back of public subsidies, and people have said it is about time that they paid a bit of a contribution. So the government has had to have a nod towards that. They have not gone the full way by putting in place a levy that would be meaningful and would address to a fuller level the support they are getting, but at least they have gone some way.

What that leaves is a gap. This levy does not fully cover the implicit subsidy that the big four banks, and potentially Macquarie Bank, get. This levy does not fully recoup the implicit too big to fail guarantee, and that is something that we should remember the next time a financial crisis hits. No-one within this place or within the banking sector predicted the GFC, but the banks were very quick to come out and say, 'We'd like a bit of support, otherwise the whole financial system in Australia is going to freeze.' This levy does not fully account for the support they have been given or the support they are going to continue to receive. That is important because there is every chance that, if there is a crash in the housing market, the banks will come cap in hand again to this place and say: 'We are in trouble because we have written so much of our loan book for mortgages that have now helped push prices up beyond the reach of most young people and many people generally. We are in all sorts of financial trouble. We need your help.' We should remember when that moment comes that this levy does not fully account for all the public support that those banks get. Some of those banks have said, 'We'll never come back asking for help, and we didn't ask for it the first time around,' but they did not turn it away when it was offered. They quite happily took up those generous rates of the wholesale funding guarantee and allowed themselves to come out the other end of the GFC in rude health.

Hopefully, this is the start of government being a bit more suspicious next time one of those big four banks comes along, because we have admitted by this bill that they do enjoy a subsidy. We have not recouped the full amount of that. If we are going to have a four pillars policy in this country, then at least what this bill does is start to call a spade a spade and say, 'It is time for you to pay some of it back.' But there is a lot more that needs to be paid back. People rightly know the big banks have been making world-leading record profits. They can afford to pay a bit more, and, until we fully account for the subsidy that they have been getting, there is no case for the government to ask students to pay more, there is no case for the government to ask people to pay more to go and see their doctor and there is no case for keeping people in poverty by keeping Newstart so low while the banks still get away with not fully paying their fair share of tax.

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