Jason Wood (La Trobe, Liberal Party, Shadow Minister for International Development and Pacific Island Affairs) Share this | Hansard source

I thank the minister for his eagerness to support our great friends in the Pacific. I know his intentions are well and truly for the right reasons. It is the same on the side of the House; I acknowledge the member for Riverina, the former shadow minister for international development and the Pacific, who I know will be speaking after me.

I make the point that the previous government never neglected our Pacific neighbours; in actual fact, it delivered a record $2.7 billion in Pacific support in 2021-22 across aid infrastructure, health and security. We became the first and only country with diplomatic posts in every Pacific Islands Forum nation, and we expanded regional security through the $2 billion Pacific Marine Security Program, including the delivery of the Guardian class patrol boat—something so important for our region.

When it comes to this bill, the Pacific Banking Guarantee Bill 2025, we definitely support the bill in principle. We support the intentions of the bill. However, we believe it needs to go to the Senate Economics Legislation Committee because there are questions which need to be answered in regard to it. One of the first things I will talk about is that the local bank over there in the South Pacific, the Bank South Pacific itself, is ASX listed. I met with a number of the executives the other day, and they gave me a bit of a rundown of what they do; I will just go through it here. Ninety-seven per cent of the BSP is owned by the South Pacific, making it the fundamental driver of the region's prosperity. The PNG government owns 22 per cent of South Pacific superannuation funds and is the largest shareholder in the BSP, with 36 per cent. It is one of the largest employers, with 4,600 employees. One of the points I'd like to make is that we want to make sure their voices are heard. When it comes to remote areas in the Pacific, that's where, I've been advised, the Bank South Pacific does a lot of good work on the ground. When we had the situation where money was given back in COVID times to Red Cross, where they supported other organisations providing funding—we just want to make sure we don't, as a country, do the wrong thing by the Bank South Pacific. With the best of intentions, I think the bill needs to be examined further.

The Liberal-National coalition's track record in the Pacific has always been pragmatic: an infrastructure led engagement combining geopolitical interests with development goals. The coalition strongly supports the continuing commitment to the Pacific that began with early governments trying to address contemporary strategic and economic challenges. We know those challenges in the area, and I do acknowledge the work the government is doing. This should be an area with a bipartisan approach because it's in the interests of all Australians.

This bill empowers the government to guarantee Australian bank operations in the Pacific using the consolidated revenue fund to provide financial backing should Australian banks in the Pacific face significant risk or default. The aim is not merely to secure continued bank operations but to maintain vital financial links for the Pacific island countries to the global financial system, especially for remittance, aid, and trade. We heard the minister rightly talk about the PALM program. That's something where those from the Pacific islands come and work in Australia. It could be in aged care. It could be in agriculture. The money they raise goes back to the families back home.

The coalition strongly supports the intention of the bill. We have concerns about how it's been drafted—as I said, further examination by the Senate Economics Legislation Committee would be important. Can I just say one thing having previously been a member of government: we always think we've got it right and we're doing the right thing, but there are always unintended consequences, and I think that, in a good democracy, that should be played out to hear from those who may be impacted to come up with what could be a better outcome for all those involved. Understandably, market conditions have made the Pacific region commercially challenging for banks and resulted in the de-risking and withdrawal of banking relationships, threatening access to basic financial services for many Pacific communities. If Australian banks withdraw, others will fill the void with alternative financial networks that may lack transparency or fall outside the regulatory standards. That's why it is so important for Australia to be the good neighbour and good friend—not only for security but also for social reasons and supporting our Pacific neighbours.

While the bill's intention is worthy, several concerns deserve attention. The bill creates a special appropriation from the consolidated revenue fund that is unlimited in scope and time. While this offers negotiating flexibility, it also raises transparency and fiscal oversight issues, potentially exposing Australian taxpayers to unknowing risk. Remember: this is Australian taxpayers' money. The bill and its mandatory materials lack clarity on several fronts, including the definition of low risk exposures to be guaranteed. Treasury says that financial risk is low and that the future guarantees will be time-limited and capped, but there is nothing in the bill that requires that. There is limited clarity on how future guarantees will be managed. The process for dispute resolution between banks and the government currently has no explicit mechanism in the bill for parliamentary oversight or regulatory review of the guarantees and their impact.

Clearly, definitions are needed specifying the types of risk and exposures to be covered and outlining objective criteria eligibility to reduce the uncertainty risk of future disputes—as examples, tying guarantees to measurable commitments by banks, maintaining service standards, investing in digital banking improvement, supporting financial inclusion and capacity-building initiatives should be looked at. Banks should be encouraged to work with regional partners, as I've said before, and harmonise regulation and explore sustainable market based alternatives so the guarantees to bridge to longer-term solutions are not permanent subsidies. For example, work in Bank South Pacific, because I think that will be a good way to go forward.

As I was saying before, in the former government we had a great respect for our Pacific neighbours, and that contribution, whether it be from security or aid, has always been important. I know the ANZ Bank announced in March 2025 that they would be one of the first recipients of the Pacific Banking guarantee of a maximum of $2 billion. The 10-year bank guarantee supported its operations in the region. As I said, we think that is very important. ANZ will be paying an undisclosed annual fee to the government for the guarantee, but exactly how it will go hasn't been made public. Many Pacific countries depend on correspondent banking, where larger banks like ANZ help local banks process payments and currency exchange. Since 2011, correspondent banking relationships in the south Pacific have fallen by 60 per cent, so it's so important Australia steps in and does its role there.

The opposition are supportive, and we will not oppose the bill, but it should go to the Senate Economics Legislation Committee. There are questions that need to be asked. There is uncapped appropriation—no maximum dollar limit. There's no end date—the guarantee power is open ended. There is limited clarity on how the future guarantees will be managed. Why is there no limit. Why is there no sunset clause, and what oversight will apply to future guarantees? Again, to all the Pacific islands, we, as one, are supporting you.

See this speech in context