Bob Katter (Kennedy, Katter's Australian Party) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The annual outlay by the Australian people on shares is $1,300 billion. The annual GDP of Australia is $1,800 billion. So almost all of Australia's income, indirectly, is going on shares. I'm not going to explain the intricacies of that. But I think it's significant enough to warrant a very close look at what is going on in the share market in derivatives, which brings me of course to the issue of banking. When I went to university we were taught—and I think every institution in the world teaches—that most of our money comes from banking loans. Who provides this money? The banks. Is it a good idea that the wealth of Australia goes into the share market? That's a decision made by the banks, not by you or me, because we have to borrow the money from the banks to invest in the share market.

Let me focus on the banks specifically. At present they are oversighted by APRA. I will go no further than my own personal experiences with APRA and with ASIC. An auditing firm audited the books of an account for a sugar mill in North Queensland turning over $300 million a year. It was a very substantial business indeed. They were appointed auditors, and they sold the sugar mill for $2 million. The year before they had been offered $54 million and two years later they were paid $72 million for the sale of the mill. They were laughed at when they made the offer of $54 million. If you sell an item, as a liquidator, for $2 million, when there is a second offer on the table—the most solid of solid offers coming from two government instrumentalities and a neighbouring sugar mill, which was much bigger and much more economically solid—and you take the first offer of $2 million when you know that two years ago you were offered $54 million and it was rejected by you, the auditor, and then two years later it sells for $72 million—I mean, the then Treasurer was so shocked that he got involved. He ordered ASIC and APRA to involve themselves in providing justice in this case. The mill is worth $200 million. Every sugar mill is valued at $200 a tonne and this mill had two million tonne through it. That did no good, so Treasurer Swan rang them up again and ordered them again. Treasurer Hockey then came in and he ordered them to do it and then he ordered them again. They were both so shocked and horrified by the case.

Never a glove was laid until 39 little farmers put some money together, took them to court and got a $23 million out-of-court settlement. That will give you the level of staggering and towering incompetence by the auditors in this country. They are not to be trusted. The greatest collapse in the human history, the GFC collapse, touched off in the United States. Ernst & Young gave a clean bill of health to Lehman Brothers in July 2008, two months before its bankruptcy precipitated the global banking crash. The New York Attorney-General accused Ernst & Young of helping Lehman Brothers engage in a massive accounting fraud. The wonderful quote, which is actually the transcript of a conversation with Standard & Poor's and the people inquiring into what was the impending disaster, which was the GFC, says: 'You've given a AAA rating to every single one of the CDOs. Have any of you checked them out? Do they warrant a AAA rating?' She said, 'They are within the bounds of our business model.' In other words, they're all right. He said, 'Have you ever knocked back a AAA rating on a CDO, collectivised debt obligation?'

The bank sold a stack of mortgages—some of them really bad and some of them really good. They mixed them up together and gave them to Standard & Poor's and Moody's and said, 'Rate them.' They all rated them as AAA, and that was the cause of the trouble where trillions of dollars were lost and millions of people were thrown out of their homes in the United States. Some seven million people lost their jobs, and that was just in the United States. In answer to the question, 'Have you ever knocked back a AAA rating?' she said, 'If we were to knock back a AAA rating, they would simply walk up the road to Moody's—it's only a block away—and get the AAA rating from them.' In answer to the question, 'So, you've never, ever knocked back a AAA rating?' she sort of nodded.

Where the business to be audited picks the auditor and the auditor works for that business, by definition it's not an audit. By definition it can't be an audit. You're employing the person. What will the person tell you—that you're a bad guy? Well, not to my knowledge in history. I do know of one case—a case that occurred in Queensland involving a very big company, the 17th biggest company in Australia. In this case, a good friend of mine was the boss of Arthur Andersen. He said, 'I can't clear this company,' in the deal that was taking place, so they were sacked and they used another auditor. That's how the machinery operates. In this case, the government gave a guarantee, and so they should. I agree with the guarantee. It's all banks. I tell my wife to invest in the banks because the government wouldn't go bankrupt—well, that could be on the cards, too, I suppose, but I don't think it's so at the present moment. So invest there. The government has given you the world's safest investment. It's been provided for you. The government has given this in the knowledge that there is no auditing taking place except by an auditor employed by the bank. If you pay the piper then you call the tune.

This situation has got to come to an end. When we see this impending doom upon the Australian economy, where $1,400 billion a year goes to the stock market and the total national income is only $1.800 billion, we have a big problem on our hands. What you're looking at is a giant Ponzi scheme, and, like all Ponzi schemes, eventually it comes to a very, very bad ending. I speak with very great authority, having been the development minister in Queensland for nearly a decade: all of the development that took place in the great economic miracle of Queensland—the Bjelke-Petersen economic miracle— (Time expired)

Tony Smith (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

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

I second the motion and reserve my right to speak.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.