Sue Boyce (Queensland, Liberal Party) Share this | Hansard source

I would also like to speak about the Australian Business Investment Partnership (Consequential Amendment) Bill 2009 and the related bills we are discussing today. The Australian people have decided that this is actually known as ‘Ruddbank’, not as ABIP, and we need to examine the very intelligent take that Australians tend to have on government actions and government finances. This bill will provide refinancing of loans for commercial property assets. This will be limited to existing commercial property loans when a commercial provider of loans has withdrawn funding or is threatening the availability of refinancing by making that withdrawal. The Commonwealth will, in fact, end up providing an initial $2 billion—if this legislation is passed—into the ABIP fund in conjunction with the four major banks. ABIP will be able to issue up to $26 billion worth of debt. The debt will be guaranteed by the Commonwealth—not by the banks and the Commonwealth, but by the Commonwealth—and could leave Australian taxpayers liable for a minimum of $30 billion worth of debt. In the context of the debt that has been discussed ad infinitum since 7.30 pm last night and even earlier, I think we need to examine the very strong concerns of Australians about what Ruddbank actually means in terms of exacerbating the potential for debt in Australia.

We already have a budget that is $58 billion in debt this year. The government has actually blown $80 billion in 12 months and completely undermined the strong financial position that they were left by the former Howard-Costello government. We need, as a parliament, to be extremely careful about authorising this government—with its current record—to lend out another $26 billion, because it is Australian workers who will need to pay this debt on top of the $58 billion and the $220 billion to come. The coalition will be working to protect the interests of Australian taxpayers by opposing this legislation. Someone earlier referred to it as ‘precautionary’ legislation. We have no evidence whatsoever that foreign banks and others are pulling out of the market in any way, shape or form. So why do we need legislation to assist the government to raise yet more debt?

The Treasurer would have you believe that the ABIP fund would be part of their concept of building the nation. In fact, it is a part of the Labor Party’s non-stop efforts, when in government, to bill the nation. It is not about building the nation; it is about billing the nation for generations to come. Let’s look also at the fact that this legislation is meant to apply only to commercially viable properties. These will be the only ones eligible to access the ABIP fund. What does ‘commercially viable’ mean in the Australian economy? The government has a very strange idea about it. If it is commercially viable then wouldn’t funding be commercially available, rather than the company needing to rely on public finance? There needs to be very strong evidence that there has been a complete drought of private finance before the idea that this group will only lend to commercially viable projects makes any sense at all.

We have no evidence whatsoever to suggest that the finance for commercially viable commercial properties is not currently available or that there is any intention on the part of the financiers to withdraw from this market. I wonder sometimes what particular line of communication the big four banks that are involved in this project—the Commonwealth Bank, Westpac, ANZ and the National Australia Bank—have with the Treasurer. We have instance after instance of this government favouring the big four Australian banks at the expense of a sensible, functioning commercial market in Australia. They are sending out a signal right now to foreign banks with this attempted legislation.

They have created huge problems already for other organisations that borrow and lend money which were not initially covered by the $1 million guarantee. Of course they had to change that because the unintended and unforeseen consequences got up and bit the government yet again. The big four banks did not explain to the government what the consequences of the initial $1 million guarantee were going to be. I am not sure why the big four banks are the ones who have been favoured in this area by the government. But, once again, we have a government project that is going to cost a lot of money and is going to skew the functioning of the market, and this government has no idea whatsoever what the outcome of this is going to be. Why do the banks need taxpayer help to provide loans to what the market considers to be commercially viable? Where is the evidence that they cannot do that? If the properties were commercially viable, would not the banks provide funding through their normal business operations?

As I have mentioned, there is no evidence to date that the foreign banks are intending to withdraw in any meaningful way whatsoever from the Australian market. We just have not had that evidence. I note that the big four Australian banks, the ‘in-crowd’ banks, are still profitable. Westpac, the Commonwealth Bank, ANZ and the National Australia Bank generated a combined $8.83 billion profit in the first half of the 2008-09 financial year. If the commercial properties that would be the beneficiaries of this fund were commercially available then surely these banks, if they are to be the favoured children of the Labor government, are not struggling to the point of needing public money to lend for properties that will give a viable return on investment.

It is very concerning that we do not have any criteria, other than what one presumes will be developed by the government appointee and the appointees of the four banks, for what constitutes ‘commercially viable’. Why can’t the current lending criteria, at least, be included in this legislation so that we have some transparency around who decides and what they are deciding? We all know that every loan, irrespective of its assessment as commercially viable or not, has some degree, however slight, of risk, and in a free market—the market that this government is now attempting to skew—the market rewards those who take that risk with an appropriate return on investment. We have no idea what the returns will be and how the risk will be assessed given that the government’s involvement will change the attitude towards that risk, skewing the market.

We have a very good example in Queensland currently, with a company called BrisConnections creating the airport link, where people made assumptions about the safety and lack of risk in that product because there was state government involvement in it. We need to get upfront very early and easily what the risk is, how it is to be assessed and who, other than the government appointed and government favoured minders, will decide. I think we have seen quite enough already, particularly in the current debt-ridden situation, of what can happen when the government starts risking taxpayers’ money—Australians’ money—by lending to companies in order to prop up banks or commercial property lenders.

We saw what could happen when the government got involved in lending practices in the subprime crash in America, but I think we can come much closer to home to look at the sorts of things that go on when governments, particularly governments that have very little experience of how business operates, get involved in private enterprise. We could start, I think, with WA Inc. The Labor government’s involvement there continues to be a matter of shame and a paragon of ineptness and corruption. Between 1983 and 1991, the Western Australian Labor government lost millions of dollars by lending to companies that have gone into the Australian lexicon as shonky, such as Rothwells. There was also Westralia Square—and who can forget the Central Park property redevelopment? The Western Australian government made secret deals with the Bond Corporation to acquire Bell Group from Robert Holmes a Court. But none of this was sustainable and it all ended up in bankruptcy. Rothwells collapsed after being loaned $408 million by the Western Australian government. Bell Group received $155 million that they happily took off to the liquidators with them. There was $74 million that went to Westralia Square and $100 million that went into Mr Burke’s Central Park property redevelopment. Conservative estimates suggest that the Western Australian government lost $877 million of Western Australian taxpayers’ money by making those deals—and we are talking eighties and nineties dollars, not 2009 dollars. The royal commission in Western Australia said:

Some ministers elevated personal or party advantage over their constitutional obligation to act in the public interest.

Their motives ‘derived in part’ from Premier Burke’s established relationships and ‘his desire to preserve’ Labor’s standing with ‘the business community from which it had secured much financial support’. So we had a Labor government in Western Australia making unscrutinised, secret deals with business that were not accountable to parliament. The result was a disaster for the state of Western Australia and its citizens.

Let us have a look also at the Cain government in Victoria between 1982 and 1992, which thought it knew a bit more about how to run business and make a state rush ahead with development than the market and the experienced businesspeople of Victoria. The government thought it knew that. It cost $65 million in debt. It destroyed the banking system of Victoria and led to $65 million just in government debt that the Victorian taxpayers took years and years to pay off. That is to ignore the people who were damaged by the collapse of the Pyramid Building Society, which, just as with BrisConnections, the government’s support had led people to think was far more secure and far less risky than it was. The State Bank of Victoria eventually had to be taken over by the Commonwealth Bank, and dozens and dozens of Victorian government programs such as WorkCare, the Victorian workers compensation scheme, went unfunded for years whilst people worked out how to climb out of the crisis that John Cain caused for them in Victoria.

We already have quite enough examples of why Labor governments are not exactly the people you want to be handing the mortgage papers to. They have a very, very poor record. We already have a huge level of debt and now we have the potential for this to be added to—potentially added to in an unlimited way. Let’s have a look at the financial impact proposal in the explanatory memorandum attached to the bill. It points out that initially the government would be putting in $2 billion and paying $2 million towards the administration of the fund and that the government guarantee on any ABIP issues would be a maximum of $26 billion plus any interest that might be payable in relation to the principal debt. But let’s look further at this. It says:

The final financial impact of the arrangements will depend on a range of factors including: the value of loans approved;

Who is going to decide that? How transparent is that? Does the ACCC get to have a look at that? No. Does any governance body get to have a look at that? No, because the government have removed it from the entire governance system. It says:

The final financial impact ... will depend on a range of factors including: the value of loans approved—

unknown, and—

... the extent of defaults ...

and that should send shivers down the spine of every Australian taxpayer—all the people who, somewhat sarcastically, coined the term Ruddbank. We have looked at WA Inc. and we have looked at the efforts of the Cain government. I do not even have time to touch on the South Australian Labor governments’ efforts of the past, but the extent of defaults on loan is again an unsupervised, unmonitored effect. It goes on:

... the amount of dividends paid by the company to shareholders;

Let’s hope there are dividends to pay to the shareholders. The banks of course are in there. The system that will be used, I am sure, will be a good one, but again we have no idea what it looks like. It could also include:

... the guarantee fee and interest costs on the Commonwealth borrowings—

if a guarantee is required. The final financial impact of these arrangements is completely unknown, as is the governance arrangements that this system would have.

The coalition believe that this bill is ill-conceived and reckless. We believe that Australian taxpayers must be protected from even further rushed spending from this government. There has been no evidence given as to why this bill is needed. There is no current evidence whatsoever that foreign banks en masse are intending to withdraw from the commercial market. There are no governance procedures that would give anyone any satisfaction as to how this will survive, and there is also the fact that it applies to commercial property assets only. They specifically take out any rural development. So it is not about building a nation; it is just another part of the Labor government’s attempts at billing the nation.