Helen Coonan (NSW, Liberal Party, Shadow Minister for Finance, Competition Policy and Deregulation) Share this | Hansard source

I move opposition amendment (1) on sheet 5821:

Page 3 (after line 2), at the end of the bill, add:

7  Public Register of Government Borrowings

        (1)    The Australian Office of Financial Management must establish and update each month a register to be known as the Public Register of Government Borrowings.

        (2)    The register is to be maintained by electronic means.

        (3)    The register is to be made available for inspection on the Australian Office of Financial Management’s website.

        (4)    The register must be in a form prescribed by the regulations and must record the beneficial ownership, by country, of:

             (a)    all securities on issue by the Commonwealth of Australia; and

             (b)    any Commonwealth of Australia guaranteed issuance by any Australian State or Territory.

        (5)    As soon as practicable after the end of each quarter the Australian Office of Financial Management must publish on its website the register containing the details that were current as at the end of the quarter.

        (6)    The Australian Office of Financial Management must include in the Register each quarter a statement of the Office’s opinion as to the domicile of the beneficial owner of securities if nominal ownership is registered in a country other than the actual domicile of the beneficial owner.

        (7)    In this section:

quarter means a period of 3 months beginning on 1 January, 1 April, 1 July or 1 October.

8  Regulations

                 The Governor-General may make regulations prescribing matters:

required or permitted by this Act to be prescribed; or

necessary or convenient to be prescribed for carrying out or giving effect to this Act.

The basis for the amendment is to seek greater transparency in relation to the beneficial ownership of bond investment in Australia. Our inquiries indicate that both the United States and New Zealand have been able to maintain registers that provide information on the public record to people who wish to ascertain it.

Before addressing exactly what we are seeking in the establishment of a public register of government borrowings, I might mention that what we know is that by the admission of the Treasurer more than 65 per cent of all Australian government bonds are borrowed by people and interests offshore. That, of course, is consistent. It is not surprising, because Australia is a net exporter of capital, but we in the opposition have a concern that our borrowings are now on a scale that Australia has not done before. We are borrowing at a magnitude at which we have never previously borrowed. It is not the private sector at risk but taxpayers more generally, particularly if the buyers are governments offshore. We believe that it is in the interest of transparency—and, indeed, in the interest of the nation and the interest of taxpayers—that we know who is lending all this money to the Australian government. We are not saying that we have a view that there is any underlying inappropriate investor. We have absolutely no reason to believe that. But we think there is a mutual interest—indeed, a national interest—in more transparency.

We think that the establishment of a register and more public information, even if you were able to identify by regions the beneficial owners or the buyers of bonds, given that a lot of bonds are bought on behalf of nominees for ultimately beneficial owners, would enable much better targeting for the government. The government is going to be out in the market, issuing an extraordinary amount of debt, and we have seen instances—yesterday was one—where, for example, it was very difficult for the Queensland government to get their issue away in competition with the Commonwealth. It is not a good thing commercially for governments to be falling over their feet in the sequencing of how the bond issues proceed, and we thought that it would provide much better information for officials assisting the government to be able to properly place future bond issuances. We think that on two grounds there is a clear public interest in greater transparency, but it is also very difficult to see that there would be any risk to anyone by having greater information about who is actually lending all this money to the Australian government.

In the last 12 months, we saw the Chinese government, for example, naturally and understandably express concerns about the risk of their massive investment in the United States, particularly in US sovereign bonds. There is a risk not only to Chinese wealth from the devaluation of the US dollar but also to Australians if those bonds become far more expensive or if they are mispriced in the interests and protection of the Chinese investors. We think it is appropriate for us to find out what is happening in Australia. We need to know, for example, the extent to which major superannuation or fund management firms from, say, Japan are the investors. Is it countries that have investment vehicles domiciled in Bermuda? Is it just general investors from the United Kingdom? We think we need to find out and are interested to know who the major holder of Australian government bonds is. It may be the Chinese government. In saying all this, I want to stress that it is not our contention that any of this investment is inappropriate. The basis for our concern is that we think that there needs to be much greater transparency and that it has not been beyond the wit and capacity of other countries—I mentioned the United States and New Zealand—to provide much more information than the absolute wall of silence that we are greeted with when we actually seek this information from the Australian Bureau of Statistics or the Australian Office of Financial Management.

In this amendment we are asking that some best endeavours be made here and that the Australian Office of Financial Management establish and update each month a register to be known as the public register of government borrowings, that it be maintained electronically and that it be made available for inspection on the AOFM website. It will contain and record the beneficial ownership by country of all securities on issue by the Commonwealth and any Commonwealth of Australia guaranteed issuance by any Australian state or territory, that being potentially much more relevant as a result of the legislation we are supporting. As soon as practicable, the Australian Office of Financial Management will publish on its website the register containing the details that were current as of the end of the quarter. The details included in the register each quarter are also to have a statement of the office’s opinion as to the domicile of the beneficial owner of securities if nominees are involved and if nominal ownership is registered in a country other than the actual domicile of the beneficial owner.

We think that that is achievable. It is doable. It is eminently reasonable. It does not pose a risk to anyone and, indeed, it has the great advantage of shining a bit of light on who owns all this investment in Australia. We think that that is overwhelmingly information that is in the public interest. For those reasons we move the amendment.