Monday, 19 June 2017
Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017; Second Reading
I rise to speak against the government's new bank tax. The behaviour of the banking industry in this country is a disgrace. However, this new tax is not the right response to it. To quote Yes, Minister: 'Something must be done. This is something; therefore, we must do it.' That is the argument used to corral support for half-baked and ineffective ideas. Fortunately for all of us, there are a few differences between One Nation and Sir Humphrey Appleby. This tax is something, but we must not do it.
Our banks are busy ripping off and exploiting consumers. They are getting rich at the expense of ordinary people. The government's response is to let them continue but to take a bit of the loot for themselves. People are looking to the government to protect them from predatory practices. They want structural reform of the sector. What we get instead is this new tax. It is like calling the cops to deal with a thug demanding protection money, but, instead of arresting the thug, the policeman just puts his hand out to get his cut. So, yes, something must be done, but this is not that something. This is a lazy, ugly, cheap solution that will hit shareholders and superannuation savings without fixing any of the real problems.
I challenge the government to, instead of bringing in this tax, address some of the real structural issues affecting the banking sector. Most people do not realise this, but the government regulators actually allow the big banks to help write their own regulations. Smaller banks get told how much they are allowed to borrow and how risk-exposed they are allowed to be. This is prudent; it protects against financial instability. But this same system is not applied to the big banks. Instead, they are allowed to use their own formulas and algorithms to determine how risky their loans are and how much capital they need to hold to be stable. It will surprise no-one that these internal calculations invariably result in a favourable outcome for the big banks, giving them a competitive advantage and allowing them to earn better returns than their smaller competitors.
The upshot of this sort of favourable treatment is not only the big advantage for the banks but more risk and instability for the system as a whole. A stress test conducted by the Australian Prudential Regulation Authority in 2004 found that the smaller banks held sufficient capital for housing to withstand an economic downturn, but the bigger banks used their own risk formulas and did not. But, of course, the big banks do not mind taking these sorts of risks. That is because they know they are too big to fail. The economic damage to the country would be so severe if any of them were to collapse that no government would let that happen. I know that, if things really get dire, it will be us bailing them out and paying the cost.
The government needs to look at structural reforms that prevent the big banks from shifting the burden of risk onto the public purse. This tax does nothing of the sort. The government needs to address the horrendous behaviour of some of these institutions, where we see people's properties being foreclosed on although they have not missed a single payment. More than anything, the government needs to hold a royal commission into the banking sector to expose and examine these predatory practices in a clear, systemic way.
With this tax, the government want to pretend they are finally getting tough on the banks. They are doing nothing of the sort. They continue to let the banks run rampant whilst skimming a little off the top of the banks' ill-gotten gains. This tax will do nothing to fix the problems facing our financial system. It will just make it uglier, clumsier and an even bigger mess for the people who eventually decide to clean it up.
One Nation will not support the bank tax. Come back to us with some real solutions to the real problems. Until then, I am afraid we will have to say, 'No, Minister.'