Monday, 19 June 2017
Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017; In Committee
For several reasons, the Greens will not be supporting Senator Xenophon's amendment. Senator Xenophon was at the committee on Friday and may be aware this question was put to the second-tier banks, which appeared in the afternoon and which included Adelaide and Bendigo banks, ME Bank and Customer Owned Banking Association. They have themselves, interestingly enough, come out and lobbied for the bank levy, so let's be clear about that. Twenty out of 25 of the Australian Bankers Association's members support this bank levy because they want to see increased competition in the market. So we got this from the second-tier banks, and you would have expected that, when you put to them, 'Do you support this levy also including foreign banks,' they might say yes, because actually these foreign banks are quite fierce competitors for our second-tier banks.
The answer was illuminating, and it is exactly my view. They said that the policy rationale, the underlying logic behind this bank levy, apart from increasing competition, is to pay the taxpayer back for its too-big-to-fail implicit and explicit guarantee to the big five banks. They made it very clear when they were asked. I asked the question: 'Do you support this levy?' and they said no, because it defeats the purpose. The foreign banks did not get a too-big-to-fail bank levy. In fact, the Australian banks, putting aside the Canadian banks, were the only banks in the world with this government guarantee.
That is quite extraordinary. As I mentioned in my speech earlier, you could easily come up with $50 billion worth of profits they had made for shareholders from this too-big-to-fail guarantee. We are only asking them to give back $5 billion of that. That is paying a premium on an insurance policy provided by the Australian taxpayer. The other reason, as I think Senator Cormann pointed out, is that the policy cannot be discriminatory against any bank. It is very clear: it sets a liabilities level of $100 billion, and if you go over that, whether you are a foreign or domestic bank, you pay the levy. I have explained this to Senator Xenophon. If we set $100 billion and then set a lower level for the foreign banks and leave the second-tier Australian domestic banks out of it, that will not work. It is almost certainly going to be challenged in international courts through state-to-state trade dispute mechanisms. It would be discriminatory against foreign banks. The only way it would work would be for all banks to have the same policy applied to them, which is the case.
I believe this foreign banks business has been thrown in by the big banks as a poison pill, and I am disappointed that we have fallen for what I think is the oldest trick in the book. The big banks are throwing this in there to try and kill this legislation, because they do not want to see more competition. I have a lot of respect for Senator Xenophon. It is interesting that in your speech you talked about supporting the smaller banks and that is one of the reasons why you will be supporting the levy. You talked about increased competition, but in a way you are contradicting yourself because, as Senator Cormann said—and I agree—what we want is more competition in the market, including from the foreign banks. Why make it harder for them? We want to make sure we have the most competitive market possible for all the banks.
There are a lot of good reasons why we do not support the inclusion of foreign banks. If somehow everybody in here were to agree that the liability should be $10 billion and not $100 billion, and that included all the banks in Australia, we would be happy with that. But this is the policy that has been set at $100 billion. This is an opportunity that we should not squander. We should pass this legislation tonight.