Lisa Darmanin (Victoria, Australian Labor Party) Share this | Hansard source

I will keep this brief, as many of the previous government speakers have said, I think, what needs to be said on the Pacific Banking Guarantee Bill 2025. With the Albanese government, we are making it clear. You can bank on Australia to keep the Pacific connected to the global financial system. We are serious about maintaining banking services in the Pacific because we are serious about the safety, security and economic development of our region. Without this action, large parts of the Pacific risk being cut off from the global financial system.

This bill will assist eligible Australian banks to maintain their Pacific operations by providing a guarantee which transfers risks of default on low-risk exposures to the Commonwealth. Essentially what it does is provide the foundations so that Australian banks can stay engaged in the Pacific. We know that Australian banks play an extremely vital role, providing critical services across the region. It amounts to a guarantee that transfers the risk of default on certain and specific low-risk exposures to the Commonwealth. It is worth remembering that Australian banks operate under strict prudential standards as set out by APRA, including requirements to hold substantial capital reserves. These high regulatory obligations mean that, without a government guarantee in place, banks would be far less willing to continue providing services in the Pacific. The bill provides for special appropriation on the Consolidated Revenue Fund, allowing the Commonwealth to pay any valid claims for the full amount of any guarantee in a timely manner and in the very unlikely event of any default. To be clear, this guarantee is not a subsidy, and banks will pay a fee for the guarantee. This bill is also not about any one country; it's about strengthening cooperation with our Pacific neighbours.

Having chaired the inquiry into this bill, I want to take the opportunity to thank the submitters and the witnesses who contributed to the inquiry. In examining the risks during the committee inquiry into this bill, Treasury officials made clear that a broad range of options was considered, including direct subsidies and even the Australian government itself providing banking services. The evidence was clear that this guarantee is the lowest-cost, lowest-risk way to achieve the objective. The inquiry also heard that the risks were assessed using commercial advice and consultation with the Department of Finance, arriving at a very low overall assessment with regard to risk. Importantly, the Commonwealth does not bear the full risk of the guarantee. The scheme has been carefully designed to be non-distortionary. As we heard from Senator Sharma just a moment ago, the banking landscape in the Pacific will not be impacted in the way that some correspondence in the inquiry raised concerns about.

This legislation is just one part of the substantial progress that we have made to secure the future of banking services in the Pacific. The government has worked with the Commonwealth Bank, and with the ANZ and Westpac, to establish operations in Nauru this year to secure their continued presence in the region. Through the multi-year Pacific partnership with New Zealand and the International Finance Corporation, we've also helped to roll out national payment systems infrastructure across Fiji, Papua New Guinea, Samoa, the Solomon Islands and Vanuatu. This means that these countries now have access to electronic payment systems that connect commercial banks with central banks and each other, enabling transfers and the settlement of government bonds.

Alongside this bill, the Albanese government is also investing in practical measures to address the root causes of debanking and to strengthen financial systems across the Pacific, including $2.9 million to the World Bank to support inclusive and secure digital identity infrastructure across Pacific island countries, $1.7 million to the Asian Development Bank to enhance regional compliance with anti-money-laundering and counterterrorism financing standards, and $1.7 million for the Attorney-General's Department to assist with criminal justice and law enforcement capacity in the region. We are also investing in developing the digital economies of our neighbours, supporting cheaper remittances and building safe and secure digital payment systems that lower costs for governments, businesses and bank customers alike. At the Pacific Banking Forum in Brisbane just last month, Treasurer Jim Chalmers announced a further $6.3 million to build better banking infrastructure across the region.

Taken together, this is a clear demonstration that Australia is committed to helping our Pacific neighbours build stronger, more resilient financial systems. The Pacific Banking Guarantee Bill is a practical, low-risk step that gives banks the certainty that they need to stay in the region. Most importantly, it ensures families and communities can continue to access their money and banking services with confidence. It supports Pacific communities here in Australia and across the Pacific itself, and it strengthens the deep partnerships that underpin our shared stability and prosperity.