Thursday, 27 February 2020
Banking Amendment (Deposits) Bill 2020; Second Reading
That this bill be now read a second time.
I seek leave to table an explanatory memorandum relating to the bill.
I table an explanatory memorandum and I seek leave to have the second reading speech incorporated in Hansard.
The speech read as follows—
This Bill will avoid doubt as to the meaning and intent of various provisions in the Banking Act 1959 in relation to bail-in.
Bail-ins are where money held in bank accounts is taken by the bank, and converted to shares in the bank.
This happens when banks are under extreme pressure during such events as the GFC.
The effect of the Banking Amendment (Deposits) Bill 2020 will be:
1. to confirm that the conversion and write-off provisions of the Banking Act I 959 do not apply to deposit accounts as defined in the Bill; and
2. to confirm that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts as defined in the Bill.
Since the passing of the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018, there have been doubts as to the meaning and intent of various provisions in the Act as to the extension by the Act of power to APRA to implement, authorise or direct bail-in to deposit accounts where the instruments relating to the creation of such accounts did not provide for a power of bail-in being the writing off or conversion of deposit accounts.
This Bill will remove those doubts by confirming that the conversion and write-off provisions introduced into the Banking Act 1959 by the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 do not apply to deposit accounts.
The Bill will further remove doubt by confirming that nothing in the Banking Act 1959 or any other Commonwealth legislation extends power to APRA to implement or authorise or direct the implementation of bail-in in respect of deposit accounts.
Deposit accounts are defined in the Bill and include those accounts commonly understood as current or cheque accounts conducted by customers with Australia's banks.
I want to make it perfectly clear that money in deposit accounts held by our banks on behalf of everyday Australians cannot be taken from them.
Our banks should not need bailing out. We have a banking oligopoly with the most profitable banks in the world.
Yet this Government produced legislation in 2018 that went right to the issue of bank bail-ins.
Is the Government worried about the banks reliance on real estate to support their loan book?
Certainly the value of Australian banks mortgage loan book has risen from $400 billion to $2 trillion since 2000.
2 trillion in mortgages?
Trillions more in exposure to securitised instruments.
Remember when banks lent to small business? Remember when they had a diversified loan book that insulated them against downturns and disasters?
Not in 2020 Mr President.
In allowing their loan book to become so narrow, our banks are displaying a level of recklessness that may just come back to bite them.
The Financial Sector Legislation Amendment (Crisis Powers and Other Measures) Act 2018 was designed to make sure that, should a catastrophic event occur, the damage would accrue, not to the banks, but to their customers.
One Nation is introducing this bill with a simple message: hands off the savings of hard working Australians.
I commend the bill.
I seek leave to continue my remarks later.
Leave granted; debate adjourned.