Sue Lines (President) Share this | Link to this | Hansard source

I believe Senator Paterson was in continuation; I'm not quite sure if he had concluded his remarks.

Ellie Whiteaker (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Pacific Banking Guarantee Bill 2025. While this bill may look like a simple technical banking measure, really it's about something much larger. It's about keeping the Pacific connected to the world, safeguarding prosperity and reaffirming our role as a strong partner in the region.

Across the Pacific, access to banking services is under real pressure. Over the past decade, around 80 per cent of correspondent banking links have disappeared. This means it has become harder for people to send money home, harder for businesses to trade, harder for locals to access banking and harder for governments to deliver aid programs and financial flows.

ANZ has already closed 10 branches in the region in just five years. Westpac has limited their services. Bendigo and Adelaide Bank has withdrawn from Nauru and smaller institutions have exited the region altogether. These withdrawals affect families, small businesses and entire communities that rely on banking services. They are changes really felt by Pacific towns and villages when the only bank branch shuts in doors. Pacific leaders have told us time and time again that banking access is one of their top priorities. They know that without it cross-border payments dry up, trade dries up and economic security weakens. In the Pacific, in countries like Tonga, Samoa and Fiji, remittances are a vital source of national income.

This bill establishes a Pacific banking guarantee, giving eligible Australian banks the certainty they need to remain active in the region. It creates a special appropriation from the Consolidated Revenue Fund, ensuring that, in the unlikely event of a claim, the Commonwealth can step in immediately and in full. Guarantees are confined to low-risk exposures. Banks will pay a fee for the protection. Independent assessments show the likelihood of a payout is very low. This is a balanced and carefully designed mechanism to keep financial services in place.

The urgency on this is clear. The Commonwealth has already reached a landmark agreement with ANZ, the bank with the largest Pacific footprint, covering nine nations: the Cook Islands, Fiji, Kiribati, Papua New Guinea, Samoa, Solomon Islands, Timor-Leste, Tonga and Vanuatu. This 10-year, $2 billion guarantee secures ANZ's presence in those countries.

ANZ has made strong commitments in return: investing a further $50 million in modernising its Pacific banking systems, continuing to facilitate around a quarter of all transactions into the region, sustaining the correspondent banking limits that allow funds to flow through the region reliably and transparently, and maintaining fee-free remittance services through its retail digital channels for the full life of the guarantee—meaning it won't cost a cent to send money where it's needed. These commitments go directly to the needs of people in the region, lowering costs, improving access and keeping the financial system open, honest and connected. Keeping Australian institutions engaged means keeping Pacific nations connected to banks that are regulated to the highest of standards, accountable to independent authorities and embedded in the values of openness and fairness.

This message was echoed just last week in Nauru when my colleague Assistant Minister Nita Green opened the Commonwealth Bank of Australia. She underlined that losing banking access has serious consequences for families, communities and governments alike. This was a milestone in our shared journey of partnership, resilience and regional cooperation, as well as a significant achievement under the Nauru-Australia Treaty. That's why Australia is working with banks and Pacific governments to maintain these services. For our Pacific friends, it is about building a safer, more stable and more prosperous region. It's about ensuring that Pacific workers in Australia can send money home to support their families. It's about enabling governments and businesses to trade, invest and grow. It's about protecting our region from economic volatility.

Foreign Minister Wong has often said that Australia's role in the Pacific is to listen and to respond to the priorities of our neighbours. Access to banking is one of their priorities. By supporting this guarantee, we are acting on what Pacific leaders have asked for. It's practical, targeted support to keep their economies resilient. The banking guarantee is just one part of our government's wider engagement with the Pacific. It complements the new Nakamal Agreement with Vanuatu, which responds to Pacific priorities such as climate change and mobility. It sits alongside the $125 million REnew Pacific program, which is delivering renewable energy projects, improving energy security and creating jobs. It is consistent with our defence cooperation, including the exercise Pacific Partnership 2025 and joint work on disaster relief and humanitarian support.

All of these initiatives reinforce the same objective—strengthening the resilience, stability and prosperity of the Pacific region. The Pacific Banking Guarantee Bill 2025 is a careful and practical measure. It underpins the financial stability of the region, supports continued access to banking services and strengthens our role as a reliable partner of Pacific nations. For families and businesses in the Pacific, access to banking is essential. It means being able to save for education, send money to relatives or secure credit to keep a business running. This bill ensures that Australian banks can keep providing those services in a way that is sustainable and consistent with our national interest.

Nick McKim (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Greens will be supporting the Pacific Banking Guarantee Bill 2025. We'll be doing so as we do recognise that there is a need to ensure access to adequate banking and financial services in the Pacific, including for Australians visiting the Pacific and Australian businesses operating in the region but also for local folks in the Pacific region. But we do have some reservations about this bill, and I want to place on the record some of our concerns.

Firstly, we are concerned that the guarantees in this bill only apply to banks headquartered in Australia. This, of course, gives banks headquartered in Australia an unfair competitive advantage over local banks operating in Pacific countries. We've already got a major bank oligopoly in this country, and the last thing that Australia should be doing is seeking to export our oligopoly to other countries. The oligopoly in the banking sector in this country does not serve Australians well. It reflects an economy-wide concentration of market power that has been underway in this country for many decades. That's the first concern we've got.

Secondly, we're concerned that the bill doesn't cap the amount of money that can be made available under any guarantees. Treasury has provided an assurance that there is a low risk of a guarantee being utilised, but it remains the fact that it is simply not good practice for the public to have to bear the risk for a potentially unlimited liability in the private sector. The neoliberal brainworms have consumed this country for the last 50 years, and they are showing no signs of slowing down in terms of our policy development process.

Another concern we have is the lack of requirements in the legislation for transparency in relation to the terms and conditions of any guarantee made under this legislation. The term 'commercial-in-confidence' has been deliberately used to stymy the public's right to know in a range of circumstances and contexts over many decades in this country—and here we go again. Commercial-in-confidence is often claimed by corporations in a way that they are not required to justify, and in a way that is simply slavishly accepted by the major parties in this place, who are so cosy with those big corporations for two major reasons. Firstly, those big corporations donate so massively to the Labor Party and to the Liberal Party and to the National Party; and, secondly, many people, even those who currently sit in this place, know that they'll be able to roll out of a career in politics, into a post-politics career in the boardrooms of those very same corporations. It's the old, 'you scratch my back and I'll scratch yours.' You scratch their back while you're in this place by accepting their commercial-in-confidence claims, and they will scratch your back once you get out by whacking you onto a couple of corporate boards.

A diverse variety of stakeholders have called for more information in relation to the guarantees to be released publicly, including Bank South Pacific, the Pacific Islands Forum Secretariat and the Director of the ANU Development Policy Centre, Professor Stephen Howes. I asked the minister, in her summing up, if she could specifically address why the government has decided not to provide for a framework to allow for the provision of more information in relation to guarantees to be released publicly, particularly in light of the calls of people like the Pacific Islands Forum Secretariat. We're supposed to be good Pacific neighbours. I'll talk a little bit more about some of the things that we're doing to our Pacific island neighbours a bit later in my speech, but, given that we are basically sinking a lot of their countries by approving new coal and gas mines hand over fist, I would have thought the very least we could do was heed their calls for more transparency in relation to this legislation.

To be clear, the Greens are calling on Labor to legislate to ensure that the terms and conditions of each guarantee are made public, including the value of the guarantee; what the guarantee specifically covers; fees, if any, paid by the recipient; and whether the recipient meets or has met their obligations under the guarantee. That is a basic minimum transparency standard, and there is precisely no reason why legislation to frame those measures should not have been included in this bill. You can't blame the Greens and, for that matter, the wider Australian public for having reservations about the Albanese Labor government's relationship with big Australian banks. Labor has shown time and time again that they will do whatever it takes to support their corporate donors, including the big four banks, even when the interests of the big four banks run counter to the interests of the Australian people.

Let's take one example from the last parliamentary term. The Greens came to an agreement with the then assistant treasurer, Mr Jones, to impose million-dollar fines on dodgy bankers who failed to uphold their obligations around probity within the banking sector. As soon as the bank executives got wind of what was going on, the calls started coming in, right up to and including the Prime Minister's office, from no less than the head of the Australian Banking Association, Anna Bligh. By the way, Ms Bligh is a former Queensland Labor premier—a living, breathing example of the rolling door that I was just talking about, the revolving door, whereby senior, major party officials, MPs and, in the case of Ms Bligh, a premier in this country roll more or less straight out of the parliament and straight out of the Premier's suite in Queensland into a job like heading up the Australian Banking Association. What happened? Labor backflipped and reneged on their agreement with the Greens. That was a naked display of power. The Australian Banking Association didn't care who saw them pulling the Labor Party strings, and the Labor Party, the shameless Labor Party, didn't care who saw them acquiescing to those tugs on their strings from the Australian Banking Association. It was a naked display of power, and it revealed who actually run this joint: vested corporate interests.

Late last term we also saw the former assistant treasurer introduce the Scams Prevention Framework Bill, supposedly to combat scams. But, of course, after heavy lobbying from—guess who?—the major banks in this country, the final result was a bill that let those very same big banking corporations off the hook and did next to nothing to stop people from being scammed. To make the scams framework even slightly more useful, the new assistant treasurer, Mr Mulino, needs to designate different sectors of the economy, including banks, telcos and social media platforms, and develop codes and rules for each sector. To date, we've heard radio silence from the Assistant Treasurer, and I politely suggest to him that he get active in this space.

The major banks in this country operate in a sweet, sweet oligopoly. Their massive market power and their huge sway over the old political parties in this place give them free rein to squeeze their customers for every last dollar, and as a result they are some of the most profitable banks in the world. They rake in billions in profits every year, they award their executives multimillion dollar salary and bonus packages, and the long-suffering Australian consumer loses out. It's a story we've heard time after time after time.

We're in the midst of the profit reporting season at the moment. CommBank are the first of the big four banks to report their profit for the last financial year—over $10 billion of profit. That's CommBank's highest profit in over a decade, and their executives are going to get handsomely rewarded for that profit. That profit is, in significant part, recorded off the back of an escalating housing crisis in this country.

Remember, when COVID first hit, the Reserve Bank panicked, printed about $400 billion and handed it over to the banks on extremely favourable terms. Because the RBA did not direct the flow of that credit, which they have the power to do under the Banking Act—and that power remains, I might add, thanks to the Greens, in the face of Labor's attempt to get rid of that power in the last term—so the banks, of course, turned around and lent it into their highest margin products, home loans. And what happened? We saw yet another housing price bubble, pricing even more young Australians out of the housing market.

The RBA has admitted on the record, and I've got to give Mr Lowe credit here—the former governor of the RBA has admitted on the record that they printed too much money. By the way, CommBank is the same bank that, just weeks ago, refused to refund low-income customers after ASIC found the bank pocketed hundreds of millions of dollars by charging low-income customers excessive account fees. The reason the major banks operate with utter disregard for ethics is that they know they're protected from adverse consequences by the political oligopoly in this place—the Labor, Liberal and National parties.

I now want to briefly talk about climate change. It is of course expensive and financially risky to establish banking infrastructure in the Pacific. The risk is only increasing as the region is battered by more frequent and severe extreme weather events that are driven by the climate crisis. In the Pacific region, cyclones, flooding, storm surges and sea-level rises are making life more precarious for business communities and, in the context of this legislation, the economy of the Pacific. But let's be clear. These extreme weather events are not natural. They are delivered by human-induced climate change, and what is the Labor Party's response to this—including right up to the level of the Minister for Foreign Affairs, Senator Wong? Their response is that we should be good neighbours to the Pacific region. What is the Labor Party doing? They are continuing to log our native forests, emitting massive amounts of carbon. They are continuing to permit unrestrained land clearing, particularly in Queensland, which releases massive amounts of carbon. And they are continuing to approve new coal and gas projects hand over fist.

The Labor Party is culpable for the extreme weather events that are destabilising the economy and societies, and that are putting lives at risk in the Pacific region. If Labor wants to be a good neighbour to the Pacific, the most important thing they could do and the way they could demonstrate that to the greatest degree possible is to stop approving new coal and gas projects, stop publicly funding the burning of fossil fuels and stop publicly funding the logging of our precious native forests. (Time expired)

Jessica Collins (NSW, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Pacific Banking Guarantee Bill 2025. I do so in support of its broad objectives, but also with some concerns about its transparency and the adequacy of its guarantees. The purpose of this bill is to ensure that Australian banks or authorised deposit-taking institutions continue to have operations in the Pacific region. I note the Treasurer's statement that the aim of the bill is 'to help ensure Pacific nations have access to correspondent banking relationships, CBRs, which provide important connections to the global financial system'. These CBRs are vital to both Australia and Pacific nations. They facilitate international trade and allow Pacific island countries to receive aid money and remittances, attract investment and grow their economies.

I liken CBRs to the plumbing of banks. They let money flow from one country to another. Without CBRs, Pacific island countries are completely financially cut off from the rest of the world. They'd have no stores of foreign currency and wouldn't be able to trade, for example. Remittances, especially, are a lifeline for household incomes of Pacific countries. Remittances are defined as 'cross-border transfers of funds'. Put simply, people remit earnings to their family and friends back home. Small businesses remit frequently across borders too. As well as providing essential income, remittances put more food on the table. They alleviate poverty, improve nutritional outcomes and are associated with higher school enrolment rates for children in disadvantaged households. The decline of CBRs is not just a financial issue but a socioeconomic one. Australian banks are the critical conduit through which the remittances of Pacific island workers are processed. Their sustained presence in the homelands of these workers is a must.

Over the past decade, financial institutions have dropped a significant proportion of their CBRs in the Pacific. For every five banks exiting the Pacific, four are Western—that is, providing services in US dollars. So 80 per cent of the CBRs withdrawing are carrying the currencies that Pacific island countries need. The process is known is as derisking, and banks are withdrawing CBRs from the region because of small and shallow markets, low profits, high cost of compliance and increasing risk. These all contribute to banks deciding that the business case of operating in the Pacific does not stack up. Smaller Pacific nations with little capacity to combat financial crime are particularly impacted by this alarming loss of banking relationships. Moreover, increasingly stringent regulations on anti-money-laundering and combatting the financing of terrorism have driven the derisking of Western banks further.

Pacific island nations are close friends of Australia, and now is the time for our government to step up and ensure the provision of adequate banking services in the region. Our banks must remain the trusted go-to for our Pacific family. If Australian and American banks continue their retreat from the Pacific, they will leave a wider vacuum for banks of other nations to fill. Banks with lower standards on financial crime taking the place of Australian banks will only increase the risk of doing business there, pushing more good banks out of the region.

I welcome the objective of this bill to counter the risk of Australian banks leaving the Pacific, by making conditions more favourable for Australian banks to operate in the region. The bill seeks to do this through two key measures—firstly, by allowing the Commonwealth to enter legally binding guarantees with banks that could act as a safety net for their operations in the Pacific; and, secondly, by ensuring that the money from the consolidated revenue fund can be used to pay out funds to Australians banks under the terms of a Pacific banking guarantee.

The bill sees these two measures as allowing Australian banks to mitigate the expected risks and constraints of operating in the smaller markets typical of Pacific island economies. Remember this: risky markets make it hard for banks to sell the business case to shareholders. The ANZ banking group announced it would be the first recipient of a Pacific banking guarantee, a maximum $2 billion, 10-year bank guarantee to support its regional operations. This is the first such guarantee, and it is contingent on the passage of this legislation.

I am fully on board with the intention of this bill to support Australian banks in the Pacific and to counter the risks of banking withdrawals. These are worthy goals. I do, however, have concerns about the lack of clarity with some of the bill's provisions. First, I am concerned about the transparency on how taxpayers are made aware of when a guarantee is triggered. There is also no specificity on how much gets paid out, on what the red line will be. The bill in its present form provides for an uncapped appropriation with no dollar limit and no end date. I'm not convinced taxpayers will be informed well, if at all. There also needs to be transparency on why this guarantee is needed, when the risk of needing the guarantee is deemed by Treasury to be low.

I'm also concerned about the locking in of fee-free remittances for 10 years without assurances from ANZ that the markup on the foreign transfer for Pacific Islanders won't be exorbitant. Will the government scrutinise this commitment to fee-free remittances under its annual review and get assurances that Pacific workers aren't getting ripped off? I recognise that this is a commercial venture, but we still need to protect workers from excessive mark-ups on the foreign exchange. The absolute lack of transparency on the total cost of remittances, not just the fee, and the lack of competition makes the Australian-Pacific remittance corridor one of the most expensive in the world.

As I wrote in a 2023 policy brief for the Lowy Institute, the Australian government should better support Pacific workers who remit significant earnings home by reducing transaction costs. The government must get assurances from our banks that their markups on international money transfers for Pacific workers will be made transparent so they can choose if that is the right transfer provider for them. Transparency is key to competition and fairness. Keeping foreign exchange markups down will mean Pacific island workers can pocket more of their hard-earned cash.

My other concern is that the bill provides limited specificity about the nature of any future banking guarantees. As my colleagues in the other place have argued, there is limited detail about how these guarantees will be managed by the Commonwealth. The bill offers no explicit mechanisms for parliamentary oversight or regulatory reviews of the guarantees and their impacts. Again taxpayers are left in the dark, this time about what is actually being guaranteed.

To provide the public with the clarity they need, I agree with the recommendation of the great ANU economist in the Development Policy Centre, Professor Stephen Howes. In his submission to the Senate Standing Committee on Economics inquiry on the Pacific banking guarantee, he recommended:

The Bill should have transparency requirements written into it, similar to those associated with community service obligations. These would stipulate at a minimum that the terms and conditions of any guarantee made under this Bill would be made public, and that the recipient of the guarantee would be required to report on its compliance with the obligations it has entered into.

Adopting this recommendation would give taxpayers assurance that their money is being handled with transparency and accountability by the Commonwealth. As Professor Howes rightly pointed out:

Any corporation receiving a benefit from the taxpayer should be required to disclose the terms and conditions on which such benefits are provided and should be obliged to report on what it is doing in return.

I welcome the thoughtful submission of Professor Howes to the public consideration of this bill. I appreciate the longstanding contributions he has made to Australia's foreign aid policy through the Development Policy Centre, AusAID and the many other bodies on which he has served as chair or adviser. Like Professor Howes, I believe this bill not only lacks transparency but awards too much discretion to government and business officials. It requires more rigorous accountability on the part of these players to ensure that the interests of taxpayers are properly served.

In short, I fully support legislation that maintains Australia's banking presence in the Pacific yet does so in a way that is fiscally responsible, transparent and fair to Australian taxpayers. Beyond this bill, there are other ways by which the government could support and sustain the presence of Australian banks in the Pacific. Professor Howes has proposed an interesting measure that this government could consider, which reflects one I made in my 2023 policy brief on remittance costs—that the government explore a more direct role for the Reserve Bank of Australia to facilitate international transactions involving Pacific island workers employed in Australia under the Pacific Australia Labour Mobility Scheme. There are many ways to support cheaper remittances into the region, and we need all options on the table. We need to think outside the square as to how we can best serve the banking needs of our Pacific family.

We also need to help the Pacific islands region build a self-sustaining banking system. In this vein, we need to create an environment that enables its own banking system to flourish and prosper in the long term. In so doing, we can build on the previous coalition government's proud record of empowering our Pacific family. As I said in my maiden speech on 30 July, we must help our Pacific family develop a harmonised banking regulation framework that will integrate with Australia's. This will reduce the cost of compliance, lower the risk profile and encourage more Australian and American banks to do business there.

Looking forward, we will continue to work with the government to help sustain healthy correspondent banking relationships in the Pacific, yet we will ensure that all Pacific banking policy is transparent and fiscally responsible, with accountability to the Australian taxpayer. Importantly, the coalition will ensure that all such future legislation is directed towards the financial autonomy, security and wellbeing of Pacific island workers in Australia. When they prosper, their home countries will also prosper. A thriving Pacific region connected to the global financial system through our banks is absolutely something we should strive for.

Richard Dowling (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise today in firm support of the Pacific Banking Guarantee Bill 2025. It's a critical piece of legislation that not only underpins Australia's economic and diplomatic presence in the Pacific but also echoes the Albanese Labor government's enduring commitment to equitable access to financial services both at home and across our region.

For those of us in this chamber who represent regional communities, as I proudly do, this bill should resonate deeply. The decline of banking services is not just a local issue in rural and regional Australia; it's also being felt in our Pacific family, in places like Tonga, Vanuatu and the Solomon Islands, where everyday people are increasingly cut off from the global financial system. Whether it's a sugar cane grower in Mackay or a market vendor in Suva, people need a functioning banking system to build a life. This bill addresses that challenge head on. The Pacific banking guarantee enables the Commonwealth to step in where risk aversion from major financial institutions threatens to leave whole communities behind. Under this legislation, the government can issue guarantees to Australia based, authorised deposit-taking institutions operating in the Pacific, allowing them to maintain services that are commercially marginal but socially and strategically essential.

The Pacific is our neighbourhood. Since coming to office, the Albanese Labor government has been working hard to restore trust, rebuild relationships and be the partner of choice in the Pacific region. Within our first 12 months in office, ministers from the Albanese government visited every Pacific Islands Forum member country to renew our Pacific partnerships, to listen to Pacific priorities and to deliver on our collective interests. Indeed, we are the region's largest development partner. But let's be clear. This bill is not about benevolence; it's about sovereignty, it is about stability, and it is about keeping Australia present, visible and trusted in our immediate region. Just as we wouldn't tolerate rural towns in our own backyard being financially abandoned, nor should we allow friendly Pacific nations to be left to the whims of foreign-state backed lenders and opaque financial actors.

In recent years, we've seen correspondent banking relationships, the backbone of cross-border financial activity, evaporate across the Pacific. According to the IMF, the Pacific region has experienced one of the sharpest declines in such relationships globally. In fact, the Pacific is losing correspondent banking services at twice the rate of the global average. This is not just a banking problem; it's a national security issue, an economic sovereignty issue and a long-term diplomatic risk for Australia. With this bill, we are making it clear that Australia is in the Pacific to stay, through our banks, our institutions and our principles.

To illustrate the practical application of this bill, I want to draw attention to the arrangement struck with ANZ, Australia's largest financial institution in the Pacific. The Commonwealth and the ANZ have entered into a 10-year guarantee agreement underpinned by this very legislation. The guarantee, up to $2 billion, will allow ANZ to remain operational in key Pacific markets where economics might not justify a continued presence but the national interest certainly does. This is not a free handout though. ANZ will pay a commercial fee to the government for the guarantee, and, in return, it will continue providing services that no other institution is willing or able to offer. Significantly, ANZ will invest a further $50 million into improving digital infrastructure and expanding fee-free remittance options into the Pacific, putting money back into the pockets of Pacific workers and their families. This is exactly the kind of outcome we want from public/private collaboration—government backed stability while the private sector delivers the service.

Some on the other side of this chamber might argue that this kind of intervention distorts the market—that it's too risky, that it's government overreach. To that I say look at our track record. We already backed the Australian banks through the Financial Claims Scheme. We guaranteed deposits, and we provided wholesale funding support. During the global financial crisis, we underwrote interbank lending. During the pandemic, we coordinated liquidity to the Reserve Bank. This legislation is a continuation of that tradition—limited, targeted and in the national interest. Crucially, it's not open-ended. Each guarantee will be assessed individually under section 60 of the Public Governance Performance and Accountability Act. The government will remain discretion and force transparency and collect commercial fees. So let's not pretend it's a blank cheque. It's a smart investment in resilience and influence.

What we're doing here is also an investment in regional economic stability. When banks exit fragile markets, what fills the vacuum? Informal lenders, unregulated remittance operators, foreign state owned institutions with opaque mandates—in short, instability. Financial exclusion fuels corruption, tax avoidance and crime. It breaks down the trust between people and institutions. It limits the ability of governments to collect revenue to fund schools, hospitals and infrastructure. We cannot allow that dynamic to fester on our doorstep. That's why this legislation matters. That's why it complements the almost $3.3 billion commitment we've made to the Indo-Pacific in development assistance, supporting financial literacy, digital identity systems and anti-money-laundering capabilities. You can't have development without banking, and you can't have banking without a system to support it. That's what this bill provides.

I will also touch briefly on what this means for working people, especially those of Pacific heritage living here in Australia. Every year, hundreds of millions of dollars are sent in remittances from workers in our country to families across the Pacific. These are not luxury transfers. These are school fees, medical bills and housing support. They are acts of love of solidarity. When banks pull out of the Pacific, these families are the first to feel the pain. Transaction costs skyrocket; fraud becomes a greater risk; and, too often, the money simply can't get through. By ensuring that established regulated banks remain present and functional, we're not just backing institutions; we're backing people. This is a win for Pacific families, a win for multicultural Australia and a win for every worker trying to support loved ones across borders.

Colleagues, this bill is part of a larger story. Since coming to government, the Albanese Labor government has tackled head on the challenges facing Australia's financial system, particularly in the regions. We've pushed back against branch closures. We've stood up to customers hit by junk fees. We've restored trust in financial regulators. We're levelling the playing field for smaller banks, making sure competition remains alive and well. This legislation sits comfortably within that agenda. It's about fairness, security and doing what works. It reflects Labor values—practical, not ideological; cooperative, not combative; regional, not just metropolitan; internationalist but grounded in the national interest. It's the kind of policy that only a Labor government can deliver, and I'm proud to support it.

In conclusion, I encourage all senators across parties to support this legislation because the truth is the Pacific is not just a peripheral concern. It is central to who we are and how we live. In banking, it's not just a commercial service; it's a social utility—essential, foundational and transformative. Within this bill we affirm that Australia is a reliable partner, that we take our obligations seriously and that no-one, whether in Fiji, Tonga or Samoa, should be left behind by the forces of financial retreat. Let us pass this bill with conviction and clarity. Let us build a banking system that works for people, not the other way around. Let us do so with certainty that this is what good government looks like.

I commend this bill to the Senate.

(Quorum formed)

Dave Sharma (NSW, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Link to this | Hansard source

I thank my colleagues for making quorum; I appreciate that. Australia's interests in the Pacific are vital, and this is something I know personally. In my earlier career, before coming to this place, I was an Australian diplomat, and in fact my first overseas posting was in Bougainville, a province of Papua New Guinea, where we maintained a peace monitoring group, a regional peacekeeping force, to help put an end to the Bougainville civil war of the 1990s. My second diplomatic posting was in Port Moresby in Papua New Guinea, and I was very heavily involved in our regional assistance mission to the Solomon Islands, which deployed there to, again, quell civil unrest and the risk of a civil war in the early 2000s. Making sure that Australia retains strong links to the Pacific and making sure that the Pacific becomes more stable, prosperous and secure over time are not only important national interest objectives, I think, but important objectives that I'm personally committed to.

As a coalition, when last in government, we were the authors of what we called the Pacific Step-up, and I'm proud of the record that our government was able to achieve. We became the first country, and I think we're still the only one, to establish diplomatic posts in every member nation of the Pacific Islands Forum, every PIF nation, which had not been the case previously. We expanded regional security through the $2 billion Pacific Maritime Security Program, which included the delivery of Guardian class patrol boats, allowing Pacific Islanders and Pacific island nations to better protect their fisheries and to better enforce maritime security. We significantly expanded the Pacific labour mobility scheme and the Seasonal Worker Program, which, importantly, addressed labour market shortfalls in Australia and also gave important skills to Pacific Islanders, allowing them to upgrade their level of skill, and provided a valuable flow of remittances to Pacific island countries. Those links between our nations, the Seasonal Worker Program and the labour mobility scheme, remain important elements of our bilateral ties. We also established the Australian Infrastructure Financing Facility for the Pacific, the AIFFP, which has provided and unlocked billions of dollars in loan and grant financing for key infrastructure projects in the Pacific, whether they be telecommunications, ports, airports or roads. They're all things that will help improve the economic prospects of this region. Of course, we were intimately involved in the COVID response in the Pacific, helping Pacific Island nations secure masks and protective gear at the initial stages of the outbreak of COVID and then also vaccines down the track. I think both sides of the House, to their credit, have taken a close interest in the affairs of the Pacific, and it's important we continue to do so.

I appreciate that the Pacific Banking Guarantee Bill 2025 is formulated very much with that in mind. The intent is to help maintain an Australian banking presence in the Pacific and to make sure that Pacific Islanders continue to have access to sophisticated financial services, especially from financial sources that have high transparency and high regulatory standards, like the Australian banking system does. But we, the coalition, do have some concerns about elements of this bill, which were well canvassed in additional comments to the Senate committee report into this, as authored by my colleague Senator Hume. First of all, I think we have some concerns that the bill provides for an uncapped appropriation with no maximum dollar limit and no end date. It was argued by the government, the proponents of the bill, that flexibility is needed, but an uncapped appropriation inevitably reduces parliamentary oversight of future spending and increases the potential liability—the exposure of the taxpayer for future guarantees.

Earlier this year, ANZ announced it would be the first recipient of the Pacific banking guarantee, which would be a maximum $2 billion, 10-year bank guarantee to support its operation in the region. Obviously, that guarantee is contingent on the passage of this legislation, and no other guarantees have been announced to date. But there is the potential—because, as I said, the appropriation is uncapped—for that dollar limit to grow considerably, with there being no end date. That is a concern to us. ANZ has reportedly paid an undisclosed annual fee to the government for the guarantee, but the exact details have not been made public due to commercial confidentiality.

Obviously, I accept at face value the utility of this mechanism in allowing ANZ and other banks to continue to maintain the commercial viability of their presence and operations in the Pacific. The presence of Australian banks in the Pacific is an important national asset for Australia and one we should seek to protect and preserve. But one concern in particular I have about this bill, and I know it's shared about my colleagues, is about some of the unintended consequences that might flow from it onto Pacific banking institutions themselves, notably the Bank South Pacific, BSP. BSP executives and leadership did come to meet with me a few weeks ago. BSP, as some of you might know, is the largest and most widespread bank in the South Pacific. It provides banking and financial services both retail and commercial to large numbers of Pacific Island citizens and also Pacific Island businesses. BSP had a number of concerns about the lack of consultation that they had experienced with respect to this bill, the lack of publicly available information about what is being provided to ANZ and, naturally enough, what it will mean for their own competitiveness in the region. If the result of this Pacific banking guarantee is that we render or make BSP or other Pacific banking institutions commercially unviable, then the net result of this intervention will be worse for the Pacific and worse for our interest in the Pacific.

In that vein, and as my colleague Senator Hume put in her additional comments, we would encourage the Treasury in particular to reconsider whether there is more information about the guarantee that could be made publicly available. We would encourage Treasury and relevant Treasury ministers in the government to consult and meet with executives from Bank South Pacific to provide as much information and detail as they can, importantly, to provide reassurance—because I don't believe this is the intent—that this guarantee is not intended to commercially undercut BSP or render them unviable. We think it's important, particularly going forward, that some of those reassurances are provided.

As I said, we do have some concerns about the risk to Australian taxpayers from an uncapped liability with no maximum dollar amount and no end date, but we did hear evidence from Treasury during the committee inquiry that the risk to Australian taxpayers for these guarantees is low. For those reasons, we do not propose to oppose this bill. But, in not opposing the bill and in engaging constructively with the government on it, we would urge the government, as I said earlier, to make sure there are no unintended consequences of this bill, that Bank South Pacific and other Pacific banks are better briefed and provided and furnished with as much information as possible. Particularly, provided this bill passes, once it is passed and enacted and becomes operational, the commercial and competitive impacts on the banking industry in the South Pacific should be closely monitored to make sure that we are not rendering sovereign Pacific banking and financial institutions unviable as a result of this well-meaning intervention.

Lisa Darmanin (Victoria, Australian Labor Party) Share this | Link to 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.

Nita Green (Queensland, Australian Labor Party, Assistant Minister for Tourism) Share this | Link to this | Hansard source

I rise to contribute to this debate, particularly given my new portfolio as Assistant Minister for Pacific Island Affairs and my most recent engagement in the Pacific around this issue. I begin by thanking the committee and the chair for the good work on the report and that engagement with stakeholders.

The Pacific Banking Guarantee Bill 2025 is an important bill for Australia and for the Pacific. Three years ago, when the Albanese Labor government was elected, we made a promise to our Pacific family that we would listen, that we would learn and that we would act to ensure that we work hand in hand. Together we are working to foster a safe and stable global financial system. We are doing this by supporting the services that underpin economic growth, whether that be critical infrastructure, aviation or the banking measures that we will discuss today.

The Albanese government is dedicated to revitalising our Pacific partnership after the decade of neglect that we saw from those opposite. We are ambitious in our support for the Pacific because that is what good neighbours do. We share an ocean. We are a region that shares a future. Together we have shared interests and priorities that make us collectively stronger when we work side by side. It's important for the prosperity of our region now more than ever that we are economically and financially connected. That is why I am so proud to support the Pacific Banking Guarantee Bill 2025.

Last week I had the honour of visiting Nauru. I was there with President David Adeang to launch the opening of operations of the Commonwealth Bank of Australia. During this visit, it was clear that the launch of the Commonwealth Bank agency in Nauru was so much more than the opening of a bank branch. The event marked an important milestone for the Nauru-Australia Treaty, a treaty which speaks to securing Nauru's long-term economic resilience and security. It was significant because it was a significant milestone towards our shared journey of partnership and regional cooperation.

Nauru, like many other nations in the Pacific, faces the possibility of being left without a bank and, with that, losing access to the global economy. Think about what that would mean for you or your community—to be cut off overnight, to sleep with cash under your pillow because there's nowhere else to store it. This was the reality for the nation of Nauru, and it should never be again.

This could have been the story going forward. The Pacific has been disproportionately affected by the global trend of financial institutions reducing and withdrawing banking services. This decline, occurring at twice the rate of the global average, impacts whole countries' access to, importantly, cross-border payment services, and their connection to the global financial system and the ability for Pacific communities—particularly Pacific workers in Australia—to send remittances home. These banking services are crucial for economic growth, inclusion and stability. Nationally, they ensure that government and businesses can engage with international trade, grow local infrastructure, protect essential services and grow their communities.

At a local level, banking services allow people to start and maintain businesses to ensure that workers can send money home to support their communities and their families. It was a real source of pride for every single person who had their new CommBank card issued. It's a real source of pride for the leadership of His Excellency and the cabinet in Nauru that we've reached this important step.

Australia and our Pacific partners want to avoid the situation where Pacific nations are debanked and lose access to crucial cross-border payments and banking services. We know that, right now, the Pacific's ability to engage with the world remains at stake if we do not enact legislation such as this. This bill will enable the Commonwealth to guarantee an Australian bank's business in the Pacific against the unlikely possibility of a default in the region which may force them to shut their operations. Though it is unlikely to be needed, Australian banks who are eligible will pay a fee to the Commonwealth for the guarantee.

The bill allows for a special appropriation from the Consolidated Revenue Fund for the purpose of meeting any liabilities that the Commonwealth may incur under the Pacific Banking Guarantee. This will aim to incentivise banks to continue their operation in the Pacific by reducing risk and guarantees. This legislation goes hand in hand with the Australian government's commitment to enable Pacific governments, businesses and communities to trade, invest and grow.

The Albanese government has proudly signed landmark treaties with countries such as Nauru and Vanuatu. These treaties create a safer region and advance our position as a security partner of choice in the Pacific. We've strengthened cooperation with Papua New Guinea through our bilateral security agreement and our landmark National Rugby League deal. These are both underpinned by strategic trust. We're also getting our relationship with the Solomon Islands on better footing by building its police force. We've committed to listening to and working together with our Pacific neighbours on issues that matter to both of us.

The Pacific and Australia have had more than 40 years of tariff-free access, to ensure the smooth flow of goods and services across the Pacific. Australia's trade with Pacific island countries in 2024 was 23 per cent higher than in 2019, with the rate of increase even higher in countries that are partners in the PACER Plus treaty. Families, businesses and tourists are connected thanks to new and upgraded airports, seaports and roads as well as more flight routes, including the Palau Paradise Express and the Australia-North Pacific Connector.

In 2023, over 600,000 Australians visited Pacific island countries. Pacific islanders have better pathways to live, work and study in Australia—and, across the region, through Australian scholarships and skills training, the Pacific Australia Labour Mobility scheme. These pathways have seen more than 20,000 Pacific people graduate with full Australian qualifications. They have seen 13,000 Pacific students with Australian award scholarships and more than 30,000 Pacific workers employed under the PALM scheme.

Under our government, digital services are also expanding in the Pacific, with every country being connected to undersea cables by the end of 2025 to ensure faster and more reliable access in the Pacific. And, of course, as we discussed today here in this chamber, essential banking services are available through the guaranteed presence of Australian banks in nine countries. These are services that people rely on every single day. They are services that the Albanese government want to protect within our Pacific region. As a Queensland senator who lives in Cairns and whose home is closer to Port Moresby than to Brisbane, I cannot express how important it is that we protect Pacific communities' access to the global financial system. Our region is stronger when we work together and when we face regional challenges as partners. The Pacific Banking Guarantee Bill 2025 ensures that we are fostering a stable and safe region with our Pacific family. I commend this work and the bill and wholeheartedly support it.

Anthony Chisholm (Queensland, Australian Labor Party, Assistant Minister for Regional Development) Share this | Link to this | Hansard source

I'd like to thank the senators who have contributed to this debate. Australia is responding to the concerns of Pacific and Timor-Leste governments by introducing the ability for the Commonwealth to provide guarantees to eligible Australian banks to maintain their Pacific operations and their enduring presence in the region, because we know secure access to the global financial system and banking services is critical for economic growth, financial inclusion and overall stability.

The Pacific Banking Guarantee Bill 2025 allows the Commonwealth to offer support to eligible Australian banks—a guarantee which transfers risk of default on low-risk exposures to the Commonwealth. It provides for a 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 in the unlikely event of any default. Provision of this guarantee is not about any individual country. It is about our commitment to working to maintain access to enduring banking services and is about our connection to the global financial system in the Pacific. I commend this bill to the Senate.

Question agreed to.

Bill read a second time.