Division Description Changes — Bills — Banking Amendment (Deposits) Bill 2020; Second Reading — 30th Nov 2020

Change	Division
senate vote 2020-11-30#1 Edited by mackay staff on 2022-07-29 12:57:46	Title ~~Bills — Banking Amendment (Deposits) Bill 2020; Second Reading~~ Banking Amendment (Deposits) Bill 2020 - Second Reading - Put the question Description ~~<p class="speaker">Malcolm Roberts</p>~~ <p>Thank you, Madam Acting Deputy President. As a servant to the people of Queensland and Australia, I proudly ask for the Senate's support for this bill, the Banking Amendment (Deposits) Bill 2020. It's commonly called the 'no bail-in bill' or the 'anti-bail-in bill'. Its purpose is to keep people's money safe and to keep the banking system safe. Let me first explain what is a bailout and what is a bail-in. Bailouts have been used during financial crises when banks get into trouble and are a lifeline of money from taxpayers to banks to keep banks afloat. Governments act as a conduit from taxpayers to corporate banks, even when the banks get into trouble due to their own greed, recklessness or stupidity. In times of profit, it seems, banks are capitalists; and in crises banks are socialists.</p> <p>However, International Monetary Fund and G20 rules now prevent taxpayers' money being used to save a bank, instead requiring that rescue funds must come from shareholders and from depositors: a bail-in. And here's how it works. Literally, banks steal the money in retail deposit accounts and use that to save themselves. In exchange, depositors get shares in the bank. The shares are then suspended from trading because the bank's shares are worthless pieces of paper and will remain so for many years. Retail deposit accounts are the bank accounts of everyday Australians and small and medium-sized businesses. This is money, taken from these accounts, which people need to pay bills, buy stock, pay the rent and pay staff—gone. This is money a couple is saving to buy their first home—gone. This is money retirees cashed out of superannuation and need to live on, to buy food and clothing and pay bills—gone; gone overnight.</p> <p>Reserve Bank figures now show that $1 trillion is available to be taken in a bail-in. That's what the Liberal, National and Labor parties defend when opposing my bill. They defend stealing depositors' money. I'll share a letter from a constituent, Peter Thompson, last week :'As a self-funded retiree, I shouldn't be lying awake at night worrying how to safeguard my deposits from bail-in by predatory and profligate banks; however, I am. I have Greek friends who lost most of their savings in the Greek bank bail-in. I don't trust APRA nor the Treasury to protect my interests and certainly don't trust any bank. We need a people's bank now. What can I do to protect my bank deposits? Withdraw cash, which by design is getting harder and harder to do, and take the risk it will be stolen by more obvious thieves? One can't buy property or land with the Australian real estate market in radical downturn. I want my deposits in a bank. Your Banking Amendment (Deposits) Bill is a vote winner. It will give Australians, many of whom have no idea of what bail-in entails, an opportunity to understand and take action to prevent their savings and create confidence in the system.' Thank you very much, Peter. Creating confidence in the banking system is exactly why I have proposed this bill. By the way, the public understand that the government's cash ban bill is designed to force everyday Australians to keep all of their money in the banking system to make a bail-in much more effective. Labor, the Liberals and the Nationals passed the cash ban bill through the House of Representatives and are now terrified of the public and backbench backlash if it enters our Senate.</p> <p>The next point is that the public understand our real estate prices are the third highest in the world. The public understand that the government's COVID restrictions are destroying small and medium businesses and the ability of those business owners and their staff to service their mortgages, loans and credit card debts. In fact, there is sleight of hand going on here. A handful of large retail businesses, telcos and internet based companies are doing better than ever, while hundreds of thousands of small and medium businesses are doing much, much worse. The effect on the economy of the government's COVID restrictions is much worse than the headline figures, yet state governments recently doubled down with more lockdowns, more restrictions, more destruction of wealth and more unemployment amongst small and medium businesses. So the public are responding by removing cash from the banking system at an alarming rate—$20 billion in notes have gone missing in calendar year 2020. Cash is being stashed under beds. It is being taken out of banks, out of the system, and stashed under beds.</p> <p>My bill is an opportunity to restore confidence in the banking sector. It is an opportunity to attract deposits from other countries where bank deposits are less secure than ours. We could be a safe haven for legal investments in our banking sector, money that for once is not coming from the taxpayer. Why shut that down and make banks even more reliant on the government for funding? What a missed opportunity that will be for our banks and for their customers. The Liberal, National and Labor parties now have a chance, though, to stand up for everyday Australians and to protect bank deposits from being bailed in. The response from these tired old parties is denial. We are told that this bill is not necessary. We are told that the law does not allow for a bail-in. I ask all Australians to listen more closely. Listen for their proof. Listen: there is none. There's no legal opinion. There's nothing but bland assurances from self-interested public servants hoping that constant repetition will fool the public.</p> <p>Here's my argument: the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 that was passed in the dead of night, with just seven senators present, uses weasel words to hide the reality. The wording does allow for the banking regulator, APRA, to instruct the banks to bail in retail deposit accounts. The protections that the tired old parties are relying on for the supposed opposite case are contained not in the crisis resolution powers act but in the Banking Act. That is what they're relying on. Their argument is a nonsense, because the emergency provisions powers in the crisis resolution powers act override the everyday protections in the Banking Act. That's why the government has an emergency powers act—to provide extra powers in an emergency.</p> <p>This is not just my opinion; it's the International Monetary Fund's opinion. The IMF said that the new 'catch-all' directions powers in the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 provide APRA with the flexibility to make directions to the banks 'that are not contemplated by the other kinds of general directions listed in the Banking Act'. That's it. It went on to say that APRA's direction powers are 'a key element in the resolution process' for a distressed bank and that APRA could order a bank to recapitalise using the funds of unsecured creditors. The IMF went on to define unsecured creditors as shareholders and retail depositors.</p> <p>Liberal MP Tim Wilson, Chair of the House Standing Committee on Economics, has admitted the crisis resolution powers act does allow for a bail-in. Liberal senator Amanda Stoker in a letter to a constituent admitted that legislation allows for a bail-in. Yet their party bosses say the complete opposite. Why would they do that? The answer, yet again, is: because of our international obligations. The G20 and the IMF have dictated that taxpayers' money can't be used to rescue a bank. The tired old parties know that letting unelected bureaucrats in New York, Brussels and Geneva tell Australians what to do in a crisis does not pass the pub test, so the tired old parties hide the facts and contradict reality using weasel words. It's instructional to note that New Zealand's response to the same IMF and G20 instructions is to do the opposite of what our government has done. The Kiwis dutifully wrote their bail-in laws and made them honest and transparent. If a bank fails, it closes, pays off its debts using depositor funds and then reopens the next day. Depositors can then access what remains of their money, if there is any. I am not suggesting that the New Zealand model is better. More honest? Yes. Better? No.</p> <p>There is a simple solution for bank failures. When a bank fails, the government could issue bonds. Currently we're offering just one per cent interest on bonds, so it's not a costly option. We would then use that money to buy shares in the failing bank. That injects enough capital for the bank to survive. We'd then invest those shares with a future fund, who pay that small interest payment on the bonds. In a few years those shares will be worth money again and the future fund can sell them back into the market in an orderly fashion. In this simple One Nation bank survival plan, taxpayers' money would not be used to save the bank, so our IMF and G20 masters should be pleased. Nobody in our process loses money. Depositors keep their cash. Banks keep trading. Mum-and-dad shareholders retain the value of their shares over the medium term.</p> <p>What is the Labor and LNP track record on corporate bailouts? Both gave foreign car companies billions and then watched them shut up shop as soon as the money tap was turned off. If we'd been asking for shares for that money, we would now own the car company and we would still have a car-manufacturing sector. We would still have all those wonderful breadwinner jobs for workers. Prime Minister Gillard gave ABC child care $120 million, not in exchange for shares; it was another gift from taxpayers. If we'd asked for shares in ABC child care in return for the bailout, those shares would be worth $250 million today—double what Julia Gillard, as Prime Minister, gave them. Our response to a bank failure should not be, 'Go and steal it from customers.' Our response should be to use capitalism to fix crony capitalism.</p> <p>Labor have a lot to say about their Financial Claims Scheme guarantee. The Financial Claims Scheme guarantee will advance up to $20 billion per bank to protect deposits if a bank fails. Let's take a closer look at the Financial Claims Scheme guarantee. The vast majority of the $1 trillion in retail deposit accounts is held by the big four banks, and $20 billion times four is only $80 billion, so the Financial Claims Scheme guarantee will save less than 10 per cent of bank deposits. The Financial Claims Scheme guarantee is not active and is not funded. There's no money sitting there ready to go—not one cent. Should a bank fail, the Treasurer must issue a notice to activate the scheme. Yet the Labor scheme uses taxpayer money to bail out banks, so the Treasurer will not issue the notice, because the notice would breach IMF orders.</p> <p>In the unlikely event of the Financial Claims Scheme guarantee being activated, there's a second problem that Labor never discusses. Once the Financial Claims Scheme guarantee is activated, APRA must liquidate the bank to get taxpayers' money back. How much does anyone think will be available to retail depositors if the bank is liquidated? And how long will taxpayers have to wait to get their money back from the liquidator? The Financial Claims Scheme guarantee is worse than a con job. It will make things worse.</p> <p>Earlier, I said that once a bank fails, whether that failure is public or known only to the regulator, the Financial Claims Scheme guarantee can be activated if the Treasurer so chooses. The whole point of a bail-in is to prevent a bank failing. This means the bail-in can only come first and will come first. Then, if the bail-in doesn't work, the Financial Claims Scheme guarantee is triggered and 10 per cent of bank deposits are saved and the bank is liquidated. This is what the Liberals, Nationals and Labor are relying on to falsely tell everyday Australians that our money is safe. Yet the reality is that it's not safe. Following the dictates of unelected globalist masters yet again is more important to them than looking out for the interests of everyday Australians.</p> <p>The government has advanced a criticism of my bill that the definition of 'retail deposit account' introduces a different definition than is contained elsewhere in the Banking Act. This argument fails because the only place the phrase 'retail deposit account' appears in the Banking Act is in my amendment. We did that deliberately so as not to interfere with the rest of the act. Criticism dismissed!—but questions about the government's competence and level of integrity asked.</p> <p>In conclusion, at no time has the government, the Treasurer or APRA actually said they will not order a bail-in. These government agencies duck the question and say, 'APRA doesn't have the power'. Well, my bill clears that up. My bill adds one clause to the Banking Act which simply says that APRA does not have the power to order a bail-in. No other powers are affected—none! Passing my bill ensures that everyone will read it the same way. Fellow senators: let Australians know that their money is safe in a bank. Let Australians know that there's no need to stuff cash under the bed. Even the Australian Banking Association said in its submission that if there's any confusion about what the law actually says then consider passing my bill. What a great idea! Let's pass this bill to keep people's money safe. Let's pass this bill to keep people's confidence in the banking system. But, above all, let's pass this bill to keep people's money safe.</p> ~~<p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>~~ *The majority voted against a [motion](https://www.openaustralia.org.au/senate/?gid=2020-11-30.17.4) to "put the question", which is parliamentary jargon for immediately asking the question under discussion - in this case, the question* is *"that the bill b*e read a [second time](https://peo.gov.au/understand-our-parliament/how-parliament-works/bills-and-laws/making-a-law-in-the-australian-parliament/)" (to read a bill for a second time is to agree with the bill's main idea).

~~Malcolm Roberts~~
Thank you, Madam Acting Deputy President. As a servant to the people of Queensland and Australia, I proudly ask for the Senate's support for this bill, the Banking Amendment (Deposits) Bill 2020. It's commonly called the 'no bail-in bill' or the 'anti-bail-in bill'. Its purpose is to keep people's money safe and to keep the banking system safe. Let me first explain what is a bailout and what is a bail-in. Bailouts have been used during financial crises when banks get into trouble and are a lifeline of money from taxpayers to banks to keep banks afloat. Governments act as a conduit from taxpayers to corporate banks, even when the banks get into trouble due to their own greed, recklessness or stupidity. In times of profit, it seems, banks are capitalists; and in crises banks are socialists.
However, International Monetary Fund and G20 rules now prevent taxpayers' money being used to save a bank, instead requiring that rescue funds must come from shareholders and from depositors: a bail-in. And here's how it works. Literally, banks steal the money in retail deposit accounts and use that to save themselves. In exchange, depositors get shares in the bank. The shares are then suspended from trading because the bank's shares are worthless pieces of paper and will remain so for many years. Retail deposit accounts are the bank accounts of everyday Australians and small and medium-sized businesses. This is money, taken from these accounts, which people need to pay bills, buy stock, pay the rent and pay staff—gone. This is money a couple is saving to buy their first home—gone. This is money retirees cashed out of superannuation and need to live on, to buy food and clothing and pay bills—gone; gone overnight.
Reserve Bank figures now show that $1 trillion is available to be taken in a bail-in. That's what the Liberal, National and Labor parties defend when opposing my bill. They defend stealing depositors' money. I'll share a letter from a constituent, Peter Thompson, last week :'As a self-funded retiree, I shouldn't be lying awake at night worrying how to safeguard my deposits from bail-in by predatory and profligate banks; however, I am. I have Greek friends who lost most of their savings in the Greek bank bail-in. I don't trust APRA nor the Treasury to protect my interests and certainly don't trust any bank. We need a people's bank now. What can I do to protect my bank deposits? Withdraw cash, which by design is getting harder and harder to do, and take the risk it will be stolen by more obvious thieves? One can't buy property or land with the Australian real estate market in radical downturn. I want my deposits in a bank. Your Banking Amendment (Deposits) Bill is a vote winner. It will give Australians, many of whom have no idea of what bail-in entails, an opportunity to understand and take action to prevent their savings and create confidence in the system.' Thank you very much, Peter. Creating confidence in the banking system is exactly why I have proposed this bill. By the way, the public understand that the government's cash ban bill is designed to force everyday Australians to keep all of their money in the banking system to make a bail-in much more effective. Labor, the Liberals and the Nationals passed the cash ban bill through the House of Representatives and are now terrified of the public and backbench backlash if it enters our Senate.
The next point is that the public understand our real estate prices are the third highest in the world. The public understand that the government's COVID restrictions are destroying small and medium businesses and the ability of those business owners and their staff to service their mortgages, loans and credit card debts. In fact, there is sleight of hand going on here. A handful of large retail businesses, telcos and internet based companies are doing better than ever, while hundreds of thousands of small and medium businesses are doing much, much worse. The effect on the economy of the government's COVID restrictions is much worse than the headline figures, yet state governments recently doubled down with more lockdowns, more restrictions, more destruction of wealth and more unemployment amongst small and medium businesses. So the public are responding by removing cash from the banking system at an alarming rate—$20 billion in notes have gone missing in calendar year 2020. Cash is being stashed under beds. It is being taken out of banks, out of the system, and stashed under beds.
My bill is an opportunity to restore confidence in the banking sector. It is an opportunity to attract deposits from other countries where bank deposits are less secure than ours. We could be a safe haven for legal investments in our banking sector, money that for once is not coming from the taxpayer. Why shut that down and make banks even more reliant on the government for funding? What a missed opportunity that will be for our banks and for their customers. The Liberal, National and Labor parties now have a chance, though, to stand up for everyday Australians and to protect bank deposits from being bailed in. The response from these tired old parties is denial. We are told that this bill is not necessary. We are told that the law does not allow for a bail-in. I ask all Australians to listen more closely. Listen for their proof. Listen: there is none. There's no legal opinion. There's nothing but bland assurances from self-interested public servants hoping that constant repetition will fool the public.
Here's my argument: the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 that was passed in the dead of night, with just seven senators present, uses weasel words to hide the reality. The wording does allow for the banking regulator, APRA, to instruct the banks to bail in retail deposit accounts. The protections that the tired old parties are relying on for the supposed opposite case are contained not in the crisis resolution powers act but in the Banking Act. That is what they're relying on. Their argument is a nonsense, because the emergency provisions powers in the crisis resolution powers act override the everyday protections in the Banking Act. That's why the government has an emergency powers act—to provide extra powers in an emergency.
This is not just my opinion; it's the International Monetary Fund's opinion. The IMF said that the new 'catch-all' directions powers in the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 provide APRA with the flexibility to make directions to the banks 'that are not contemplated by the other kinds of general directions listed in the Banking Act'. That's it. It went on to say that APRA's direction powers are 'a key element in the resolution process' for a distressed bank and that APRA could order a bank to recapitalise using the funds of unsecured creditors. The IMF went on to define unsecured creditors as shareholders and retail depositors.
Liberal MP Tim Wilson, Chair of the House Standing Committee on Economics, has admitted the crisis resolution powers act does allow for a bail-in. Liberal senator Amanda Stoker in a letter to a constituent admitted that legislation allows for a bail-in. Yet their party bosses say the complete opposite. Why would they do that? The answer, yet again, is: because of our international obligations. The G20 and the IMF have dictated that taxpayers' money can't be used to rescue a bank. The tired old parties know that letting unelected bureaucrats in New York, Brussels and Geneva tell Australians what to do in a crisis does not pass the pub test, so the tired old parties hide the facts and contradict reality using weasel words. It's instructional to note that New Zealand's response to the same IMF and G20 instructions is to do the opposite of what our government has done. The Kiwis dutifully wrote their bail-in laws and made them honest and transparent. If a bank fails, it closes, pays off its debts using depositor funds and then reopens the next day. Depositors can then access what remains of their money, if there is any. I am not suggesting that the New Zealand model is better. More honest? Yes. Better? No.
There is a simple solution for bank failures. When a bank fails, the government could issue bonds. Currently we're offering just one per cent interest on bonds, so it's not a costly option. We would then use that money to buy shares in the failing bank. That injects enough capital for the bank to survive. We'd then invest those shares with a future fund, who pay that small interest payment on the bonds. In a few years those shares will be worth money again and the future fund can sell them back into the market in an orderly fashion. In this simple One Nation bank survival plan, taxpayers' money would not be used to save the bank, so our IMF and G20 masters should be pleased. Nobody in our process loses money. Depositors keep their cash. Banks keep trading. Mum-and-dad shareholders retain the value of their shares over the medium term.
What is the Labor and LNP track record on corporate bailouts? Both gave foreign car companies billions and then watched them shut up shop as soon as the money tap was turned off. If we'd been asking for shares for that money, we would now own the car company and we would still have a car-manufacturing sector. We would still have all those wonderful breadwinner jobs for workers. Prime Minister Gillard gave ABC child care $120 million, not in exchange for shares; it was another gift from taxpayers. If we'd asked for shares in ABC child care in return for the bailout, those shares would be worth $250 million today—double what Julia Gillard, as Prime Minister, gave them. Our response to a bank failure should not be, 'Go and steal it from customers.' Our response should be to use capitalism to fix crony capitalism.
Labor have a lot to say about their Financial Claims Scheme guarantee. The Financial Claims Scheme guarantee will advance up to $20 billion per bank to protect deposits if a bank fails. Let's take a closer look at the Financial Claims Scheme guarantee. The vast majority of the $1 trillion in retail deposit accounts is held by the big four banks, and $20 billion times four is only $80 billion, so the Financial Claims Scheme guarantee will save less than 10 per cent of bank deposits. The Financial Claims Scheme guarantee is not active and is not funded. There's no money sitting there ready to go—not one cent. Should a bank fail, the Treasurer must issue a notice to activate the scheme. Yet the Labor scheme uses taxpayer money to bail out banks, so the Treasurer will not issue the notice, because the notice would breach IMF orders.
In the unlikely event of the Financial Claims Scheme guarantee being activated, there's a second problem that Labor never discusses. Once the Financial Claims Scheme guarantee is activated, APRA must liquidate the bank to get taxpayers' money back. How much does anyone think will be available to retail depositors if the bank is liquidated? And how long will taxpayers have to wait to get their money back from the liquidator? The Financial Claims Scheme guarantee is worse than a con job. It will make things worse.
Earlier, I said that once a bank fails, whether that failure is public or known only to the regulator, the Financial Claims Scheme guarantee can be activated if the Treasurer so chooses. The whole point of a bail-in is to prevent a bank failing. This means the bail-in can only come first and will come first. Then, if the bail-in doesn't work, the Financial Claims Scheme guarantee is triggered and 10 per cent of bank deposits are saved and the bank is liquidated. This is what the Liberals, Nationals and Labor are relying on to falsely tell everyday Australians that our money is safe. Yet the reality is that it's not safe. Following the dictates of unelected globalist masters yet again is more important to them than looking out for the interests of everyday Australians.
The government has advanced a criticism of my bill that the definition of 'retail deposit account' introduces a different definition than is contained elsewhere in the Banking Act. This argument fails because the only place the phrase 'retail deposit account' appears in the Banking Act is in my amendment. We did that deliberately so as not to interfere with the rest of the act. Criticism dismissed!—but questions about the government's competence and level of integrity asked.
In conclusion, at no time has the government, the Treasurer or APRA actually said they will not order a bail-in. These government agencies duck the question and say, 'APRA doesn't have the power'. Well, my bill clears that up. My bill adds one clause to the Banking Act which simply says that APRA does not have the power to order a bail-in. No other powers are affected—none! Passing my bill ensures that everyone will read it the same way. Fellow senators: let Australians know that their money is safe in a bank. Let Australians know that there's no need to stuff cash under the bed. Even the Australian Banking Association said in its submission that if there's any confusion about what the law actually says then consider passing my bill. What a great idea! Let's pass this bill to keep people's money safe. Let's pass this bill to keep people's confidence in the banking system. But, above all, let's pass this bill to keep people's money safe.
~~Long debate text truncated.~~
The majority voted against a [motion](https://www.openaustralia.org.au/senate/?gid=2020-11-30.17.4) to "*put the question*", which is parliamentary jargon for immediately asking the question under discussion - in this case, the question is "*that the bill be read a [second time](https://peo.gov.au/understand-our-parliament/how-parliament-works/bills-and-laws/making-a-law-in-the-australian-parliament/)*" (to read a bill for a second time is to agree with the bill's main idea).