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senate vote 2017-06-19#7
Edited by
mackay staff
on
2017-07-08 20:53:42
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Title
Bills — Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017; in Committee- Major Bank Levy Bill 2017, Treasury Laws Amendment (Major Bank Levy) Bill 2017 - in Committee - International banks
Description
<p class="speaker">Nick Xenophon</p><p>by leave—On behalf of the Nick Xenophon Team I move the requests on sheet 8166 together:</p><p class="italic">(1) Clause 4, page 3 (lines 7 to 9), omit subclause (2), substitute:</p>- The majority voted against a [motion](http://www.openaustralia.org.au/senate/?id=2017-06-19.180.1) introduced by Nick Xenophon Team Senator [Nick Xenophon](https://theyvoteforyou.org.au/people/senate/sa/nick_xenophon) (SA), which means it failed. Senator Xenophon explained that the motion would have ensured:
- > *"that the provisions of the [Major Bank Levy Bill](http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/r5896) would also apply to foreign banks that have significant assets of over $100 billion in terms of their global assets. What this would mean is that banks such as HSBC, ING and BNP Paribas would be liable for this levy in terms of their Australian liabilities."*
- Read the arguments against the motion on [OpenAustralia.org.au](http://www.openaustralia.org.au/senate/?id=2017-06-19.180.1) and learn more about the bill in the [explanatory memorandum](http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id:legislation/billhome/display.w3p;query=Id%3A%22legislation%2Fems%2Fr5896_ems_f8a34a79-dc0f-4294-aa94-c912ebb30f71%22;rec=0).
- ### Motion text
- > *(1) Clause 4, page 3 (lines 7 to 9), omit subclause (2), substitute:*
- >> *(2) The total liabilities amount for a quarter in relation to an ADI is:*
- >>> *(a) if the ADI is a foreign ADI (within the meaning of the Banking Act 1959)—the amount equal to the total liabilities of the ADI and its related bodies corporate (within the meaning of the Corporations Act 2001) for the quarter (excluding any liabilities to each other); or*
- >>> *(b) in any other case—the amount equal to the total liabilities of the ADI for the quarter;*
- >> *as reported under an applicable reporting standard.*
- > *(2) Clause 5, page 3 (lines 20 and 21), omit paragraph (2) (a), substitute:*
- >> *(a) the amount equal to the total liabilities of the ADI for the quarter, as reported under an applicable reporting standard; and*
- > *(3) Clause 6, page 4 (line 18), omit "paragraph 5(2) (b)", substitute "(5) (2)".*
- > *(4) Clause 7, page 5 (lines 19 and 20), omit "subsection 4(2), paragraph 5(2) (b) or subsection 6(2)", substitute "subsection 4(2), 5(2) or 6(2)".*
- > *(5) Clause 8, page 5 (line 28), omit "subsection 4(2), paragraph 5(2) (b), or subsection 6(2)", substitute "subsection 4(2), 5(2) or 6(2)".*
- > *Statement pursuant to the order of the Senate of 26 June 2000*
- >> *These amendments are framed as requests because they are to a bill which imposes taxation within the meaning of section 53 of the Constitution. The Senate may not amend a bill imposing taxation.*
- > *Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000*
- >> *As this is a bill imposing taxation within the meaning of section 53 of the Constitution, any Senate amendment to the bill must be moved as a request.*
<p class="italic">(2) The <i>total liabilities amount </i>for a quarter in relation to an ADI is:</p><p class="italic">(a) if the ADI is a foreign ADI (within the meaning of the <i>Banking Act 1959)—the </i>amount equal to the total liabilities of the ADI and its related bodies corporate (within the meaning of the <i>Corporations Act 2001) </i>for the quarter (excluding any liabilities to each other); or</p><p class="italic">(b) in any other case—the amount equal to the total liabilities of the ADI for the quarter;</p><p class="italic">as reported under an applicable reporting standard.</p><p class="italic">(2) Clause 5, page 3 (lines 20 and 21), omit paragraph (2) (a), substitute:</p><p class="italic">(a) the amount equal to the total liabilities of the ADI for the quarter, as reported under an applicable reporting standard; and</p><p class="italic">(3) Clause 6, page 4 (line 18), omit "paragraph 5(2) (b)", substitute "(5) (2)".</p><p class="italic">(4) Clause 7, page 5 (lines 19 and 20), omit "subsection 4(2), paragraph 5(2) (b) or subsection 6(2)", substitute "subsection 4(2), 5(2) or 6(2)".</p><p class="italic">(5) Clause 8, page 5 (line 28), omit "subsection 4(2), paragraph 5(2) (b), or subsection 6(2)", substitute "subsection 4(2), 5(2) or 6(2)".</p><p class="italic">Statement pursuant to the order of the Senate of 26 June 2000</p><p class="italic">These amendments are framed as requests because they are to a bill which imposes taxation within the meaning of section 53 of the Constitution. The Senate may not amend a bill imposing taxation.</p><p class="italic">Statement by the Clerk of the Senate pursuant to the order of the Senate of 26 June 2000</p><p class="italic">As this is a bill imposing taxation within the meaning of section 53 of the Constitution, any Senate amendment to the bill must be moved as a request.</p><p>I raised these issues in the context of my second reading contribution earlier today. I can indicate that these requests would ensure that the provisions of the Major Bank Levy Bill would also apply to foreign banks that have significant assets of over $100 billion in terms of their global assets. What this would mean is that banks such as HSBC, ING and BNP Paribas would be liable for this levy in terms of their Australian liabilities. I think it would lead to an unfair and uneven playing field if foreign banks got a free kick on the bank tax. We heard the evidence that was given to the inquiry just a few days ago.</p><p>The major banks have set out—as I did in my second reading contribution—the reasons why this particular levy ought to apply to the foreign banks. They will get a strategic competitive advantage over the major banks, and I believe that is fundamentally unfair. We are looking at three foreign banks active in Australia whose global liabilities are well over the government's $100 billion threshold. ING has something like $794 billion in liabilities. Banque National de Paris has 1,971 billion—close to two trillion—euros in liabilities. HSBC has over 2,000 billion British pounds in global liabilities. A bank levy of six basis points on all foreign banks on their Australian liabilities would be in the order of about $180 million per annum. A bank levy of six basis points on all foreign banks under their Australian assets would be in the order of $228 million per annum.</p><p>This is something that I think would be equitable and fair. I know that there does not appear to be much support in the chamber for this, but I have yet to hear a good explanation as to why the foreign banks should be exempt from this and major Australian banks should be put at a competitive disadvantage.</p> <p class="speaker">Mathias Cormann</p><p>I thank Senator Xenophon for his contribution. Firstly, foreign banks are not excluded from the application of the major bank levy. It just happens to be the case that no foreign bank in Australia is a major bank. What is relevant is the RD liabilities under the Australian licence, and no foreign bank operating in Australia is a major bank in Australia. No foreign bank operating in Australia has liabilities of $100 billion or above. If in future any foreign bank operating in Australia grows to have a large presence with a subsidiary above $100 billion in total liabilities, they would be subject to the levy on the same basis.</p><p>The concern of the government is that, if we were to support the amendment that Senator Xenophon has moved, the effect actually would be a lessening of competition in the banking market. It was indeed none other than former Labor Prime Minister Paul Keating who made a very significant effort to strengthen competition in the banking market in Australia by attracting foreign banks into the Australian market. If we were to assess foreign banks not based on their liabilities in Australia but on their liabilities worldwide, it would obviously put them at a significant disadvantage in terms of their activities in Australia, which would lessen competition, which would not be good for consumers. That is why the government has proposed to structure this major bank levy the way we have.</p> <p class="speaker">Katy Gallagher</p><p>Labor will not be supporting this amendment. We note that Treasury has considered issues relating to foreign banks when designing the measure that is before us in the bill. Labor believes the government should release this work to explain why large foreign banks should be excluded, and we agree with the recommendation of the Economics Legislation Committee that Treasury provide greater explanation of the rationale for the method of liability calculation, which presently excludes foreign banks. Such information is important to consider the significant policies such as this, but in the absence of this information we emphasise that the importance of this legislation before the Senate is for budget repair, and we cannot let the government off the hook for its poor management of the budget. We will not delay the passage through the Senate of this legislation, which has a start date of 1 July.</p> <p class="speaker">Peter Whish-Wilson</p><p>For several reasons, the Greens will not be supporting Senator Xenophon's amendment. Senator Xenophon was at the committee on Friday and may be aware this question was put to the second-tier banks, which appeared in the afternoon and which included Adelaide and Bendigo banks, ME Bank and Customer Owned Banking Association. They have themselves, interestingly enough, come out and lobbied for the bank levy, so let's be clear about that. Twenty out of 25 of the Australian Bankers Association's members support this bank levy because they want to see increased competition in the market. So we got this from the second-tier banks, and you would have expected that, when you put to them, 'Do you support this levy also including foreign banks,' they might say yes, because actually these foreign banks are quite fierce competitors for our second-tier banks.</p><p>The answer was illuminating, and it is exactly my view. They said that the policy rationale, the underlying logic behind this bank levy, apart from increasing competition, is to pay the taxpayer back for its too-big-to-fail implicit and explicit guarantee to the big five banks. They made it very clear when they were asked. I asked the question: 'Do you support this levy?' and they said no, because it defeats the purpose. The foreign banks did not get a too-big-to-fail bank levy. In fact, the Australian banks, putting aside the Canadian banks, were the only banks in the world with this government guarantee.</p><p>That is quite extraordinary. As I mentioned in my speech earlier, you could easily come up with $50 billion worth of profits they had made for shareholders from this too-big-to-fail guarantee. We are only asking them to give back $5 billion of that. That is paying a premium on an insurance policy provided by the Australian taxpayer. The other reason, as I think Senator Cormann pointed out, is that the policy cannot be discriminatory against any bank. It is very clear: it sets a liabilities level of $100 billion, and if you go over that, whether you are a foreign or domestic bank, you pay the levy. I have explained this to Senator Xenophon. If we set $100 billion and then set a lower level for the foreign banks and leave the second-tier Australian domestic banks out of it, that will not work. It is almost certainly going to be challenged in international courts through state-to-state trade dispute mechanisms. It would be discriminatory against foreign banks. The only way it would work would be for all banks to have the same policy applied to them, which is the case.</p><p>I believe this foreign banks business has been thrown in by the big banks as a poison pill, and I am disappointed that we have fallen for what I think is the oldest trick in the book. The big banks are throwing this in there to try and kill this legislation, because they do not want to see more competition. I have a lot of respect for Senator Xenophon. It is interesting that in your speech you talked about supporting the smaller banks and that is one of the reasons why you will be supporting the levy. You talked about increased competition, but in a way you are contradicting yourself because, as Senator Cormann said—and I agree—what we want is more competition in the market, including from the foreign banks. Why make it harder for them? We want to make sure we have the most competitive market possible for all the banks.</p><p>There are a lot of good reasons why we do not support the inclusion of foreign banks. If somehow everybody in here were to agree that the liability should be $10 billion and not $100 billion, and that included all the banks in Australia, we would be happy with that. But this is the policy that has been set at $100 billion. This is an opportunity that we should not squander. We should pass this legislation tonight.</p> <p class="speaker">Ian Macdonald</p><p>As I mentioned in my speech on the second reading, there are couple of elements of this bill which I, as a Liberal, do not like. It does open the way for future governments to have a super profits tax, and that raises the issue of how we can argue against that in the future, in the next 10 to 15 years, when there might be another government in power. But I am persuaded, because of the need to repair Labor's mess in the budget, that we have to do something. I am prepared to go along with that. I also acknowledge the argument that this is a sort of payment or licence fee for the guarantee that the Australian taxpayers give to these banks, as they did in the time of the global financial crisis and more broadly.</p><p>On balance, as I mentioned to my speech on the second reading, I do not really like it, but I am prepared to support it. But I do refer the minister to the recommendations of the Economics Legislation Committee—which, I might say, has a government majority—which had unanimous recommendations. There are five recommendations there, which I know the Treasurer would be aware of. I really want to confirm the government's position, particularly on recommendation 4, which I will summarise very briefly by saying it was all about the fact that it was raised with us that the Treasurer, if the economic and financial situation of the banks became quite critical—hopefully it never happens—but it was pointed out to us that currently the Treasurer was unable to give any relief in those extreme circumstances. We hope and expect they will never happen, but the committee thought that in that event it would be a good idea to give the Treasurer that ability and flexibility in those extreme circumstances to suspend the application of the levy. The committee was hopeful that the government would adopt that amendment. All of the amendments were done by the committee in good faith and after hearing the evidence.</p><p>I will spend a couple of seconds on recommendation 1. It was put to us—and I personally agreed with this—that this is a budget repair levy and when the budget is repaired the levy should stop. I easily equated to that view. But the committee took a more moderate approach, saying: 'Well, let's have a look at whether we should look at stopping the levy when the budget is repaired. This has been sold to the Australian public as a budget repair measure and, once the budget is repaired, why do you continue on with a levy which many Liberals do not like?' We do not like it because, again, I will briefly mention, profit is not a dirty word. The banks make profits, and we hope they do make profits. As Senator Bernardi said, 'The only thing worse than a very, very profitable bank is an unprofitable bank. We do not want them.' There are lots of mums and dads who are shareholders in banks and they want the banks to make profits. Of course, the biggest shareholders in the banks are the superannuation funds, who want the banks to make money so that they get big dividends so that they can adjust their superannuation payouts to all of us in Australia to look after us all in retirement.</p><p>The committee thought, as a mid-way post, that in two years the government should refer this back—not to an independent group or to some other organisation to assist—to the same committee, the Senate Economics Committee, to have a look to see whether the policy was fulfilling its stated objectives—that is, is it repairing the budget? Also, to look at the effect of competition on the banking market—let's have a look at that in a couple of years—and in two-years' time, after the levy has been working for two years, to see whether it is required in perpetuity, which is the current legislation as I understand it, and where it is going. It is there forever; it is not just until the budget is repaired. I would have hoped that in two years the—</p> <p class="speaker">Peter Whish-Wilson</p><p>'You keep going in perpetuity.'</p> <p class="speaker">Ian Macdonald</p><p>Sorry, you were—</p> <p class="speaker">Barry O'Sullivan</p><p>Senator Whish-Wilson, you should be in your seat if you want to speak. Otherwise—</p> <p class='motion-notice motion-notice-truncated'>Long debate text truncated.</p>
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