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Government cosying up to their bank mates – APRA

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The government is set to try and ram through destructive changes to responsible lending rules. This axing will mean banks can go back to the bad days of over-lending to people who will never pay their loans back. We cannot go back to the bad days of equity theft where banks lent to people who couldn’t afford it just so the bank could later sell their house for a profit.

The government’s proposed axing includes giving APRA more bank-policing responsibility. I’m sorry to say but APRA has been weak and ineffective when it comes to policing the banks. They’ve managed to hand out just a $1.5 million dollar fine compared to ASIC and AUSTRAC’s impressive $2.2 billion in banking fines.

I won’t allow this government to use the cover of the pandemic to ram through cushy rule changes for their banking mates.

Transcript

Thank you very much Senator small. Senator Roberts, please take us home

[Malcolm Roberts] Thank you Chair and thank you for appearing here

As promptly as possible.

[Malcolm Roberts] Okay. If I can reference a December 2020 headline ‘Westpac hit with a second bank regulator penalty.’ Westpac broke key capital ratios and the consequence APRA levied was to make Westpac keep more money in the bank. In other words, to comply with the law this has the effect of reducing the bank’s ability to lend by reducing their available capital. Is that a fair analysis?

Thanks Senator, for the, for the question. So just to be clear you’re referring to the press release of March 21. Did I hear that correctly?

[Malcolm Roberts] No.

Which one?

[Malcolm Roberts] The headline of December 1st 2020 in Reuters.

December 1st, 2020.

[Malcolm Roberts] Yep.

So at that time, Senator, there were a range of AML issues for Westpac,

[Malcolm Roberts] AML?

Anti money laundering issues. APRA announced at that time, just before Christmas that it was taking action on three issues, there was an additional capital overlay, which I think is the point you’re making, of an additional 500 million on top of the 500 million they’d already applied, a BEAR investigation and some supervisory work. And I’m happy to talk about that. In terms of the capital impost, Westpac is a bank as per other majors who are very well capitalised. They’re running CT1 in the twelves at the moment and they have plenty of capital to lend for worthwhile projects and housing.

[Malcolm Roberts] Okay, thank you. Another headline, April 2021, APRA takes action against Macquarie Bank over multiple breaches of prudential and reporting standards. The penalty there was to keep more money in the bank, that also has the result of reducing the bank’s liability- ability to lend money. Correct?

Senator that’s another example where a bank breached a number of reporting issues on capital and liquidity and also on stable funding. We took action on the bank and part of that action was the capital impost. And I think the same answer applies that you have a bank with considerable capital and considerable ability to lend commercially. And in fact, in the case of Macquarie, they have been lending very significantly into housing.

[Malcolm Roberts] A third example, APRA takes, this is the headline from October 20th. APRA takes action against Bendigo and Adelaide Bank for breaching prudential standard on liquidity, their penalty, well their consequence, was not a penalty. Their consequence was to keep more money in the bank, that also reduces their ability to lend.

Senator, I think all three examples that you give go to breaches of standards that APRA has and as we’ve explained to the Committee previously we have an enforcement approach. The adoption and compliance with prudential standards is critically important to safety and system, safety for depositors in particular. And so we need to and have taken appropriate action, enforcement action on each one of those cases. And so that’s what we’ve done.

Can I just clarify one thing, Senator? So you keep referring about our actions reduce the capacity to lend and that’s not, not quite right, what we do when we’re adding more capital to the bank effectively we’re changing the mix in which it uses either its shareholders money or depositors’ money to fund loans. And the actions we take mean effectively that a bank has to use more shareholders’ money and less depositors’ money to fund a loan, but it doesn’t actually stop the bank from or reduce the bank’s ability to lend. It just says, use more of your shareholders money, put- get your shareholders to put more on the table and use less depositors’ money.

[Malcolm Roberts] Doesn’t it make the bank, reduces the bank’s ability to lend in that it makes

Only if they don’t have enough capital to meet their regulatory requirements and then they have to stop. But as John has said, these banks are running well above their minimum regulatory requirements. So the issue is really, it changes their, because capital is more expensive than funding from depositors it makes their funding costs slightly higher.

[Malcolm Roberts] So the headline in the Reuters that, well, the first paragraph, the Australian bank regulator, APRA, said on Tuesday it was forcing Westpac Banking Corp to raise its cash reserves after it fell short of prudential standards its second enforcement action in a year against the country’s number three lender.

So the effect of what we did was to increase the minimum amount of shareholders’ money that we required Westpac to have.

[Malcolm Roberts] Okay.

But they use that money still to lend.

[Malcolm Roberts] I ask because in a meeting of the Responsible Lending legislation with my staff, between my staff and Treasury, Treasury indicated that a substantial reason behind moving responsible lending regulation from ASIC to APRA was because ASIC was imposing restrictions on the bank’s ability to lend. But you’ll argue with this, then that is exactly what we see that APRA doing, is it not, because it’s altering the liquidity?

Well, I think we’ve already answered that question Senator.

[Malcolm Roberts] So since the Royal Commission, has APRA ever launched an action against an ADI or bank that resulted in a fine, a real penalty, not just complying with the law?

Yes we have Senator. And an example of that would be Westpac again, for a breach of reporting standards, a small fine but it was the maximum fund that could be levied under the FSCODA Act.

[Malcolm Roberts] What was the fine?

It was from memory, 1.5 million.

[Malcolm Roberts] Isn’t it amazing how 1.5 million is a small fine these days but anyway

Well we’re talking about a major

[Malcolm Roberts] It is all relative Does the National Consumer Credit Protection Amendment Supporting Economic Recovery Bill 2020 allow APRA to fine a bank that engages in systemic breaches of the Responsible Lending Guidelines.

So no, no Senator.

[Malcolm Roberts] Thank you. What action is open to APRA to regulate low doc home loans which are provided for in that legislation.

Well that, that is not something within our responsibility Senator.

[Malcolm Roberts] Well, we could find none

Senator Roberts we will need to wind up soon.

[Malcolm Roberts] Yep, I’m almost done. What about all the people who lose their homes their savings, their marriages, their mental health. Is there no consideration for the human cost of bad bank behaviour in this legislation?

Senator, is that a question?

[Malcolm Roberts] Yes.

If it is it’s not a piece of legislation that APRA has responsibility for Senator

[Malcolm Roberts] But you will have, or for Responsible Lending.

No, that’s not correct Senator.

[Malcolm Roberts] I thought you were getting, going to have responsibility for Responsible Lending.

What we have, as explained earlier, is we have a standard, Prudential Standard, APS220 there are some very minor changes to that and APRA’s current stance in relation to how it assesses credit will be pretty much the way it has been for many years. So no change

[Malcolm Roberts] Under the new legislation,

Well correct Senator.

[Malcolm Roberts] Thank you. APRA runs the Bank Executive Accountability Regime – BEAR scheme which fines bank executives for bad banking behaviour. You have taken action against the banks for bad behaviour, ASIC and AUSTRAC have fined, have caused fines on the banks of over $2 billion in the last three years. How many of the executives in charge of the banks have been personally fined through BEAR?

I was going to say the BEAR doesn’t give us capacity to impose fines on individuals.

[Malcolm Roberts] None at all?

That’s not part of the legislative framework.

[Malcolm Roberts] Okay. Well last question Chair. Westpac are moving night safe wallets and advising their business customers to not accept cash. Isn’t that rule number one for a bank, accept the Queen’s currency. On what basis are APRA allowing the banks to make such fundamental and illegal decisions without reference to APRA.

Senator, APRA does not have particular standards in place in terms of what commercial activities banks undertake and services that they provide. So, so they are commercial issues for the banks. Thank you Chair. Thank you. Thank you.

Just on your last point though I do think it is a little bit of an issue if banks do, and I’m not saying that Senator Roberts is necessarily correct, but banks refuse to accept legal tender, but I will leave that part there. Thank you very much for your time.

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Should we let bad banks keeps abusing virtual AGMs? Australian Securities and Investments Commission at Senate Estimates

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Annual General Meetings of large companies have almost always been held physically. This changed with COVID when the use of Virtual AGMs was authorised. Virtual AGMs were necessary when the country was plagued by lockdowns, but now as restrictions ease big companies such as banks are desperately trying to hold on to them.

Virtual AGMs allow the big banks to shut down investor questions and avoid scrutiny on important topics like the huge salary bonuses of top executives. AGMs that used to take an entire day because of questions from investors are now being sailed through in just a couple of hours.

I believe in the free market and to have that we must have confidence in the stock market. Physical attendance at AGMs for those investors that want it is a fundamental part of maintaining that confidence in the stock market and the companies in it.

Transcript

[Senator Roberts] And thank you all for attending today. The corporation’s coronavirus economic response determination number three, 2020, provided the basis for virtual AGMs. ASIC have replaced that determination, which expired this week with order 21-056 MR, which takes a no action position on virtual AGMs. Does this mean that corporations can run a virtual AGM with no restrictions coming from ASIC?

[Commissioner Melina] Senator, hopefully I can help you with that. In relation to this, there is a bill that parliament is considering about a full-time permanent change to the law to allow virtual AGMs, but that bill is still in committee and being considered.

[Senator Roberts] That was the rule of the Senate to extend it.

[Commissioner Melina] Yes, exactly, exactly. So in light of the fact that the pandemic, whilst we’ve operated very effectively nationally in the pandemic, but there is still some uncertainties about the pandemic for companies whose balance dates, for example, after December 31, this year, they have five months to have their AGM. In light of that fact, we think that it is reasonable given that there are still some restrictions of movements for companies to temporarily, until we hear, and it is temporary, but until we hear how parliament intends to pursue that matter, have an opportunity to, if they need to hold a virtual AGM to comply with various restrictions, wherever they may be located. Now, it is only a no action position. We don’t have the power to amend the law in this area or make any more permanent situation. But we are intending to give guidance to companies about what’s important. If they do need to take advantage of having a virtual AGM to ensure really the safety of their shareholders, their employees, and their staff. We are working to ensure that we give enough guidance about what’s necessary, so that people have an opportunity to ask questions of the chairs.

[Senator Roberts] So you’re saying this is temporary.

[Commissioner Melina] Temporary, absolutely.

[Senator Roberts] When will it expire?

[Commissioner Melina] We intend to revisit it once we, one, if the pandemic conditions change dramatically and two, once we hear more how the Senate and the parliament are considering this particular issue.

[Senator Roberts] So why couldn’t you’ve extended it until September 30th?

[Commissioner Melina]Well, we weren’t feeling comfortable about doing that because we were, my understanding and please correct me because I’m not so familiar with parliamentary time-tabling but my understanding was it’s possible that this bill could be determined before then. I understand the committee that is considering it is due to report at the end of June. So we did want to take our lead from the decisions of parliament. We’re not interested at all in-

[Senator Roberts] So the intent is temporary, but there’s no deadline.

[Commissioner Melina] And we could announce in a month or two, you know, it’s no longer applicable, but we want to give companies the opportunity to plan. These events do require a bit of logistics.

[Senator Roberts] Were you happy with the outcome of the trial of virtual AGMs?

[Commissioner Melina] Generally, there were some instances where we received complaints about how those, on some occasions, how questions were dealt with, but generally we were reasonably happy, and we’re able to go back and talk to chairs and companies about the particular issues.

[Commissioner] Senator, I just wanted to emphasise what Commissioner Melena just said, that the dialogue, the ongoing dialogue, which we had with the director community and the corporate community was very constructive so that we saw improvements taking place, as this was operationalized by companies in that initial no-action period.

[Senator Roberts] Okay my experience and the feedback we’ve got is quite the opposite. Companies are using virtual AGMs to disenfranchise activist shareholders. And these tactics include sending activist shareholders a wrong entry code. So they can’t access the virtual meeting room. Accepting questions on notice and then not reading them out, not calling on shareholders who they know will ask difficult questions and switching off shareholders, who were asking difficult questions. So this is why virtual AGMs went to an inquiry. So you’re basically invalidating the process.

[Commissioner Melina] Well, Senator we would be very happy to take those points on board and review them ‘cos that sort of feedback is very helpful.

[Commissioner] Yeah, we are interested in following up that sort of feedback.

[Senator Roberts] It does become a great way to manipulate annual general meetings and shareholders. American shareholder organisations are stating just that. So I understand the benefit for small companies to have virtual only AGMs, if shareholders agree before every AGM. But are you really saying that 100% virtual is acceptable for large companies like the banks and Crown Casino, who featured strongly in complaints to my office? And in addition, it seems like some of these companies want to shut down the problems, but that only defers it, because they eventually pop up, and then it becomes more embarrassing.

[Commissioner] Senator the points that you’re raising, we will certainly take on board, but just to confirm and this is explicit in your question. This is a temporary relief, we’re waiting on parliament. And certainly we will take those points on board but it strikes me that these are issues for Parliament’s consideration.

[Senator Roberts] Okay, thank you. Going to Banking Code of Practise. The enforceable code provisions, particularly, how close are we to seeing which provisions of the Banking Code of Practise will be enforceable?

[Commissioner Hughes] Morning Senator. Sean Hughes-

[Senator Roberts] Good morning.

[Commissioner Hughes] Commissioner at ASIC. Thank you for your question. The current version of the code, which we approved in January, which came into effect on the 1st of March does not contain any enforceable provisions. The changes that were approved by us in January are essentially minor in nature. We are however waiting to see the outcomes from the ABO’s triennial review of the code, which commences in June, that will also include a consideration of the small business threshold definition with the reviewer recommending an increase of that definitional threshold from $3 million to $5 million. At that point in time, I’d suggest Senator that we would revisit to the issue of enforceability in relation to any provisions of the code.

[Senator Roberts] So what date after June?

[Commissioner Hughes] So they’re commencing the triennial review in June.

[Senator Roberts] So at the moment, ASIC doesn’t have any provisions it wants to see as enforceable?

[Commissioner Hughes] The position in relation to enforceable code provisions, Senator is that the relevant body in this case, the ABA needs to apply to ASIC to say whether any provisions should be made enforceable. No such provisions were nominated to us and having considered it, we didn’t believe that any needed to be made enforceable at this point in time. As I say the changes that we approved in January were relatively minor and technical in nature. We would prefer to revisit the question of enforceability post the triennial review in June.

[Senator Roberts] So basically at the moment ASIC is waiting for the banks to tell them what to do.

[Commissioner Hughes] That’s not the case at all Senator. We have not identified any enforceable provisions in relation to the minor and technical changes to the code made in January.

[Chair] Senator Roberts, two more questions.

[Senator Roberts] Yes, exactly that, two. Going to unconscionable conduct. My question relates to this week’s judgement of the full bench of the Federal Court in the Kybolt Case which saw a substantial change in the definition of unconscionable conduct. Unconscionable conduct is contained in section 12CB of the ASIC Act. Will ASIC assist Corporate Australia to meet the lower standard of proof this offence now carries by way of a regulatory document or note or report?

[Commissioner Hughes] Senator I’ll take that question as well. We are aware of and have followed the decision of the High Court in relation to that proceeding that was commenced by the ACCC. And we’re revisiting the extent to which that may have an impact in enforcement actions that we are running. But as you rightly point out, Senator, that’s a very fresh judgement from the High Court. And I can’t make predictions as to what we will do in relation to future litigation matters at this stage.

[Senator Roberts] Will you be assisting Corporate Australia though to understand this component?

We will certainly continue to inform and educate Corporate Australia as to the impact of that decision. As I know, the ACCC will do, and we will be discussing with colleagues across the law enforcement agencies the benefits and the implications of that judgement .

[Senator Roberts] Last question. Well, it’s not a question, actually it’s a statement. May I compliment ASIC for its enforcement history on unconscionable conduct cases against the major banks. And I look forward to this judgement making your job even easier.

[Commissioner] Thank you, Senator.

[Commissioner] Thank you, Senator.

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Anti Bail-In Bill defeated, but will be fixed – 2SM with Marcus Paul

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Transcript

[Marcus Paul]

All right, welcome back to the programme on this Thursday, December 3, where it’s 22 minutes away from eight o’clock, New South Wales, daylight saving time. And Senator Malcolm Roberts joins us on the programme. Good day, Malcolm.

[Malcolm Roberts]

Good morning, Marcus, how are you?

[Marcus Paul]

I’m okay. I think you’d still be disappointed with the bank bail-in voted down this week. I know you’ve done a lot of work on it.

[Malcolm Roberts]

Yes, we were disappointed, but we were expecting to get, have it defeated. We were mildly hoping the labour party would wake up, But they abandoned their core, but what has been very good, Marcus, is that as a result of my speech and as a result of the work, one of the liberals came up to me later and he organised a meeting with me and our staff and himself and a senior advisor from the treasurer’s department.

And they now acknowledge that there is a problem and that they have promised to remedy it. So it looks like it’ll be taken care of, anyway, thanks to the effort we’ve done.

[Marcus Paul]

All right, just remind my listeners, What this is all about, what is the bail-in?

[Malcolm Roberts]

Well, let’s talk about a bail-out first. A bail-out is when a bank gets into trouble and the government gives it taxpayer money. So basically a bail-out is where the taxpayer money goes from the taxpayer through the government, to the bank, save the banks, even though the taxpayers didn’t cause the damage and bail-in is where the bank takes the depositors’ money and converts into shares.

So they get their money, they get the depositors’ money and get out of trouble. And in exchange, the depositors get worthless pieces of paper called shares because the bank is so close to collapse, it won’t be of any value.

So then that means that the depositors have a worthless piece of paper or they can hang on for a few years and hope that the bank comes back, which it probably will in our system, but a bail-in takes money, steals money from the depositors of the bank.

[Marcus Paul]

All right, and you’re hopeful that eventually after further discussions, even though it was voted down earlier this week, you’re hopeful that you will get this passed?

[Malcolm Roberts]

Well, not passed, but modified by the government itself. So it’ll take care of it. So either we’ll get the corrections that we wanted, the modifications we wanted in the government’s bill, so that there’s no bail-in. Or if there is a bail-in possibility, then at least it will be honestly portrayed.

And so everyone can make up their own mind what to do, but we think a bail-in would be better ruled out because it then instils confidence in the banks. We’ve had something like $20 billion in notes go disappearing in the last 12 months because people are scared of what will happen to their cash if there is a bail-in.

Because they’ve had bail-ins in Greece and other countries, we see this as a magnificent opportunity to clarify and to make it very, very clear to people what is happening.

[Marcus Paul]

All right, you want more of us to drink Australian wine?

[Malcolm Roberts]

Yeah. I didn’t know if you knew it, but 30% of our wine export goes to China.

[Marcus Paul]

Oh, yeah I knew it, well used to.

[Malcolm Roberts]

That’s double the UK, double the UK, double the US but an inter parliamentary alliance on China, our friends in parliamentarian and parliaments and congresses around the world showed support for Australia. And they’re really annoyed with the bullying of China against Australia.

So we actually saw a video that was made up of people from Japan, parliamentarians, from Japan, who said, you know, we like our saki better mate, but Aussie wine, go and buy a bottle of Aussie wine, and then the Italian saying we’re the number one wine exporters in the world, and we make the best wine, but go and get a bottle of Aussie wine.

So we’re encouraging Australians to go and spend a bit more time in the wine rose and liquor store and get stuck into some Aussie wine and show the Chinese that we will carry on regardless of their threats.

[Marcus Paul]

Well that’s right, there’s no 212% tariffs here at home with our domestic wine. I mean, we know that wine, the sector itself valued at $4 billion in September, 2020, before these ridiculous over-inflated tariffs were imposed. Maybe we can, I know we export around 15 and 14% respectively to the United Kingdom and to the United States of our wine products maybe we could up their share of exports and not worry too much about China.

[Malcolm Roberts]

Exactly, and I think this is a problem that’s coming home to roost Marcus, we’ve gone to China because it’s the easy way out. We haven’t done the hard yards in this country of fixing the tax system, reducing our energy costs. We’ve instead inflated our energy costs.

We’ve doubled in, some places tripled our electricity costs for example, instead of doing the hard yards to fixing that energy sector and stopping the rort on climate and the subsidies, and instead of fixing the taxation system to make manufacturing more competitive, we have taken a lazy way out and just exported iron ore to China, coal to China, raw materials to China, agricultural products to China and just bought, whatever we can from China, very lazy way.

We’ve destroyed our manufacturing, let China supply us, and we’ve got to stop that. We’ve got to rebuild this country, bring it back to basics.

[Marcus Paul]

You’re not still betting on a Trump win, are you?

[Malcolm Roberts]

Oh yes, definitely. Definitely.

[Marcus Paul]

Malcolm, you still haven’t woken up.

[Malcolm Roberts]

No, no. The fact they’re coming in now there’s clear corruption, Marcus. And I think that Trump has recognised this. In fact, one of the Republicans said that we know there’s been corruption from the Democrats, especially for many, many years.

And Trump, to his credit has set the eyes in motion and the monitors in motion. And now it’s all coming home to roost for the Democrats. There’s serious corruption out there. And there’s a path for Trump to the White House. He’s definitely in.

[Marcus Paul]

Not till 2024, though.

[Malcolm Roberts]

No, no, it’ll be this year. You watch.

[Marcus Paul]

This year?

[Malcolm Roberts]

So much corruption going on that the constitution and the laws in America provides for this kind of circumstance. And Trump is in the box seat. He knows what he’s doing.

[Marcus Paul]

You want to bet me a bottle of wine on this? Australian wine

[Malcolm Roberts]

I definitely do.

[Marcus Paul]

All right. Now the Australian federal integrity commission, you know, that toothless tiger that’s been suggested, the centre for public integrity called a press conference to highlight the extensive inadequacies of the government’s draught Commonwealth integrity commission bill, 2020.

There were plenty of people present, including previous members of the high court, former judges from the Victorian court of appeal and a former judge of the New South Wales court of appeal. Now, Helen Haines MP has introduced a better version. The Australian federal integrity commission bill 2020. What do you say to this?

[Malcolm Roberts]

We actually like Helen Haines’s version much better. We’ve had a couple of presentations on it. We listened to Helen herself, came over to Pauline’s office and I joined them. It’s quite good. The Australian centre for public integrity endorses it. And the government’s bill is a shocker.

It’s just a lazy well, it doesn’t even work properly because politicians are treated differently from everyone else. They’re treated far too softly. And, that’s, you know, that’s the worst thing you can do to restore public confidence in the integrity in parliament.

The second thing is that the government’s proposal has a very high threshold for referrals. You have to be, have a lot of evidence there before you can even get through. And the third thing is that the Attorney General has powers to limit information that can be considered by the corruption commission.

[Marcus Paul]

Well as I said, it’s toothless.

[Malcolm Roberts]

Yes, that’s basically it, they can hide, they can still hide. And the other thing, Marcus, is it’s not retrospective meaning that we won’t be able to investigate any of the past dodgy dealings.

[Marcus Paul]

That’s right. And you know, we may never know why the government thought it was a great idea or a great investment to, you know, overspend on land at Badgerys Creek Airport, and the rest of it. Malcolm, I’ll have to leave it there today, but thank you very much, mate. We’ll catch up with you again next week.

[Malcolm Roberts]

I’ll look forward to drinking your wine.

[Marcus Paul]

He’s still in lala land over there. All right, mate. Good on you, we’ll talk soon.

[Malcolm Roberts]

See you, mate.

[Marcus Paul]

All right, there he is. Senator Malcolm Roberts.

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Bail-in loophole to be remedied

One Nation Senator Malcolm Roberts met with the government today and received reassurance that, despite his anti bail-in bill being voted down 12-32, the loophole that allows a bail-in will be remedied.

Senator Roberts said, “The public needs to know that their savings are safe from failed banks and the vote against my bill fails to offer this assurance.”

“There is no ambiguity that our deposits are indeed at risk of being used in a bank bail-in and I assure all Australians that I am resolute in my fight for security of bank deposits.”

The anti bail-in bill closes the loophole left in previous legislation that gives Australian Prudential Regulation Authority (APRA) or the banks the power to order a bail-in of depositors’ funds in the event of bank failure.

Senator Roberts added, “Our aim is to ensure that APRA and the banks never have bail-in powers.” “This is an exceptional opportunity to restore confidence in the Australian banking sector and to attract deposits from other countries seeking more security.”

Senator Roberts said, “The public needs to know that their savings are safe from failed banks and the vote against my bill fails to offer this assurance.”

“There is no ambiguity that our deposits are indeed at risk of being used in a bank bail-in and I assure all Australians that I am resolute in my fight for security of bank deposits.”

The anti bail-in bill closes the loophole left in previous legislation that gives Australian Prudential Regulation Authority (APRA) or the banks the power to order a bail-in of depositors’ funds in the event of bank failure.

Senator Roberts added, “Our aim is to ensure that APRA and the banks never have bail-in powers.” “This is an exceptional opportunity to restore confidence in the Australian banking sector and to attract deposits from other countries seeking more security.”

/4 Comments/by

Anti-Bail-in Law

Transcript

Thank you, Mr President.

As a servant to the people of Queensland and Australia I proudly ask for the Senate’s support for the Banking Amendment Deposits Bill 2020.

Commonly called the NO bail-in bill.

Our purpose is to keep people’s money SAFE.

And to keep the banking system safe.

Let me first explain what is a bail-out and then a bail-in.

Bail-out’s 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. Govts act as a conduit from taxpayers to the corporate banks, even when the banks got into trouble due to their own greed or stupidity.

In times of profit banks are capitalists and in crises banks are socialist.

International Monetary Fund and G20 rules now though prevent taxpayers’ money being used to save a bank.

Instead requiring that rescue funds must come from shareholders and from depositors. A Bail-in.

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 banks’ shares are worthless pieces of paper and will remain so for 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 is needed to live on, to buy food and clothing and pay bills.

Gone.

Gone. Overnight.

Reserve Bank figures show that 1 trillion dollars is available to be taken in a bail-in.

That’s what the Liberal, Nationals and Labor parties defend when opposing my bill.

Next, I’ll share a letter from a constituent, Peter Thompson, last week:

Quote: “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 saving 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?”

Peter continues: “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 land or property 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 protect their savings and create confidence in the system. “

Thank you, Peter. Creating confidence is exactly why I have proposed this bill.

The public understands that the govt’s Cash Ban bill is designed to force everyday Australians to keep all their money in the banking system to make a bail-in much more effective.

Labor, Liberals and Nationals passed the Cash Ban bill through the House of Reps and are now terrified of the public and backbench backlash if it enters our senate.

The public understands our real estate prices are the third highest in the world.

The public understands that the govt’s COVID restrictions are destroying small and medium business and the ability of those business owners and their staff to service their mortgage, loans and credit card debt.

In fact, there is a 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 govt’s COVID restrictions is much worse than the headline figures.

And 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 2020.

Cash is being stashed under beds.

My Bill is an opportunity to restore confidence in the banking sector.

It’s an opportunity to attract deposits from other countries where bank deposits are less secure than ours.

We could be a safe haven for legal investment in our banking sector – money that isn’t coming, for once, 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 to stand up for everyday Australians.

To protect bank deposits from being bailed in.

The response from these tired old parties? Denial.

We’re told that this bill is not necessary. We’re told that the law does not allow for a bail-in.

I ask all Australians to listen more closely. Listen for their proof.

There is none.

No legal opinion, nothing but bland assurances from self-interested public servants hoping that constant repetition will fool the public.

Here’s MY argument. The Crisis Resolution Powers and Other Measures Act 2018, that was passed in the dead of night, with just 7 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 rely on for the supposed opposite case are contained, not in the Crisis Resolution Powers Act, but in the Banking Act.

Their argument is a nonsense because the emergency provisions powers in the Crisis Resolution Powers Act over-ride the everyday protections in the Banking Act.

That’s why the govt 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. Quote:

“The new ‘catch-all’ directions powers in the 2018 Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 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.”

“[APRA’s] Direction powers are a key element in the resolution process for a distressed bank. APRA could order a bank to recapitalize…using the funds of unsecured creditors”

The IMF goes 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?

Well, the answer is yet again 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 and Brussels 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 instruction is to do the opposite. The Kiwis dutifully wrote their bail-in laws and made them honest and transparent. If a bank fails the bank closes, pays off it’s debts using depositor funds and then re-opens the next day. Depositors can access what remains of their money. If there is any.

I’m not suggesting the New Zealand model is better. More honest yes, better no.

There’s a simple solution for bank failures.

When a bank fails, the Government could issue bonds. Currently we’re offering just 1% interest on bonds, so it’s not a costly option. We then use that money to buy new shares in the failing bank. That injects enough capital for the bank to survive.

Then vest those shares with the 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’s the Labor and LNP track record on corporate bail-outs?

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 companies. 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 $120m. Not in exchange for shares, it was another gift from taxpayers.

If we’d asked for shares in ABC Childcare in return for the bail-out those shares would be worth $250 million today.

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 are having a lot to say about their Financial Claims Scheme Guarantee (FCS).

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 4 banks. $20 billion times 4 though is only $80 billion. The Financial Claims Scheme Guarantee will save less than 10% 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’s 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 customers 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 only known to the regulator, the Financial Claims Scheme Guarantee scheme 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 triggers, 10% of bank deposits are saved and the bank is liquidated.

This is what Liberals, Nationals and Labor are relying on to falsely tell everyday Australians ‘our money is safe?’ Yet the reality is that it’s not safe.

Following the dictates of unelected globalist masters 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 to not interfere with the rest of the act.

Criticism dismissed.

In concluding Mr President, at no time has the Government, the Treasurer or APRA actually said they will not order a bail-in. These govt agencies duck the question and say “APRA doesn’t have the power”.

Well Mr President my bill clears that up. My bill adds one clause to the Banking Act that simply says APRA does not have the power to order a bail-in.

No other powers are affected.

Passing my bill ensures everyone will read it the same way.

Let Australians know that our money is safe in a bank. Let Australians know that there’s no need to stuff cash under the bed.

Even the Australian Bankers Association in its submission said if there is 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.

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RBA props up banks with $100 Billion

The Reserve Bank of Australia has just given $100 billion to prop up the banks but why is the government ignoring spending that would increase our productive capacity like road, coal power stations and dams?

Transcript

[Marcus Paul] All right, the RBA this week cut the interest rate down to you know, virtually nothing. 0.1% interest rates. So I mean, it’ll help people buy or stay in their homes, but there is a cost of course, self-funded retirees as we’ve talked about on the programme, who rely on investment income, and seeing their returns fall to basically nothing.

[Malcolm Roberts] That’s right. And then so, these people providing for their so-called own retirement is just hot air, because the legs had been cut out from under them now. We’re now at the point where retirees are having to spend their capital, because the return on their nest egg is almost non-existent and heading negative. And what’s disturbing is that, you know, this is going to create a lot of pressure for people at a time when people don’t need it. And by printing another a hundred billion, and giving it to the banks, they’re going to prop up the banks to do more mortgage lending. This government, the state and federal are completely ignoring the need to invest in productive capacity. We need to invest in power stations, dams, roads, ports bridges. The Iron Boomerang Scheme, the Bradfield Scheme. These and many other prime investments, opportunities in our country

[Marcus Paul] Yeah.

[Malcolm Roberts] Are being neglected. And we need to get into building the productive capacity of our country.

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Questioning Reserve Bank of Australia (RBA) – Cash Ban and Bail-In

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One Nation has led the fight in the Senate against the Cash Ban bill, which makes any cash transaction over $10,000 illegal. Our efforts stopped the bill from passing, but the Government has not formally withdrawn the bill. At this estimates we started a campaign to have the bill removed from Senate business permanently. Our first questions asked the Reserve Bank if they still thought the cash ban was a good idea.

We didn’t get the answer we wanted, it seems the Reserve Bank is still trying to force people into the banking system and take away their right to decide what to do with their own money. Cash Ban Explanation – https://youtu.be/93EigYTWe5s

Then we asked about our bill coming up later next month to prevent banks using money deposited with them to pay their own expenses in a bank emergency.

What was obvious to Senator Roberts is that the Reserve Bank had no idea they had made a submission on our bail-in bill. The Reserve Bank was not on the list of submissions. Where did their submission come from? Could the Government have written it, not the Reserve Bank? The Reserve Bank is an independent regulator, it would be a scandal if the Government is writing their policy for them. One Nation will pursue this matter further.

Transcript

Senator ROBERTS: Thank you for attending today. I’ve seen reports that the Reserve Bank has printed an extra $12 billion in banknotes this year to keep up with demand. Do you have the accurate figure, please?

Dr Debelle: I do. I can provide you with an accurate figure. Yes, we have printed extra bank notes because there has been additional demand. Between 16 March and 6 August we printed 220 million banknotes worth $12.5 and they were issued into circulation. I don’t have the most up-to-date information to hand, but I can provide that.

Senator ROBERTS: If you could, that would be appreciated.

Dr Debelle: I don’t have it completely to hand. I may have it before we finish this line of questioning.

Senator ROBERTS: That’s impressive. The Reserve Bank’s written answer to my question on notice from the February estimates—it’s reference AET93—included this response—I’m slightly paraphrasing: ‘While cash is used less frequently in Australia, it is still widely held for precautionary purposes and some members of the community really very heavily on cash for their daily lives. Cash remains an important payment method for older households, those with disabilities and those living in rural and remote areas where electronic banking may not function reliably.’ Do you consider that people are voting with their feet and withdrawing cash to get ahead of the cash ban bill?

Dr Debelle: What we have seen is increased demand for banknotes, as you just highlighted in your previous question. I think that is mostly as a store of value. What we’ve seen is around 50s and 100s in particular; actually mostly 50s. I think it is primarily as a store of value, particularly in a world where interest rates are as low as they are.

Senator ROBERTS: So people have an alternative in cash. People need that alternative. Does the Reserve Bank support withdrawal of the widely criticised cash ban bill and instead support the development of a bill that actually addresses money laundering and tax compliance? In other words, is it time to kill the cash ban bill?

Dr Debelle: We’re part of the Black Economy Taskforce and we’re comfortable with the recommendations of that.

Senator ROBERTS: Item 1.27 of the Economics Legislation Committee’s report on the bail-in bill includes this statement:

The Reserve Bank of Australia … indicated the information provided by the Treasury to the committee’s inquiry was consistent with their views.

Is this correct?

Dr Debelle: I have no reason to suspect otherwise.

Senator ROBERTS: How did the RBA communicate with the committee? Because my office saw no submission.

Dr Debelle: I will have to take that on notice. I did not have direct involvement with this. Michelle, I don’t know if you can answer this?

Ms Bullock: I didn’t have. I know we had someone on the Black Economy Taskforce but I’m not aware of this particular bill.

Senator ROBERTS: Could you also send me the full comments that you made to the committee.

Dr Debelle: Sorry, the committee on the bail-in bill?

Senator ROBERTS: Yes, please. Your views to the committee include this statement: ‘The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 did not include a statutory power for APRA to write down or convert the interests of depositors as unsecured creditors of a failing ADI.’ Is this correct?

Dr Debelle: Yes. Michelle, I think you can confirm that.

Ms Bullock: Yes, our view is that it does not include those sort of provisions.

Senator ROBERTS: The G20 Financial Stability Board’s Key attributes of effective resolution regimes for financial institutions, adopted by Australia in October 2011, states: ‘Powers to carry out bail-in should enable authorities to convert into equity’—meaning shares of the bank in this case—’all or parts of unsecured creditor claims.’ And elsewhere it says that means deposits. We have a clear obligation, then, under this agreement, to provide a bank bail-in mechanism. If the 2018 act did not do that, where else is that provision?

Dr Debelle: We have depositor preference, as you may be aware, and a deposit guarantee—sorry, we have a deposit guarantee scheme, which guarantees bank deposits.

Senator ROBERTS: I understand the timing of that doesn’t quite back up what you’re saying. Let me look at that more closely. New Zealand responded to the Financial Stability Board’s instruction to pass bail-in laws with their open bank resolution system. The New Zealand Reserve Bank explains this is a follows: ‘If a bank fails, it is placed under statutory management and closed. If losses cannot be covered by shareholder funds, then a proportion of depositors’ funds are set aside and frozen for the purpose, then the bank reopens.’ That could not be clearer. New Zealand has a bail-in law. The UK and Canada have the same bail-in laws. I ask you again, if the crisis resolution act did not establish bail-in laws, where are ours?

Dr Debelle: As I just said, we have a depositor protection scheme in Australia. Michelle, do you want to add anything to that?

Ms Bullock: No, only that our understanding of the bail-in laws, and I think APRA’s understanding of the bail-in laws, is that they apply to certain hybrid instruments which may be bailed in, not depositors. Depositors have depositor preference and also the Financial Claims Scheme. My understanding, and I think it’s the common understanding, is that bail-in does not apply to deposits in Australia.

Senator ROBERTS: I put it to you that it is our obligation under the G20 agreement to conduct a bail-in if a bank fails, that the 2018 act was specifically written to allow a bank bail-in, and that the wording chosen in the 2018 act was deliberately obtuse to hide that fact.

Dr Debelle: I’d like to confirm that we have depositor protection. You can take this issue up with APRA when they come later on, but that’s the state of play in Australia.Senator ROBERTS: Thank you. I have some more questions to put on notice.

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Questioning Australian Prudential Regulation Authority – Debanking

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De-banking is the process of banks closing accounts for businesses or individuals. All the big banks are now de-banking clients and claiming that this is for Anti Money Laundering reasons, but it is just not true. At our Senate Estimates questions, APRA agreed they had authority in this area and also agreed they were doing nothing about this scandal.

The companies being de-banked are bullion dealers, bitcoin exchanges and cash handling companies working to keep ATMs in clubs and pubs full and so on. All of the companies that have been de-banked that my office has looked at are legitimate, long-established companies that are following the law.

The only explanation for de-banking is this – banks are shutting down their competitors. This is an abuse of their market power that will prevent competition in banking and reduce freedoms Australians enjoy as to the choice of what to do with their own money. This is bank greed and the supposed-regulator the Australian Prudential Regulation Authority are facilitating this by looking the other way.

The Cash Ban Bill produced by Treasury works with the banks by de-banking their rival businesses and then preventing those businesses to move over to cash payments. This effectively puts these banking rivals out of business.

Transcript

Senator ROBERTS: Moving onto the practice known as debanking, is the regulation of debanking practised by the banks your responsibility?

Mr Byres: I don’t know that I can talk about a regulation for debanking. The concern is that various customers no longer get banking services. It’s certainly not a primary issue for APRA. We understand the issue exists. In many cases, it relates to banks being able to comply with anti-money-laundering and counterterrorist-financing regulations.

Senator ROBERTS: That’s where I’d go. Commander Security is an Australian cash security company. It transits cash, and a large part of that is refilling third-party ATMs. So it’s a competitor to the banking cartel. Commander Security is fully AUSTRAC compliant and operates its accounts lawfully. On 14 October 2020, it received a notice from Westpac cancelling Commander Security’s banking accounts effective from 26 October. It has been refused accounts at other banks. Where is the protection of interests of depositors in this process?

Mr Byres: The depositors of the banks themselves are protected. I’m not aware of the specific case that you’re referring to. We’re happy to look at that.

Senator ROBERTS: Let’s look at another one then. Melbourne Gold Exchange sell bullion to retail investors. It is also AUSTRAC compliant and operates legally. It was debanked by Westpac, then the Commonwealth, then the NAB and now cannot get an account anywhere. Would you categorise bullion as a rival store of wealth to  cash in the bank?

Mr Byres: No, I wouldn’t actually. I think cash in the bank has a very stable value and bullion does not. But that’s a discussion about investment rather than safety.

Senator ROBERTS: Bullion’s not stable? Okay. The point of this question is simple: banks are debanking businesses that they have decided are an unacceptable risk. When my office looks at these businesses, they are bullion dealers, non-bank companies providing rival services to the banks, like Commander Security, and bitcoin exchanges. APRA appear to be turning a blind eye to Australian banks debanking their rivals. Can you explain that?

Mr Byres: I don’t think we’re turning a blind eye to it. We understand the issues there, but banks are making decisions based on their risk profile as to whether they want to take on the risk associated with some of these customers. Clearly what we have seen in recent times is that the penalties for getting it wrong are significant. That’s not to condone the banks but to simply make the point that they’re taking it very seriously.

Senator ROBERTS: When the Melbourne bullion company was debanked, Westpac debanked not only the accounts but also the private accounts of the owners and the private accounts of their employees. APRA is responsible for protecting the financial interests of depositors. Does APRA consider this acceptable behaviour?

Mr Byres: Just to be clear, our obligation to depositors is not a consumer protection obligation, it’s making sure that people get 100c in their dollar—

Senator ROBERTS: I think you’re also responsible for making sure that there’s adequate competition.

Mr Byres: We have to be mindful for competition, but we don’t have a mandate to promote or establish competition. We have to deliver safety and soundness having regard to a range of other factors: competition, efficiency, ability and competitive neutrality. But we’re not primarily a competition regulator.

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Questioning Australian Prudential Regulation Authority (APRA) – Bail in Laws

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Bail-in measures are designed to inject capital into a bank that gets into trouble. The bank is authorised by the corporate regulator – APRA to take money out of the bank accounts of depositors and to use that money to pay their own bills. The depositor loses their money but does get shares in the bank, which will be worthless, but may come good years down the track if the bank doesn’t go broke.

APRA maintain that the emergency banking measures passed in 2018 by the Turnbull Government did not include a bail-in power. Further, if they used the general powers in that act to order a bail-in, that bail-in would be declared “invalid”.

This is because the Banking Act protects deposits. One Nation’s legal advice is that the emergency powers over-rule the general protections in the Banking Act and APRA do have bail-in powers. One Nation have proposed a bill to clear this up by adding one simple paragraph to the Banking Act that says APRA do not have the powers to order a bail-in.

APRA doesn’t want our bill passed because they know they do have bail-in powers and don’t want us to take them away. This round of questions did extract an admission that APRA does have bail-in powers, but not for deposits. So at least we are getting a little more honesty out of APRA on this matter. We also spoke about their emergency bank rescue plans.

One Nation feels these plans will show a bail-in is part of the plan. Getting our hands on those plans won’t be easy.

Transcript

Senator ROBERTS: Thank you all for participating tonight. APRA’s submission 197 to the inquiry into our bank anti bail-in bill—and I am slightly paraphrasing—says that APRA does not have the power to direct Australian authorised deposit-taking institutions to bail in a deposit because that would be inconsistent with the objects of the Banking Act, particularly the paramount objective of protecting depositors, and that such a direction would be found to be invalid. Who would find it invalid?

Mr Byres: It could be challenged by anyone who wished to take it before the courts—that would be the answer. Our direction could be appealed to a court.

Senator ROBERTS: That is my understanding, too—that only a court can find an APRA direction invalid. Can I confirm that it is your position that if a bail-in occurs those depositors who have lost some or all of their money must then take their banks to court at their own expense, with millions of dollars in legal expenses, to seek an order declaring the bail-in invalid? They will have very little in the way of funds to fund that because their deposits have been cleaned out.

Mr Byres: Your question is premised on the assumption that there is a bail-in. I think in our correspondence with the committee and in our submission to the committee on this bill we made very clear that our whole purpose is to protect depositors, not to bail them in. A bail in of depositors would be anathema to the way we operate and our statutory purpose. So I think it is a scenario that is entirely hypothetical, because that would not be a direction that we would give.

Senator ROBERTS: The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act 2018 says APRA has a right to enact emergency powers and they are often said to be overruling. Does that emergency directions power have primacy over the general banking directions in section 2A in the Banking Act?

Mr Byres: I’m not sure where exactly you are referring to, but you are right: we have strong powers to deal with an emergency situation where a bank or another financial institution is in severe financial stress. The purpose of that in the case of a bank, to be clear, is to protect the community and depositors.

Senator ROBERTS: The IMF disagrees with APRA on the strength of the section 2A protections. The IMF has stated that:

The new ‘catch-all’ directions powers in the 2018 Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill provide APRA with the flexibility to make directions to the ADIs that are not contemplated by the other kinds of general directions listed in the Banking Act.

If the IMF are correct, you do have bail-in powers. Is the IMF wrong?

Mr Byres: The bail-in powers that we have relate to capital instruments. Again as we put in our submission to this committee when it conducted its inquiry into that bill, the objective is very clearly to have bail-in for subordinate capital instruments. That act and, in particular, the sections of that act which attracted a lot of attention were designed to make sure that there was legal certainty and that the contractual arrangements that are in those subordinated debt and hybrid instruments would work in this.

Senator ROBERTS: Our bill simply clarifies that you do not have bail-in powers, which is what you’re  telling me here today. Why are you opposing our bill when it does nothing more than clear up what the law is saying that you say it is?

Mr Byres: Sorry, Senator. We do have bail-in powers. They relate to certain specific instruments. As the law currently applies to banks, it applies to their subordinated debt or, in the jargon of the bank supervisor, tier 2 capital, and it applies to hybrid capital instruments or additional tier 1 capital. So we do have bail-in power. It was designed to give legal certainty to the bail-in of those instruments if needed. It does not apply to deposits.

Senator ROBERTS: Our bill simply clarifies that it doesn’t apply to deposits, so why would you oppose it? It doesn’t stop the bail-in of other funds, appropriately, but it would stop the bail-in of deposit funds: cheque accounts, savings accounts, small business accounts, private accounts. That’s all it does, so it’s agreeing with you. Why would you oppose it?

Mr Byres: The view we put in the submissions was that it was not necessary because we thought the current law was adequate.

Senator ROBERTS: It doesn’t change anything for you; it complies with what you just stated. I can’t understand why you’d oppose it. It makes two minor changes that are in line with what you’re saying.

Mr Byres: As we said in our submissions, we didn’t think it was necessary.

Senator ROBERTS: Okay. APRA’s 2018 paper titled ‘Increasing the loss-absorbing capacity of authorised deposit-taking institutions to support orderly resolution’ states:

APRA will need to work with ADIs on an ongoing basis to ensure adequate resolution plans are developed and maintained. These plans—

supposedly—

outline how APRA would use its powers to manage the orderly failure of ADIs and identify steps that can be taken to remove barriers to achieving effective resolution outcomes.

Have those plans been drawn up? If so, what are they?

Mr Byres: I’ll start, and then I’ll see if my colleague Mr Lonsdale wants to jump in. One of the things we have to do is prepare for the unexpected. We can never provide a guarantee that a bank—or, for that matter, an insurer or another type of financial institution—won’t get into financial difficulty. We need to have crisis plans, like contingency plans, drawn up for how we would respond in the unlikely—and I stress ‘unlikely’—scenario that a bank was close to failing or was failing. The sorts of plans that we have—we’ve just stepped through what actions we might be able to take and how we would achieve an orderly outcome, but, as I’ve said many times already in my answers to your questions, this is with a view to protecting depositors.

Senator ROBERTS: Just to interrupt there: you said the plans would be drawn up. Have they been drawn up is what I asked?

Mr Byres: We have plans drawn up, yes, but they could always be improved. The institutions themselves are constantly evolving and changing, so the plans always need to be updated to make sure they continue to be current.

Mr Lonsdale: I would just add that this has been a big priority for us this year. In fact, the government has provided APRA with some funding in the budget. A significant portion of it focused on recovery and resolution development, so, as Mr Byres said, there’s a lot of work in continually keeping the plans updated and making sure they’re operationally fit for purpose.

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Stop banks stealing our money

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Stop banks in financial trouble from stealing our savings is the message of Senator Roberts’ submission to the Bank Bail-in inquiry.

“The Australian people and small business owners need to know that their savings, whether for mortgages or quarterly tax payments, right now are not safe if a bank faces financial hardship,” said Senator Roberts.

The disappointing and inaccurate submissions from Treasury and APRA claim there is no provision for a bail-in of depositors’ money, in spite of Australia being signatories to international agreements that demand a bail-in strategy.

“This is a blatant lie. Australians need to know that our politicians have ratified the IMF (2008) operating agreement  and the G20 financial management guidance which both clearly state that if a bank fails, taxpayers’ money cannot be used to save it (a bail-out), and instead banks must use a bail-in, which steals depositors’ money.”

The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2018 that allows banks to take your deposited money and convert to devalued bank shares, was waved through with only nine senators present.

“That Bill legalises a bail-in that international agreements demand happens. My Bill, the Banking Amendment (Deposits) Bill 2020, stops this happening.

“New Zealand has openly acknowledged the same international agreements that Australia has signed and has passed legislation that allows depositors’ money to be taken as a bail-in, so why are Treasury and APRA pretending this can’t happen here?” added Senator Roberts.

A bank bail-in has already occurred in Cyprus and Iceland and many countries now have these provisions as part of their banking system.

Only One Nation is prepared to stand against the international agreements that intrude into the lives of Australians and the banks taking our money to save themselves. “Government bonds issued for the purpose of saving a bank are a much better way to save that bank without costing taxpayers any money,” Senator Roberts stated.

Senator Roberts’ submission can be read in full here:

Senator Roberts makes submission to Bank Bail-In Inquiry
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