Pacific Banking Guarantee Bill 2025; Second Reading

Whiteaker argued that the bill addresses the critical decline in correspondent banking links, which has made it difficult for Pacific nations to access financial services and receive remittances. Whiteaker detailed the $2 billion, 10-year guarantee for ANZ, noting that the bank would invest $50 million in modernising systems and maintain fee-free remittance services. Whiteaker framed the legislation as a practical measure to support regional stability and respond to the priorities of Pacific leaders.

McKim stated that the Greens would support the bill but expressed significant concerns about the lack of transparency and the uncapped liability for taxpayers. McKim argued that the legislation favoured Australian banks over local Pacific institutions and criticised the use of commercial-in-confidence clauses to hide guarantee terms. McKim called for legislative requirements to publish the terms, conditions, and compliance reports of any guarantees provided.

Collins supported the bill's objective of maintaining Australian banking presence but raised concerns about transparency and fiscal responsibility. Collins highlighted the importance of correspondent banking relationships for remittances and trade, noting that their decline poses socioeconomic risks. Collins advocated for stricter accountability measures, including public disclosure of guarantee terms and scrutiny of foreign exchange markups to protect Pacific workers.

Dowling stressed that the legislation supports Australia's trade and foreign relations in the Pacific, tackling the swift decline of banking services there. Dowling characterised the ANZ guarantee as a specific measure that secures ongoing services without acting as an open-ended commitment, since every guarantee is evaluated on its merits. Dowling contended that preserving access to regulated banking is vital to stop financial exclusion and aid Pacific families dependent on remittances.

Sharma acknowledged the strategic importance of the bill but reiterated concerns about the uncapped appropriation and its potential impact on Bank South Pacific. Sharma noted that BSP executives had expressed worry about a lack of consultation and the competitive implications of the guarantee. Sharma urged the government to provide reassurances to local banks and monitor the commercial impacts to ensure the intervention does not render Pacific banking institutions unviable.

Darmanin, who chaired the inquiry into the bill, stated that the guarantee was the lowest-cost and lowest-risk option to maintain banking services in the Pacific. Darmanin clarified that the scheme is not a subsidy, as banks pay fees, and that the risk to the Commonwealth is low due to strict prudential standards. Darmanin highlighted additional government investments in digital identity and anti-money laundering capabilities to strengthen regional financial systems.

Chisholm commended the bill for responding to the concerns of Pacific and Timor-Leste governments regarding access to the global financial system. Chisholm explained that the guarantee shifts the chance of non-payment for low-risk exposures to the Commonwealth, ensuring banks can maintain their operations. Chisholm concluded by affirming the bill's role in supporting economic growth and financial inclusion in the region.