Disconcerting evidence has come to light that 'Ruddbank' could be in breach of the TPA

Today’s Senate Estimates hearings were interesting fare for those interested in the development of the so-called “Ruddbank.”

Most would be aware that at Agitate! we have severe reservations about a commonwealth bank – established on the recommendations of the Big Four – developed to bail out loans for property developers who can’t refinance.

Sure, the banks themselves are going to tip in $500 million each and the Commonwealth will also stump up $2 billion of taxpayers’ cash into a central fund. This will be used as a sort of “get out of jail” default plan for the banks who stand to lose on their investments.

And of course property developers think it is a good idea as well – but when has a rent seeker ever thought that a tax-payer gift was a bad idea. After all who wioll say no to a chance to socialize one’s loses.

So to today’s Estimates.

With the ACCC  appearing before the Economics Committee Senator George Brandis (Liberal, QLD), raised question with Graeme Samuel about the role of the ACCC in the development of the Ruddbank.

Senator Brandis’s line of questioning was the Ruddbank may breach anti competitive behaviour under the Trade Practices Act.

The discussion – with antagonists and protagonists politely refusing to “verbal” (an exotic and we are sure an archaic term where police interview methods involve telephone books) each other – centred on whether the ACCC had given advice to the Treasury about this.

Senator Brandis raised in effect two concerns: 1, that the banks could collaborate in breach of the TPA given that they would have representatives on the board of the “Ruddbank” and; 2, the process of the ACCC of giving advice to Treasury may be inappropriate.

The ACCC could not tell Senator Brandis whether or not the Ruddbank – (founded on the advice of former NAB executive Ahmed Fahour who will be its CEO) – whether or not it would breach the TPA’s anti-competitive behaviour rules.

Further, it could not say whether or not it would be able to grant an exemption or an authorisation for anti competitive behaviour by the Ruddbank

As the discussion proceeded it became apparent that the Federal Government – despite announcing the Bank with a media release over a month ago still had no detail as to its operations – particularly as it affected anti-competitive behaviour.

Brandis was told by the ACCC that they had been given some “general detail” but no “specific detail” about the operation of the Ruddbank in discussions with Treasury officials.

The ACCC said that if officials of the four banks who were sitting on the board reported back to their respective banks on the details of bailouts as to interest rates etc that were set, then the ACCC could have some difficulty.

“What the role of the individual bank representatives will be and the length from (the parent) bank” could help determine whether or not behaviour is antic competitive.

The difficulty for the ACCC (and Brandis) is the lack of detail from Treasury. As the ACCC told the committee “we haven’t got the detail.”

So here we have it. Taxpayers’ money being spent to prop up property investors and banks in the formation of a Ruddbank that is being headed by a former CEO of the NAB (who happened to suggest the idea to the Government) and a regulator who can’t say whether this arrangement is, or will, be anti-competitive.

It seems the government is once again having to “backfill” the detail of its expensive bailout plans.

Tomorrow’s proof of the Estimates Hansard should be compulsory reading.