After stories started to appear last month about the huge sums the federal government had lent to our major banks, the RBA decided to get on the front foot and voluntarily disclose the 10 biggest recipients of its extraordinary $188 billion term finance facility.
The RBA August statement on monetary policy revealed that these institutions were enjoying three-year loans of printed money at just 0.1%.
CBA: $51.14 billion
NAB: $31.87 billion
Westpac: $29.78 billion
ANZ: $20.09 billion
Macquarie: $11.26 billion
ING Bank (Aust): $5.42 billion
Bendigo Bank: $4.72 billion
Suncorp: $4.13 billion
Judo Bank: $2.86 billion
BoQ: $2.15 billion
This raises a number of questions. First, who got the other $25.48 billion because the top 10 snaffled only $163.42 billion of the $188 billion?
The industry fund-created ME Bank, which was formally purchased by Bank of Queensland for $1.32 billion on July 1, had borrowed $900 million through the TFF, so this lifts BOQ’s total loan to $3.05 billion, placing it in ninth position.
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AMP has confirmed to Crikey that its banking subsidiary has borrowed $1.03 billion from the TFF, so we’re now down to not knowing about $22.65 billion.
Some observers suspect it will be a lot of foreign banks like ING, which is why the RBA has decided to keep it quiet.
With the big five banks’ shares and profits soaring to record highs, this whole concept of massive government loans to our major banks is problematic, as Glenn Dyer and Bernard Keane argued last Friday after CBA unveiled an $8.6 billion annual profit.
CBA CEO Matt Comyn was on Sky News on Sunday gloating about having $13 billion of excess capital. Macquarie claims it has $8 billion of surplus capital, and NAB is doing so well it has just launched a $2.5 billion buyback.
Here are the market capitalisations of our five biggest banks as of last Friday:
CBA: $184.6 billion
Westpac: $96 billion
NAB: $91.4 billion
ANZ: $84 billion
Macquarie: $60.7 billion
Why don’t these five institutions worth $516.7 billion pay back at least some of the collective $144.14 billion in printed free money they have borrowed from the RBA, just as Cochlear, Nine, Premier Investments and several other public companies returned some or all of their excessive JobKeeper windfalls?
And speaking of JobKeeper, wouldn’t it be good if the ATO followed the lead of the RBA and disclosed the biggest recipients of the $90 billion program? I’m guessing the top 12 would rank something like this:
Anglican/Protestant Church (the Salvos alone got more than $100m)
Federal Treasurer Josh Frydenberg is starting to lose some serious political skin over JobKeeper, especially after the Parliamentary Budget Office revealed that $4.6 billion went to 157,650 employers that actually increased revenue during the relevant period.
That said, save for Terry McCrann, the Murdoch interests have largely avoided criticising JobKeeper, which is probably because Lachlan Murdoch’s privately owned radio business Nova received $10.6 million in JobKeeper despite posting a 28% jump in earnings to $16.88 million last year.
Billionaire Kerry Stokes’ media empire has also been surprisingly quiet on JobKeeper, probably because Seven West Media this week reported soaring EBIT of $229 million in 2020-21, up from just $95 million previously. Revenue was also up when it was meant to have fallen by 50% to qualify for the $47 million-plus in JobKeeper it pocketed.
Southern Cross Media, Australia’s biggest commercial radio broadcaster and a significant player in regional television, revealed yesterday that it received $40 million in federal grants in 2020-21, which was primarily JobKeeper. Without that, its 5 cent final dividend and 91% jump in net profit to $48 million simply wouldn’t have happened.
Given that News Corp has just started a major deal with Southern Cross to deliver Sky News into the regions via free to air, don’t expect to hear the Sky after dark dancing bears railing against JobKeeper rorting any time soon.
The Coalition backbench is starting to stir on this issue, given that Liberals are meant to be responsible economic managers, but Frydenberg has been trotting out these three flimsy lines of defence to his colleagues:
- Labor is just obsessed with a fantastic scheme
- The average claimant suffered a 37% revenue drop in April 2020
- The RBA forecast that JobKeeper had saved 700,000 jobs and countless lives.
Sadly, JobKeeper should not have cost the budget any more than $50 billion, and blowing $90 billion has left less capacity to provide support when it is most needed right now.
The scheme was eminently rortable because you only had to forecast a one-month drop in revenue to qualify for six months of JobKeeper with no questions asked. Meanwhile, 11,000 welfare recipients who forgot to declare JobKeeper income on their tax returns are being chased down for a collective $32 million by Centrelink. What terrible optics.
It is time for a royal commission into Australia’s pandemic response, which includes rorting of JobKeeper, but that will take time. As a start, a NZ-style public register of every recipient would lead to billions being returned, particularly if employers were given the opportunity of an amnesty through which they could pay up in order not to be named.
The above article was amended at 6.55 pm on August 19 in relation to a paragraph about Mr Lachlan Murdoch.