Uncapped taxpayer liability
Critics argued the bill creates a potentially unlimited public liability because the appropriation has no fixed cap or end date, leaving taxpayers exposed if a guarantee ever has to be paid out.
Pacific Banking Guarantee
Current status
This bill did not become law and is no longer proceeding.
Policy area
Budget, tax & economy
What does this bill do?
Australia would set aside federal money to cover any payouts if the CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. gives a Pacific banking guaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. to an Australian bank operating in Pacific countries.
Why was it introduced?
A Pacific banking guaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. could leave the CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. with payout liabilities, but there was no standing appropriation to cover them. This bill sets aside Consolidated Revenue FundThe main federal pot of money that Commonwealth payments are drawn from, including payments under this bill. money so the government can meet liabilities under a Pacific banking guaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. from 1 July 2025.
Broader context
Australian banks already played a crucial role in keeping Pacific countries connected to trade, aid and remittancesMoney sent home by workers or families, which the bill says could be disrupted if Pacific banking links keep shrinking., but over the past decade the region lost about 80 per cent of its correspondent bankingThe network of banking links that lets local banks move money across borders and connect to the wider financial system. links and banks such as ANZ pulled back branches and services. The bill responded by creating a standing appropriation so the CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. could honour guarantees for low-risk Pacific exposures if banks committed to stay in the region, after an initial February 2025 attempt lapsed at dissolutionThe point when Parliament ends before an election, which caused the earlier version of the bill to lapse. and the measure was reintroduced in July with bipartisan backing in August.
Key criticism
The main criticism was that the bill exposes taxpayers to an uncapped, open-ended guarantee without clear enough limits, scrutiny or transparency over how it would be used. These concerns were raised mainly by Coalition speakers who still backed the policy aim and by the Greens, so the criticism was real but mostly conditional rather than outright opposition.
Who supported it?
Jim Chalmers MP introduced this bill. Speeches supporting it came from Labor, Nationals.
Introduced in House 12 Feb 2025
Failed in House 28 Mar 2025
Did not reach Senate —
Did not become law —
Did it become law?
No
The bill did not complete passage through Parliament.
Final passage
No final passage
The bill has not completed passage and is no longer proceeding.
Time before failure
44 days
From introduction to the final recorded step before the bill stopped proceeding
Meaning
What does this bill do?
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Australia would set aside federal money to cover any payouts if the CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. gives a Pacific banking guaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. to an Australian bank operating in Pacific countries.
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Australian banks could only get this backing for low-risk Pacific business exposures, aimed at helping them keep banking services running and stay invested in the region.
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An Australian bank would need a binding deal with the CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. about continuing its Pacific operations before it could receive a guarantee.
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The funding for these guarantees would have no fixed dollar cap or end date, although each guarantee is expected to run for a set period, likely 10 years.
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The bill would start on 1 July 2025, and any Pacific banking guaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. could only begin on or after that date.
Show source excerpts
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The Bill provides that the Consolidated Revenue Fund is appropriated for the purpose of meeting any liabilities that the Commonwealth may incur under a Pacific banking guarantee entered into with an Australian-headquartered ADI operating in the Pacific region.
Pacific Banking Guarantee explanatory memorandum -
The Commonwealth regularly engages with Australian ADIs regarding their Pacific operations. The Commonwealth may consider providing support to Australian ADIs regarding their Pacific operations to ensure that countries in the region continue to have access to banking services and remain connected to the global economy. Any guarantees made will cover low risk exposures of the guaranteed ADI, supporting the ADI to reinvest in their Pacific operations.
Pacific Banking Guarantee explanatory memorandum -
To receive a guarantee, an ADI must have reached a legally binding agreement with the Commonwealth regarding their continued operations.
Pacific Banking Guarantee explanatory memorandum -
The appropriation is not time-limited as the duration of the guarantees entered into under the Bill may vary, and the Commonwealth needs to be in a position to pay its guarantee obligations in a timely manner, should it be required to do so. However, any Pacific banking guarantee entered into will be limited by the time specified in the guarantee. It is expected this will be for a 10-year period.
Pacific Banking Guarantee explanatory memorandum -
The Bill commences on 1 July 2025. Any Pacific banking guarantee will commence on or after this date.
Pacific Banking Guarantee explanatory memorandum
Context
Broader context for this bill
Australian banks already played a crucial role in keeping Pacific countries connected to trade, aid and remittancesMoney sent home by workers or families, which the bill says could be disrupted if Pacific banking links keep shrinking., but over the past decade the region lost about 80 per cent of its correspondent bankingThe network of banking links that lets local banks move money across borders and connect to the wider financial system. links and banks such as ANZ pulled back branches and services. The bill responded by creating a standing appropriation so the CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. could honour guarantees for low-risk Pacific exposures if banks committed to stay in the region, after an initial February 2025 attempt lapsed at dissolutionThe point when Parliament ends before an election, which caused the earlier version of the bill to lapse. and the measure was reintroduced in July with bipartisan backing in August.
- Past decade
Correspondent bankingThe network of banking links that lets local banks move money across borders and connect to the wider financial system. links across the Pacific sharply declined
Parliament and the explanatory memorandum said the Pacific had some of the fastest declines in cross-border banking globally, with about 80 per cent of correspondent bankingThe network of banking links that lets local banks move money across borders and connect to the wider financial system. links disappearing over the decade.
Hansard and Pacific Banking Guarantee explanatory memorandum ↗ - Past five years
Australian banks cut their physical presence in the region
During debate MPs said ANZ had closed 10 Pacific branches in five years and other Australian banks had scaled back services, adding to the risk of isolation from the global financial system.
Hansard ↗ - 12 Feb 2025
Government introduces the bill to fund a Pacific banking guaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries.
The Treasurer introduced the bill to appropriate Consolidated Revenue FundThe main federal pot of money that Commonwealth payments are drawn from, including payments under this bill. money for any CommonwealthThe Australian federal government, which would be the party giving the guarantee and paying any liabilities under it. liabilities under guarantees meant to keep eligible Australian banks operating in the Pacific.
Hansard and Parliamentary timeline ↗ - 28 Mar 2025
The first version of the bill lapses at dissolutionThe point when Parliament ends before an election, which caused the earlier version of the bill to lapse.
The bill's first parliamentary run ended when it lapsed at dissolutionThe point when Parliament ends before an election, which caused the earlier version of the bill to lapse., delaying the creation of the standing appropriation needed for any guarantee to start from 1 July 2025.
Parliamentary timeline ↗ - 24 July 2025
Government reintroduces the Pacific Banking GuaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. Bill
The government brought the bill back and again argued it was needed to secure banking services across the Pacific and keep the region connected to the global financial system.
Hansard ↗ - 28 Aug 2025
Bipartisan support forms around the guarantee plan
Government and opposition senators backed the bill in debate, framing it as both a practical way to preserve trade and remittance channels and a strategic way to maintain Australia's banking presence in the Pacific.
Hansard ↗
Legislative route
How did it move through Parliament?
House Senate
Introduced 12 Feb 2025
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
Introduced and read a first time
Second reading opened 12 Feb 2025
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
Second reading moved
Second reading debate 27 Mar 2025
The bill reached this recorded parliamentary step.
Lapsed at dissolutionThe point when Parliament ends before an election, which caused the earlier version of the bill to lapse. 28 Mar 2025
The bill reached this recorded parliamentary step.
Key criticism
The main case against this bill
The main criticism was that the bill exposes taxpayers to an uncapped, open-ended guarantee without clear enough limits, scrutiny or transparency over how it would be used. These concerns were raised mainly by Coalition speakers who still backed the policy aim and by the Greens, so the criticism was real but mostly conditional rather than outright opposition.
No party represented in the debate opposed the bill, but several wanted tighter safeguards and scrutiny.
Weak oversight and drafting safeguards
Several speakers said the legislation should have been tightened with clearer limits, stronger protections and committee scrutiny, warning that the drafting leaves too much discretion without enough oversight.
Too much secrecy around the guarantee terms
The Greens warned the guarantee could be too opaque, saying the public would be asked to carry financial risk without enough visibility into the terms or how the arrangement would operate in practice.
Further sources
Votes
Recorded votes
No recorded votes were found before this bill stopped proceeding.
Parliamentary debate
Who spoke, and what they said
Start here — lead voices
Sponsor speech Supports
Jim Chalmers
Chalmers supports the bill and presents it as a necessary step to protect banking access in the Pacific and keep the region connected to the global financial system.
Read in Hansard ↗ Lead supporting voice Supports
Michael McCormack
McCormack supports the bill and says it needs to be passed because it helps keep Pacific banking services and remittance flows going, especially for PALM workers and Pacific communities.
Read in Hansard ↗ Lead voice Supports
Pat Conroy
Conroy supports the bill and says it is an important way to keep Pacific banking services stable, inclusive and connected to the global financial system.
Read in Hansard ↗ Lead voice Supports
Graham Perrett
Graham Perrett supports the Pacific Banking GuaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. Bill 2025 and says it will help keep banking services operating across the Pacific, strengthening regional stability, growth and Australia’s ties with its Pacific neighbours.
Read in Hansard ↗All speeches by bloc
Labor
4 speakers · 4 support
Labor
4 speakers · 4 support
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Pat Conroy ★ Conroy supports the bill and says it is an important way to keep Pacific banking services stable, inclusive and connected to the global financial system.
“Supporting the Pacific Banking Guarantee Bill 2025 is how members here today can also advance our national interest. A secure, stable and inclusive financial system in the Pacific is not just beneficial to the region; it is in Australia's national interest.”
Read the full speech in Hansard ↗ -
Graham Perrett ★ Graham Perrett supports the Pacific Banking GuaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. Bill 2025 and says it will help keep banking services operating across the Pacific, strengthening regional stability, growth and Australia’s ties with its Pacific neighbours.
“The Pacific banking guarantee is a necessary, useful and forward-thinking component of our relationship with our Pacific family. It sets the region up for ongoing growth, prosperity and stability. For the last time I say, I commend the bill to the House.”
Read the full speech in Hansard ↗ -
Tim Watts Watts supports the Pacific Banking GuaranteeA government-backed promise to cover certain losses for an Australian bank so it keeps operating in Pacific countries. Bill 2025 as part of Labor's broader push to deepen Australia's engagement with the Pacific.
“I am pleased to be able to speak on the Pacific Banking Guarantee Bill 2025 today. Since the election of the Albanese government, we have committed to a new era of Australian engagement in the Pacific. We have worked hard to deepen the social, cultural and economic connections between Australia and our Pacific family. We have really worked to enmesh our nation with the Pacific family. The foreign minister visited the Pacific on just her fourth day in the role, travelling to Fiji to discuss how we could best secure our region and help to build a stronger Pacific family. The foreign minister visited every member of the Pacific Island Forum in the first year of this government. It was a clear demonstration of the new energy and focus that our government would bring to Australia's Pacific relationships. This was replicated across our government, with visits to the Pacific by the Prime Minister, the Deputy Prime Minister, the Minister for International Development and the Pacific, the Treasurer, the Attorney-General, the Minister for Home Affairs and other ministerial colleagues. When we say we are part of the Pacific family, we mean it. We share an ocean and we share a future.”
Read the full speech in Hansard ↗ -
Jim Chalmers ★ Chalmers supports the bill and presents it as a necessary step to protect banking access in the Pacific and keep the region connected to the global financial system.
“This bill will help prevent the loss of banking services in the Pacific at the same time as we're rolling out our domestic agenda, and the Pacific agenda is vital to the security and economic development of our region.”
Read the full speech in Hansard ↗
Coalition
2 speakers · 1 support · 1 mixed
Coalition
2 speakers · 1 support · 1 mixed
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Michael McCormack ★ McCormack supports the bill and says it needs to be passed because it helps keep Pacific banking services and remittance flows going, especially for PALM workers and Pacific communities.
“But this is legislation which needs to be passed, and I thank the minister for bringing it to the House.”
Read the full speech in Hansard ↗ -
Luke Howarth Howarth says the coalition will not oppose the bill, but wants it referred to the Senate Economics Legislation CommitteeA Senate committee that can review a bill in more detail before Parliament decides whether to pass it. because he says it creates taxpayer risk and needs stronger oversight and protections.
“We all want to see a safer Pacific and strong, soft diplomacy ties to it. But clear oversight and transparency measures are needed, because the bill creates an ongoing risk to the taxpayer, with the potential for open-ended liabilities if claims on the guarantee arise. While the coalition will not oppose this bill, referring the legislation to the Senate Economics Legislation Committee is crucial, as this will help identify any necessary amendments and ensure robust protections are in place for Australian taxpayers.”
Read the full speech in Hansard ↗
Record
Full record
- Status
- Not Proceeding -- Collected from the APH bill page.
- Originating house
- House of Representatives
- 12 Feb 2025
House · Introduced and read a first time
Introduced
The bill was formally presented to the chamber and read a first time, which starts its parliamentary journey.
- 12 Feb 2025
House · Second reading moved
Second reading opened
A minister or sponsoring member moved the second reading, opening the main debate on the bill's purpose and principles.
- 27 Mar 2025
House · Second reading debate
Second reading debate
The bill reached this recorded parliamentary step.
- 28 Mar 2025
House · Lapsed at dissolution
Lapsed at dissolutionThe point when Parliament ends before an election, which caused the earlier version of the bill to lapse.
The bill reached this recorded parliamentary step.