BIRMINGHAM, Mr Simon, Chief Executive Officer, Australian Banking Association [by video link] EVANS, Mr Craig, Head, Economic Policy, Australian Banking Association [by video link] [10:56] CHAIR: Welcome. I understand information on parliamentary privilege and the protection of witnesses giving evidence to Senate committees has been provided to you. Do you have an opening statement? Mr Birmingham : We do, Chair. Thank you to you and the senators for the chance to be with you today. Improving productivity is one of the defining economic challenges facing Australia and many developed economies. Productivity ultimately determines whether real wages rise, whether Australia remains an attractive place to invest and whether the next generation is better off than the last. The banking sector plays a pivotal role in enabling productivity in Australia's economy, through credit provision to businesses, infrastructure and homeownership along with world-leading payment systems. That is why the ABA joined with other industry associations in a joint alliance advocating for practical measures to boost productivity. What unites the alliance is a shared belief that Australia needs better regulation. Australian organisations now spend around $160 billion a year complying with federal regulation, more than double the cost of a decade ago. The alliance has called for an economy-wide regulatory stocktake and a 25 per cent reduction in regulatory costs by 2030, aligning with targets already adopted in the United Kingdom and the European Union. For a bank customer, reduced regulatory delays and duplication mean faster service and quicker approvals. A concrete example of a very practical reform with win-win benefits is set out in our submission, and I acknowledge it's been the subject of some questioning today. Today, even when a customer explicitly asks for it, the Australian Taxation Office legally cannot share that customer's own tax information with their bank. So when Australians apply for a loan they are left to gather and submit sensitive documents like payslips, tax returns and bank statements—all too often submitted by hand. This process is an anachronism in the digital age. It is unnecessarily burdensome for customers and creates unnecessary risk in our financial system. Buying a home or securing a business loan should not begin with a scavenger hunt through your own financial records. This is why the ABA has been advocating for a secure, consent based way to share ATO data with banks through the consumer data right for the purpose of credit decisions. This is genuinely a productivity-enhancing reform. It would mean faster or certain loan approvals, less paperwork for customers and less time spent on manual processing across the financial system. It would also strengthen the integrity of lending. Fraudulent loan documentation is a growing problem, and artificial intelligence is making fake payslips and doctored statements frighteningly easy to produce. Verified ATO data will give lenders a single, trusted source of truth for a customer's income, helping to prevent document fraud at its source. The single best defence against fake income documents is real income data, and the ATO has it. We therefore welcome the government's recent budget commitment to explore this reform. It is a positive step, and we encourage progress to be made on it as soon as possible. To the issue of homeownership more broadly: nowhere are productivity challenges more visible or talked about more than in housing. Banks are central to homeownership. In 2025, Australia's banks extended more than 556,000 loans for housing, nearly a quarter of them to first home buyers. That figure represents an increase of 34,000 loans from the previous year. Bank lending also supported the construction of approximately 110,000 new homes in 2025, but persistent constraints on housing supply remain a significant handbrake on homeownership, limiting labour mobility and intensifying cost-of-living pressures. Lifting productivity in housing requires clearer and more consistent planning settings that deliver faster and more certain approvals; it necessitates affordable building standards and a construction workforce big enough and flexible enough to meet demand; and it means making sure roads, power and water keep pace with where we're rezoning for homes. Finally, a word on how banks are regulated: the ABA has long argued that regulation should be proportionate to the size, complexity and risk of the institution being regulated. The 'one size fits all' approach imposes disproportionate compliance costs on smaller banks—costs that ultimately flow through to customers. We therefore welcome APRA's recent commitments in this area, including its move to formalise a three-tier approach to proportionality, to streamline accreditation and to improve the transparency of its licensing and capital decisions. These are essential steps if smaller and mid-tier banks are to successfully compete while maintaining a viable return on equity. APRA is consulting on variations to credit risk capital settings, potentially giving banks greater capacity to lend to the priorities that drive growth: new housing, infrastructure and small business. These are welcome initial steps to refine prudential settings to support productivity while keeping our financial system unquestionably strong. This committee weighs how best to lift Australia's productivity. We would urge the prioritisation of reforms with clear benefits: smarter regulation and tangible reforms like secure ATO data sharing and faster housing approvals and builds. Thank you again. We look forward to taking your questions. CHAIR: Thank you very much. I'll go to the Consumer Data Right issue first, because historically the banks and the fintechs haven't always seen eye to eye on this, but now it seems that everyone agrees that it would be a good idea to have verification of some tax information provided through the CDR. Of course, we have strong laws around tax secrecy in Australia, so what are the barriers that need to be overcome if this is to be achieved? Mr Birmingham : Thanks, Chair. Indeed, we have expressed significant concerns in relation to the CDR in the past. When I started at the ABA late last year, CEOs of smaller and mid-tier banks were virtually table thumping in their anger at the costs of implementation of the CDR and the way in which those costs had burdened their businesses. We welcome steps that are taken to rein those continued costs in. The new chair of the data standards board, Scott Farrell, has been very clear in terms of putting a pause on the development of new standards which would require and necessitate additional changes in bank systems, and that's very welcome. It comes at a time when I think the last published data shows that there were around 1.3 million Australians who used CDR in some form. There is still clearly some way to go in terms of how that is used, but we clearly see the ATO data as a really beneficial opportunity for that. In this year's budget, the government allocated some $62 million over two years to extend the operation and participation of the CDR and, importantly, to explore the potential to enable taxpayers to share certain ATO data through the CDR. That really is, as I said, a win-win opportunity if we can get it right. It does require some changes to tax laws, which Mr Evans can touch on. It, of course, requires that the ATO tap into the CDR system and that those technology systems safely and securely work. We understand that all Australians want to know that their tax data is held and handled securely and sensitively. But, that said, examples and parallels do exist. When you get your tax return done, your accountants and others are able to access certain information, pre-populated in returns and the like. It cannot be beyond our means to cost effectively and safely build a system where the same can apply for Australians seeking credit and loans from their banks and to stop the situation—which is so out of touch with 2026—where people are photocopying, posting, emailing or dropping off copies of documents that, sadly, those who wish to undertake fraud and other activities now find all too easy to manufacture illegally. Mr Evans : I will just add to that. In terms of what would be required specifically, that would need to be amendments to division 355 of the Taxation Administration Act to permit the ATO to disclose limited verified taxpayer information to ADIs for income verification purposes, strictly on the basis of explicit and revocable taxpayer consent, because, under the current framework, the ATO is unable to share a taxpayer's information even when the taxpayer has explicitly requested that the disclosure occur. As a result, as Simon has outlined, individuals must manually gather and transmit those sensitive tax documents to support the loan application. So that is the kind of tangible change that would be needed, and then we would also need to work with government about how that information could best be shared through the CDR or as has been outlined in the budget. CHAIR: How big do you think the problem is, in terms of mortgage fraud? Have you got a number on it? Mr Birmingham : We don't have a number that I can provide. Indeed, I don't have an aggregate number. I'd say, simply, that it's too big. Anything is too big in that space. In terms of the types of tools available, the fraudsters' technology is enhancing the opportunities for them, but it's also enhancing the opportunities for banks and regulators to fight back. We have a close partnership with AUSTRAC. I note that AUSTRAC, from 1 July, has new powers and responsibilities that touch on real estate agents, accountants and others that we think will be helpful in this space. The Fintel Alliance work we do with AUSTRAC is also very important and helpful in terms of sharing information. The AUSTRAC CEO and we and our board have been in close and continuous engagement in relation to these issues. There's also, of course, the work just touched on in terms of the way we see ATO data as providing a much more secure process and one that will then better enable a triage. If we have complete confidence in the accuracy of information that some loan applicants are giving us because you've got it verified by the ATO, it makes it easier to dig a little deeper into some of the others if it doesn't have that verification and to make sure that it is triaged and effectively tested. I also note really important and welcome steps in terms of linking director IDs to the companies register and ensuring that, in relation to other sources where banks use government data and government registries to verify information, they are as joined up and accurate as possible. CHAIR: If you could take on notice any numbers you can put around the scale of mortgage fraud, that would be helpful. I imagine you haven't thought about how much it would cost the Commonwealth government to actually create this back end. Have you given any thought to how expensive that would be, or do you think it would be a reasonably inexpensive systems build? Mr Birmingham : We would hope that it can be done for least cost. What that actually looks like, clearly, the scoping work that was funded in this year's budget will assess, but we're talking about relatively straightforward data points, at least initially. We're working through, from ABA members' perspective, precisely what those data points look like and how it could apply. Let's say it's not without precedent, in terms of certain other sectors being able to have certain tax information shared with them. So, using those precedents and using the pre-existing model of the CDR, we think that should achieve a least-cost outcome. CHAIR: I want to ask you about APRA's mandate and its macroprudential tools. Do you think it should have a mandate to consider, in some way, the promotion of homeownership and the deployment of finance to developers and builders, but also mortgages to first home buyers? Mr Birmingham : I think APRA have certainly shown themselves to be, firstly, very conscious of having an unquestionably strong financial and banking system in Australia, and that is an objective that we support. I note that the government updated the mandate's statements of expectations for both ASIC and APRA just last week and, in doing so, put a growth mandate into both of those statements of expectations. Again, it's something the ABA and industry have been asking for. It's analogous to what occurred in the UK, where a secondary objective had been put into the equivalent statement of expectations for their prudential and conduct regulators and where I think there is positive feedback on the way that that has changed settings. I think there is a test that follows on from that, partly for the parliament and elsewhere, as to how those regulators are then held to account for that new expectation in relation to growth. There is often a lot of scrutiny in relation to how they regulate conduct, as there should be, but there also needs to be appropriate scrutiny to make sure that the government, having made clear that they have a role in ensuring regulation, provides for growth in the Australian economy. How are they actually measuring and delivering upon that? In terms of broader changes in relation to their mandate, I'd say that we welcome the changes that have been made. They're changes that we have asked for. We think there's a big test in making sure that they are actually now effectively delivered upon. CHAIR: What about with housing-finance construction? What are you seeing there? What could be done, if anything, to help promote the amount of housing that is funded by Australian banks? Mr Birmingham : APRA, as I think has been referenced today, has undertaken or begun consultation on the changes that I referenced in the opening statement around their credit risk capital settings. They're looking at changes across three areas. One is in relation to infrastructure lending, to allow lower risk weight for large domestic public infrastructure exposures. Another is in relation to land acquisition development and construction lending, which seeks to adjust criteria to allow for more exposures to qualify for the lower 100 per cent risk weight for residential property development. A third relates to unrated corporate lending. That's welcome, but I'll put that to one side for this question. The two that are around land acquisition development and construction lending and around infrastructure lending are both welcome, as they may facilitate increased investment and increased credit into new residential construction and the infrastructure necessary for new residential construction. We certainly welcome those as an important step. We will continue to monitor carefully the adequacy of that step and any other opportunities to ensure that those regulatory settings are encouraging the lending and credit availability necessary for those projects to get off the ground. But this is definitely a pointer in the right direction. CHAIR: Finally from me, it sounds like the main point that you wanted to make, which was in your submission and which you've dealt with today, is around these issues of fraud and the CDR. But can I also ask you this while you're here: in relation to innovation in mortgages, is there anything that you think that the federal government or APRA could do to help promote different ideas or different concepts coming into the mortgage system? We have a very high level of concentration and a very low level of innovation in terms of the products people can actually use to buy a house. Mr Birmingham : I'll contest a little of that, I think, in terms of the concentration point you make. If we look at the data in terms of mortgages being written across the Australian economy, we can see increased diversification there, and that is driving competition. I note you had Barrenjoey's banking analyst before, talking about the margins falling sharply across the banking industry, particularly in terms of the mortgage industry, and the struggles to actually meet cost of capital that a number of banks are facing. The competitiveness in the industry is shown by the fact that last year, in 2025, there was a 20 per cent jump from the previous year on the number of borrowers who renegotiated or switched their home loans. Some 640,000-plus mortgages were refinanced through 2025, and 64 per cent of those were refinanced by people switching to another bank or other financial institutions. That shows that record numbers of Australians are finding competitiveness and choice and are going out to seek a better deal that is saving them thousands of dollars. More broadly, as we indicated and have been consistent on even prior to my time, the supply challenges are the real ones—how do we ensure that there is an effective supply of housing; that planning approvals are fast; that construction costs are as low as possible; and that there is critical liquidity of housing stock as well? I know that goes to an element of your question there, but, again, it's about ensuring that there is that supply so older Australians can choose to downsize and that the costs of downsizing are as low as possible. I think those are the key constraints rather than necessarily the financial products that are available to them. CHAIR: Thank you. Senator Ananda-Rajah. Senator ANANDA-RAJAH: I want to draw you out on AI. From your vantage point, could you perhaps give us an overview about how the sector is considering AI and what it's doing in terms of adoption. Is there any activity to build in-house capability within the big banks, in particular? Also, are they looking to procure from domestic vendors? I did hear earlier from CBA that their idea of diversification is to sign deals with US tech giants. I have major problems with this considering that I came from the health sector, which is pretty much handcuffed to US tech giants with regard to the electronic medical record, and it has not gone well 10, 12 or 15 years down the track. I'm interested to know what your perspective is on all of this. Mr Birmingham : I know, firstly, that the chair of the Productivity Commission has identified that artificial intelligence utilisation across the Australian economy could be a boost to our productivity of up to four per cent over the next decade, so while I understand the many, many issues that need to be managed in relation to AI, we do need to be clear that AI adoption is not a change that Australia can opt out of. It is one that is necessary if we are to seize productivity gains and the opportunities of economic growth across the economy. Certainly, major banks are very cognisant of the need to adopt AI, but to do so responsibly, safely and securely, so their test in terms of vendors is one where they'll use those measures around safety, security and the opportunity that is provided. Obviously, I think many would welcome the opportunity in relation to an Australian developed product where it is available and where it does meet those tests. In terms of the opportunities that they are looking to use AI for, scam and fraud prevention is key, and that is a big area. There are all sorts of innovative approaches to that. I didn't catch all of CBA's evidence before, but as it was public, one of the things that they have used AI tools for is to have chatbots who take and receive scam calls and basically waste the time of scammers. Equally, I know that other banks, Westpac for example, have an AI tool that works alongside human callers in their scam centre that provides them with prompts as it listens in to the call and says, 'They've just used these words in relation to "cyber", which means you should ask about these particular matters.' Each of them—ANZ, NAB et cetera—has different tools for deploying in scam and fraud prevention to make sure that they're really seizing all of the opportunities available. There's also the chance to transform the customer experience. Clearly, there are opportunities to do things faster, smarter and more accurately and to provide, potentially, information or analysis to customers in a secure and well-managed way. All of these tests also require good, skilled staff, and we are very cognisant of that. We met the FSU in this role to talk about the type of investment that banks make in their staff. I note that many are in the marketplace looking for those types of skilled technology workers as well to be able to help them with that transformation. Senator ANANDA-RAJAH: Are the banks developing in-house capability as well? Mr Birmingham : I'd have to leave that as a question for each of them. There is always, of course, a competitive aspect to some of those things, which is where there come to be limits, as an industry body, as to how much information is shared around our table, because clearly we take competition law responsibilities very, very seriously. But we do bring our members together, and we have also done so with the Customer Owned Banking Association and other smaller authorised deposit-taking institutions across the country to share information around cyber-risk and how that is best managed. We're adopting a collaborative approach to the risk management side where I think it is well accepted by regulators that a threat to some is a threat to all in terms of those cyber-risks and the confidence across the system. We're making sure that we are sharing that knowledge and information on the risk side. But, when it comes to development of in-house capabilities that may go to deploying opportunities for potentially competitive advantage, those are matters for individual banks. Senator ANANDA-RAJAH: I like the set of examples you gave us, Mr Birmingham. It just makes the idea of AI real for customers. If you could maybe supply us with a list of other scenarios on notice, that would be most helpful. Mr Birmingham : Thank you. I'm very happy to do so. CHAIR: Thank you very much for your time and for being here today. You go with our best wishes. Mr Birmingham : Thank you. Good to see you all again..