Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Hansard source

I thank the shadow Treasurer for her question. I am happy to answer questions on liquidity in our banking system. It is a very important issue, and perhaps it has never been more important than it is at the moment. I would like to remind anyone who is commenting on liquidity issues that we are in a very difficult period in which matters of confidence are paramount and we need to keep our comments balanced. I would like to just quote from the Reserve Bank’s Financial stability review, which was published today, which I think gives a pretty good and comprehensive analysis of what is going on in the banking sector, what is going on with deposit-taking institutions, what is going on in terms of securitisation and so on. I would commend her to have a look at that. I just want to quote a little from the report:

The Australian financial system is well placed to weather the current difficulties in the global financial system … the Australian banking sector continues to be highly profitable. The system is soundly capitalised and the banks have high credit ratings and relatively little exposure to US sub-prime—

debt. That is very important. When we are talking to this issue, we have to continue to repeat that so this country does not get mixed up with the problems that are occurring in the United States. Any loose talk along those lines can be very hurtful to confidence and certainly not very helpful in the current environment.

That report card, if you like, from the Reserve Bank today is not an argument for complacency. It is an argument for confidence in our system. If you go through that Reserve Bank report, you will see that they do make the comment that in the securitisation market at the moment things are very difficult and that those organisations, including smaller banks and other institutions that have been relying on securitisation, are having great difficulty. As a consequence, the deposit-taking institutions are doing more business. Certainly those who are in the big four are doing more business. That tends to indicate to me that we may have some issues in terms of the competitiveness of our mortgage market and that they may need to be addressed in the near future. The government put legislation through this House in June—

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