Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

The global financial crisis is affecting the stability of the global financial system and is affecting the real economy worldwide. Australia, as a result, is being affected as well—and that goes to the cost of finance on international markets, it goes to the prospective growth in our economy and it goes to employment as well. The challenge we all face at present is how to maintain the stability of the global financial system. National actions in this respect are important, but what is even more important is coordinated international action. The actions which the government announced yesterday are consistent with international proposals which have been advanced most recently in bodies around the world, including the G7, the IMF and the G20.

The measures taken in Australia are designed to do two things. One is to ensure that we maintain confidence in Australia’s banking institutions, confidence which has been underpinned since this crisis began by repeated reports from the Australian Prudential Regulation Authority. But when it comes to the concerns of deposit holders, which have been heightened by the events which they have seen unfold around the world, it is important to deal with those concerns as they are presented to us. On the question of the impact of the government’s guarantee of term funding arrangements by Australian banks around the world, the reason for that measure is to ensure that our banks are not discriminated against as they face other banks in international credit markets which are the beneficiaries of sovereign guarantees. That is the basis for the Australian government’s action on that measure yesterday.

The honourable member asks the impact which the measure has in relation to the Australian taxpayer. First and foremost, our responsibility is to guarantee the stability of the financial system as that affects all taxpayers, all householders, over an extremely long period of time. But, secondly, in terms of ensuring that this is not simply an act which benefits the banks but one for which there is an appropriate return to the taxpayer, as I indicated yesterday in my remarks when announcing these measures, the Australian government will also be attaching an insurance premium to the measures extended to the commercial banks. The details of that insurance premium will be settled between the Treasury and the economic regulators and the institutions concerned. We believe that is a right and appropriate measure. But the challenge for the future, and the challenge for all of us in this place, is to act responsibly and to speak responsibly in order to maintain the continued stability of this financial system. This is not just something which affects the banks themselves. The stability of the banks in our local communities is of direct relevance to the interests of households, and that is why the government acted decisively yesterday.

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