Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

The Treasurer’s shallow and unconvincing performance today was only matched by the Prime Minister’s shallow and unconvincing performance in question time today when the Prime Minister was so unconvincing that he objected with such outrage at every question put to him and not once did he give a direct answer to a direct question. He equivocated, he ducked, he weaved. The Australian people are none the wiser about the advice that the government received from the Reserve Bank on the question of an unlimited guarantee for bank deposits. After a series of questions today to the Prime Minister and to the Treasurer, the Australian public are none the wiser about this significant issue and the specific advice given to the government by the Reserve Bank.

There is a lot at stake here. There are billions of dollars of taxpayers’ funds at stake here. The government has been warned of the distortions that are now occurring in the market and the Prime Minister should be very clear, very concise, honest and give the utmost clarity around the circumstances that gave rise to this unprecedented decision to provide an unlimited bank guarantee for deposits. The Prime Minister had led the Australian public to believe that this significant announcement, this announcement on an unlimited government guarantee for deposits, was on the advice—the unequivocal, express advice—of the Reserve Bank. In fact, prior to question time today, the Prime Minister has literally clothed himself in the advice of the Reserve Bank. At his press conference on Sunday, 12 October, where he announced this unlimited bank guarantee, the Prime Minister said:

The measures I’ve announced today are based on the advice of Australia’s economic regulators.

He said:

The measures I’ve announced today have been the product of extensive deliberation between myself, the Treasurer and other Ministers who are members of the Strategic Policy and Budget Committee of the Cabinet.

But, on the following days, he has said it to an even greater extent. He said on the Sixty Minutes program that evening:

The decision was based on the advice from our regulators.

He went on to say:

… our advice as the Government comes from the regulators.

In question time on 13 October, in response to a question from me about the whole bank guarantee package, the Prime Minister said:

… this measure has been recommended to the government by the Australian regulators—the Reserve Bank, the Prudential Regulation Authority and the Treasurer.

He went on to say to the Press Club on 15 October:

Again we took this decisive action in close consultation with the regulators.

In his address to business last Friday, he said:

This brings us to the dramatic decisions of recent days, those announced by myself on Sunday and through close collaboration again with the regulators and the Treasurer on the phone from Washington, and also with the other members of the strategic policy and budget committee of the Cabinet.

The judgment we took, based on the advice of the regulators …

So it is fair enough that the Australian people and the coalition should take the Prime Minister on trust in relation to the probity and the integrity of this decision on an unlimited bank guarantee. We accepted the statements and the assurances that the Prime Minister and cabinet were in close and regular and, indeed, as the finance minister said today, constant contact with the regulators throughout this international financial crisis. Today, however, we read on the front page of the Australian that that is not in fact what occurred. This is what was reported in the Australian:

The Government ignored the RBA’s strongly voiced concerns about the impact of an unlimited guarantee scheme in its rush to announce a guarantee of all deposits in Australian deposit-taking institutions on October 12.

The report went on to say:

The Government faces severe embarrassment that its emergency measures are now creating new problems, given that it refused to heed RBA advice at the time.

Given that that statement appeared on the front page of the Australian newspaper, you would have expected that the Prime Minister would come into this parliament and explain to the parliament the confusion that has arisen in the mind of the Australian newspaper. How could the Australian newspaper get it wrong? The Prime Minister should come in and explain to the Australian people. When parliament opened at two o’clock today, we had no statement in explanation, no clarification from the Prime Minister. Never mind that the markets are in uproar about this. Never mind that the Australian public are totally confused about whether or not the Prime Minister acted on the specific advice of the Reserve Bank. We heard not a word from the Prime Minister.

However, in answer to the first question today from the Leader of the Opposition during question time, the Prime Minister said for the first time that, in fact, neither he nor any member of the strategic policy unit, nor anyone present on that day, actually spoke to the Reserve Bank. This is incredible. For the first time the Australian public was told that, in fact, neither the Prime Minister nor the Treasurer, who was in Washington, nor the Acting Treasurer—the Minister for Finance and Deregulation—spoke to the Reserve Bank. What happened to the constant contact, daily advice and collaboration with the Reserve Bank on the very day that the government met to make one of the most significant decisions of the life of the government—in fact, probably the only decision that the government has made? They did not contact the Reserve Bank; they did not seek the advice of the Reserve Bank; they did not get any written advice; they did not pick up the phone and speak to the governor, Glenn Stevens.

The Reserve Bank is the regulator responsible for the systemic stability of the financial sector. This decision goes to the very heart of the systemic stability of the financial sector. The Reserve Bank is the regulator that the government should heed on this issue above all others. And yet the very regulator whose job it is to advise the government on precisely this issue is ignored. On the one issue that they should consult the Reserve Bank on above all others, they do not—they ignore it in the rush to get the photo opportunity and the cameras into the cabinet room. The Prime Minister does not roll his sleeves up; he pushes them up above his elbows. He puts Ken Henry on one side and Treasury officials on the other to get the photo opportunity. They do not have the time to pick up the telephone and ask the Reserve Bank its opinion.

It seems that Kevin Rudd can ring every world leader on a constant basis. How many times has he been on the phone to Dominique Strauss-Kahn over the last few weeks? How many times has he been on the phone to Gordon Brown? He is on the phone to George Bush. He is ringing up Hank Paulson. But he does not ring the Governor of the Reserve Bank of Australia on the day that the government makes an unprecedented decision that puts at risk billions of dollars of taxpayer funds.

What happened when the Prime Minister finally admitted today that he had not spoken to the Reserve Bank governor? Once his deception to the Australian people was revealed he did what has become standard practice for this Prime Minister. He hung someone else out to dry. He placed the Secretary of the Treasury squarely in the frame. Can you believe this? The Prime Minister has now said that, after the decision was made and they had had Swanny on the phone, the only question that was asked in a cabinet meeting specifically called on a Sunday to address this question of an unlimited bank guarantee was directed at the Secretary of the Treasury. According to the Prime Minister at 2.05 in question time today, he asked Dr Henry:

‘Is the position being recommended here that of the regulators?’ He answered, ‘It was, and that includes the Reserve Bank.’

That is the extent of the inquiry made by the Prime Minister about one of the most significant decisions that this government has made and one of the most important decisions that would impact on the stability and the confidence in the financial markets.

Then the Prime Minister forgot the answer that he gave, because it was asked again about this unprecedented decision that the government had made. This time, at 2.21, in answer to another question from the Leader of the Opposition, the Prime Minister’s answer was:

… at the time that the options which were then adopted were being considered by that committee of the government, the question was explicitly put to the Secretary to the Treasury, ‘Is this the advice of the financial regulators, including the Reserve Bank?’ to which the answer was unequivocally, ‘Yes.’

That is all that Dr Henry— (Time expired)

See this speech in context