Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

I thank the member for Franklin for her question. The international financial crisis has already sparked a great deal of debate both in Australia and overseas with respect to the future regulation of the financial sector. The government of course has taken decisive immediate action to deal with the early consequences—the early issues—emerging from the international financial crisis. In particular, of course, I refer to the guarantees provided to the banking and financial institutions in Australia and our $10 billion Economic Security Strategy: the package of stimulus—the package of spending—to flow into economic activity and continue growth and employment at reasonable levels.

We are also, at the same time, turning our attention to wider regulatory issues. There has been considerable debate about what lessons can be learnt, particularly internationally but also for Australia specifically, as a result of the international financial crisis. It is worth noting that the Australian regulatory regime, under governments of both persuasions, is strong, has been strong and will be strong in the future. It is robust. In fact, nations overseas have regarded our regime as something of an exemplar that they can look to for inspiration and guidance as they tackle these issues.

Although we should never lose vigilance in considering our own options on the domestic front—and there will always be room for reconsideration of regulatory arrangements—the real issues that emerge from the financial crisis are international, particularly in the United States. The Prime Minister has already set out, in his speech to the United Nations General Assembly, five principles which we seek to insert into the international debate on these issues with respect to regulatory reform: stronger regulation of non-bank financial institutions, stronger capital adequacy requirements, tackling the culture of institutionalised greed and excessive executive salaries, stricter accounting rules and a greater role for the International Monetary Fund in analysing the global spread of risk.

Inevitably, some of these themes are already being debated. I specifically commend to honourable members work by an Australian who works for the OECD, Adrian Blundell-Wignall, who has highlighted the role, at least from his perspective, that the Basel II capital adequacy rules have played in contributing to the emergence of a mortgage based bubble in both the United States and the UK, with the fall of Northern Rock.

I look forward to the debate about these regulatory issues broadening and deepening. In particular, I look forward to a contribution from the opposition on these issues. We know that the opposition suggests that the Leader of the Opposition, given that he has a background in some of these things—he is a former investment banker, of course—has something to bring to the table on these questions. There is personal experience and personal expertise involved here, and no doubt he will have a lot to contribute, which makes it even more puzzling that we have heard very little from the opposition or the opposition leader about the third item on the Prime Minister’s list of reform issues: the question of excessive salaries for executives in the financial sector. There is no doubt that in this instance the opposition leader does have significant personal experience to draw upon.

Perhaps the opposition leader could explain to the Australian people why it is necessary that people leading these organisations need to have salaries in the vicinity of $10 million to incentivise them to work really hard and to put their best into the job. Why is that necessary? And perhaps he might explain to us how he manages to turn up to work as opposition leader on a humble couple of hundred grand. I look forward to the contribution from the Leader of the Opposition on these questions.

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