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

or waiting outside to answer questions. Name one occasion when a cabinet would make such a momentous decision about monetary policy and not seek the direct advice of the Reserve Bank governor. I find it inconceivable that people who hold themselves out to be economic managers of this country did not make a phone call or seek the physical attendance of the Governor of the Reserve Bank when they were announcing an unlimited guarantee and excluding a segment of the market.

What also happened, it seems, is that nobody asked APRA. Nobody bothered to ring the head of APRA, John Laker, or contact anybody from APRA and say, ‘APRA, there are institutions that are prudentially regulated by APRA. They are authorised deposit-taking institutions but they are to be excluded from this guarantee.’ Take, for example, the foreign bank branches. ‘We are going to exclude authorised deposit-taking institutions that are regulated by APRA. I wonder what the consequence will be to their market. I wonder what the consequences will be to those institutions that are excluded from this unlimited guarantee.’ Did nobody in cabinet think to contact either APRA or the Reserve Bank to find out the impact—the consequences—for the banks? These are banks under APRA’s responsibility and jurisdiction. They are banks that are authorised deposit-taking institutions. Nobody asked, ‘What is the impact on those banks of excluding them from the unlimited bank guarantee?’

Take, for example, the foreign bank branches. They have about $100 billion in certificates of deposit. They are excluded from the unlimited bank guarantee, and yet not one person sitting around the cabinet table had the nous to ask APRA or the Reserve Bank whether there would be an impact on this market. It is inconceivable that the Prime Minister’s version of events in fact occurred.

The Treasurer and the Minister for Finance and Deregulation seem to be claiming that they act on the advice of the regulators, including the Reserve Bank, that they knew what the consequences would be—because the finance minister and the Treasurer said on radio this morning that it was always intended and recognised that there would be consequences—but that they do not ask the Reserve Bank or APRA to express any view about those consequences. It is unconvincing at the least.

Following the announcement of the unlimited deposit guarantee, the government—including the Prime Minister, the Deputy Prime Minister, the Treasurer, the finance minister and the Assistant Treasurer—participated in numerous media interviews. Not once in those interviews did they raise the issues we are discussing today. Not once did they say, ‘We know there will be consequences from the unlimited bank guarantee; we know there will be an impact on the market.’ Not once was that raised in the numerous media interviews that numerous government ministers gave on 12 October or, indeed, 13 October. Not once did the government raise the question of a fee. They did not raise it on the 12th, the 13th or the 14th, and the Treasurer did not raise it in his second reading speech on 15 October. The Treasurer has been holding up his second reading speech as if it contained all of the information that we are learning about only for the first time this week. It does not. The Treasurer’s second reading speech, in fact, refers to a cap. The Treasurer said last night on The 7.30 Report: ‘Oh, no, the government is not considering a cap. No, the Reserve Bank have not given us advice on a cap.’ In his own second reading speech, the only issue that the Treasurer referred to was a cap that they propose to put in in three years time, so it is government policy and the government have been thinking about a cap. The Treasurer raised it in his second reading speech. But what he did not raise was the fact that this unlimited bank guarantee would now attract a fee that is compulsory in return for the guarantee—therefore it is a tax.

This will impact on depositors who on 13 October, learning that the government was giving an unlimited guarantee to certain institutions, moved their funds from cash management trusts or property trusts—maybe even sold shares in the stock market—into the banks listed by the government as receiving the government’s unlimited guarantee. Are those depositors, who moved their money in good faith, now to be subjected to a tax if their deposit is over the threshold that the government eventually determines? Is this going to be a retrospective tax that is imposed on depositors who, in good faith, took the government on trust and believed that the Prime Minister was seeking to ensure stability in the financial markets? Will those people now be slugged with a new tax? What if they put their money into, say, the Commonwealth Bank and the Commonwealth Bank says: ‘We’re not going to pay a fee to the government. We’re the Commonwealth Bank. It’s safe with us; we’re not going to pay a fee to the government’? The Treasurer said today that the tax will be compulsory. So that means that the depositor who put their funds in the Commonwealth Bank on the basis that it would be guaranteed by the government now finds that the Commonwealth Bank will not pay the fee and therefore is not covered by the government’s guarantee. This is a confused mess. (Time expired)

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