Chris Pearce (Aston, Liberal Party, Shadow Minister for Financial Services, Superannuation and Corporate Law) Share this | Hansard source

Thank you, Mr Deputy Speaker. We are here to talk about the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008. Looking at the explanatory memorandum, which I picked up off the table tonight, it is interesting to see on page 3 that the announcements were made on 12 October and the date of the effect of this bill is 28 November, and here we are today on 25 November introducing the bill. You really do have to ask yourself the question: what on earth has this government has been doing since 12 October to make an announcement on 12 October and introduce legislation into the House some six weeks later?

Of course we know the answer to that question. The answer is they have been trying to sort out the absolute mess that they created with their announcement on 12 October. It is difficult to try to construct a phrase which in an adequate way sums up the absolute mess that this government has created through its announcement on 12 October. I have thought about various descriptions, but it is difficult to come up with a description that totally reflects the dislocation that this government’s announcement has made in the Australian financial system. I guess the best way is to refer to some remarks from the Leader of the Opposition. He has made the point very strongly, and correctly in my view, that we are yet to see a leader of a developed nation throughout the world actually make things worse, by their response to the global financial crisis, other than Kevin Rudd, the Prime Minister of our country. He has managed to earn this distinction for himself because through his policy responses he has made things worse in our country rather than better. I think that does define him in the true and proper way that he deserves to be defined.

This bill goes to providing a guarantee scheme for large deposits in the wholesale funding issue. This is a proposal that the opposition requested of the government six weeks ago—weeks and weeks and weeks ago. And for weeks and weeks and weeks we have been hearing from the government that they would not legislate, that there was no need to legislate and that everything would be fine. So what we have seen today from the Treasurer is probably one of the biggest backflips in Australian parliamentary history. I notice that no government speakers so far have mentioned this, but Mr Deputy Speaker, you being the very astute person that I know you are, will recall that it was around the middle of this year that the government said that it would introduce a guarantee to cover deposits up to $20,000. We have just heard the member for Lindsay criticising our position for stating that there might be a deposit limit of $100,000, but it was the government that proposed a policy initially of $20,000.

On 10 October that week we called on the government to increase that guarantee to a minimum of $100,000. We did that because we were hearing firsthand the reports of deposits being moved from second-tier ADIs et cetera into the so-called big four banks. So it was that on 12 October, just two days later, the Prime Minister announced the introduction of an uncapped guarantee for all deposits of Australian banks, building societies and credit unions and the subsidiaries of foreign banks and for wholesale term funding. It has gone down in Australian political history, of course, that the Prime Minister did that without even talking directly with the Governor of the Reserve Bank of Australia. Mr Deputy Speaker, I am sure you would agree with me that it is incredible to think that the Prime Minister of Australia could actually make this decision without consulting directly the Governor of the Reserve Bank of Australia.

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