Steven Ciobo (Moncrieff, Liberal Party) Share this | Hansard source

Why this bill was not introduced 12 years ago is directly relevant. The reason why is that there was no need to implement a bill like this 12 years ago because, at that time, coalition policy drove competition in the banking sector. The core focus of this bill is to drive competition. That is the focus of this bill. Let me explain it in Economics 101 terms for the members of the government, who are apparently implementing this policy without any understanding of what it actually does. If you want proof, look at the market share of lending. It was the coalition that, for 12 years, increased the smaller players' share of the market when it came to credit, as opposed to the complete reversal of that situation under this Labor government. This Labor government has driven the single biggest increase in the concentration of market share in the four major banks that this country has seen for decades. So, Mr Deputy Speaker Sidebottom, that goes to the very core of why this bill, and indeed a covered bond market, was not previously needed in this country but is now required as a consequence of Labor's ill-informed policy changes.

Many speakers in this debate have outlined what covered bonds are and what they do. There are safeguards that have been put in place, including an eight per cent limit on the pool of assets and a requirement for there to be 103 per cent effective coverage on the bonds that have been issued—and of course we welcome both of those things. There could be arguments that it should be 10 per cent, 12 per cent or five per cent, but eight per cent seems reasonable, and I note that a large number of marketplace operators welcome that eight per cent figure. The need for there to be a 103 per cent overall level of coverage is also a prudent step.

I am very mindful, though, of the change as a direct consequence of this bill that will see deposit holders effectively relegated to a secondary position, if I can put it in lay terms. Naturally, to some extent this could increase the degree of angst in the community. But I think it is important to recognise that that degree of angst is largely unfounded because of where deposit makers currently already exist with respect to secured and unsecured creditors. The issuance of covered bonds does change that position somewhat, but not to such a significant extent that it warrants, I believe, any level of anxiety. Furthermore, the fact that it is limited to eight per cent of the asset base does provide a very high level of assurance that they need not be concerned.

I sum up by saying again that I welcome being able to throw a bouquet in the direction of the international finance minister of the year because I think it is good that he has adopted coalition policy. I note that the Assistant Treasurer, who has carriage of this particular piece of legislation, is at the table. I have no doubt that he is of the view that, if he had the opportunity to be Treasurer, which I doubt he is attempting to engineer, he would seek to introduce the same bill. I think it is good that the Assistant Treasurer has adopted coalition policy as well in that respect. There are many aspects of this bill that the coalition endorse, and we hope—certainly, I sincerely hope—that we see an increased competitive tempo in the marketplace as a direct result of the passage of this bill.

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