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

My question is to the Treasurer. I refer the Treasurer to the recent $5 billion in profits this quarter of Australia’s big four banks, which is an increase of more than 15 per cent. How many second-tier providers of mortgage finance, who were keeping competitive pressure on the big four banks, have stopped lending, leaving the big four banks with 90 per cent of the mortgage market and record profits? What is the government doing about the prime residential mortgage-backed securities market which provided that much-needed competition to the big four banks?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the shadow Treasurer for her question. It is true that the banks have been very profitable in Australia, particularly in the first quarter of this year, and that is why I was so absolutely insistent earlier this year that if there were to be a cut in the official RBA cash rate then that cut should be passed on.

Joe Hockey (North Sydney, Liberal Party, Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Answer the question!

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I will answer. I am going to go all the way through it. This is a very important question. It is one that the government is very, very concerned about and has been very active on. But you have got to understand the background. It is quite complex, and those opposite may have some difficulty understanding it. It is true that the big banks have been very profitable, and that is why the government was absolutely insistent that if there were a cut in the cash rate then that should be passed on—and it was passed on, and that is a very good thing. But the government is concerned about the degree of competition in the mortgage market, and that is one of the reasons we have been so insistent on putting in place a bank-switching package, something those opposite could not manage to do in over 12 years.

It is also the case that the securitisation market has dried up because of events in global markets. That is true as well and that is producing a situation where the market is less competitive. Of course, that outlook changes by the day and by the week, given events in global financial markets. That is why I have made it very clear on a number of occasions publicly that should further action be required to put further competitive forces into that market then the government would take the appropriate steps at the appropriate time. We acted earlier in the year when it was very clear there was not enough liquidity in the market. There were not enough government bonds and we put more out there. We brought legislation into this parliament to issue further government bonds—

Peter Costello (Higgins, Liberal Party) Share this | Link to this | Hansard source

That is nothing to do with it.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

Well, the current Leader of the Opposition thought it was a good idea at the time—something you could not manage to do. The current Leader of the Opposition understood the need to put more liquidity in the market, and we did issue more bonds. We also, in that legislation, gave authority to the government for the AOFM to be more active in the area, should that be required. We stand ready to take further action in the mortgage market to make it more competitive so that Australian families out there get a fair deal. That is the government’s position.

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Small Business, Independent Contractors and the Service Economy. Will the minister please update the House on the government’s program of regulatory reform in the wake of today’s report from the International Monetary Fund?

Craig Emerson (Rankin, Australian Labor Party, Minister Assisting the Finance Minister on Deregulation) Share this | Link to this | Hansard source

I thank the member for Braddon for his question. Those opposite, who lay claim to economic credibility, should take a long, hard look at this report, the latest International Monetary Fund report on Australia’s economic performance. The International Monetary Fund strongly endorses the government’s economic strategy and importantly has commended the government on its long-term reform agenda. The IMF report says the directors considered that:

… if implemented fully, the broad reform agenda should enhance the flexibility of the economy and lift productivity and labor force participation.

The report goes on to say:

Successful implementation of further reforms would enhance the economy’s flexibility, lift productivity—

hear, hear!—

and foster labor force participation. Reform is essential to take full advantage of the mining boom that is centered on Queensland and Western Australia, that will require capital and labor to move from other states.

The Rudd government is helping to create the conditions for sustained, low-inflationary economic growth. The government is pursuing an ambitious long-term reform agenda aimed at restarting productivity growth. This follows a decade of squandered opportunity when productivity growth after the boom times of the 1990s slipped away until, last year, as mentioned by the Minister for Trade, it not just had fallen to a low level, not just had slowed but had stopped. It had ground to a complete halt. It was zero.

The government is investing in an education revolution to restart productivity growth. We are working, through the Council of Australian Governments, to reduce regulation in 27 different areas of reform. We are doing this to advance Australia towards a seamless national economy as called for by the Business Council of Australia. As the IMF says, this government’s reform agenda will help lift productivity growth, because today’s productivity growth is tomorrow’s prosperity. I note that the newly elected Leader of the Opposition said, on 19 September, just the other day:

There is a need for bipartisanship and a constructive approach to the economy.

I invite the opposition leader to support the Rudd government’s program of long-term economic reform as endorsed today by the International Monetary Fund.