Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is addressed to the Treasurer. I refer the Treasurer to his speech on 18 March 2008 and a second speech overseas on 6 June where he stated that the ‘market for Australian residential mortgage backed securities vanished late last year’—which he restated in the House today. Why has the Treasurer done nothing to support the mortgage lending market in Australia?

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

I thank the Leader of the Opposition for his question. It is true that late last year and early this year it was very difficult in the securitisation market. It is also true that as recently as only a month ago a number of those institutions that were active there were beginning to be successful again. Of course, that has now been dramatically affected by the events of the last couple of weeks. That is the very simple answer to the member’s question.

What we are doing is keeping in constant contact with our regulators. We want to ensure that the system is robust—it is well capitalised through this difficult period. The one thing we will not be doing is making silly suggestions like that made by the Leader of the Opposition that we should somehow go out and buy US-style bad debt. That is what he said to Laurie Oakes last weekend. I note there has been a fair bit of commentary about the Leader of the Opposition’s statements to Laurie Oakes last weekend, not the least of which came from the member for Higgins on Lateline on Tuesday night. The member for Higgins was not impressed at all on Lateline on Tuesday night. If I could just have a look at what he had to say, this is Peter Costello on Tuesday night:

I’m going on to make the point in my view no major financial institution in Australia has the exposure to the subprime of anything like the dimension of the United States.

And then:

TONY JONES: Why doesn’t Malcolm Turnbull repeat what you say?

PETER COSTELLO: You ask Malcolm Turnbull what he’s on about, I’ll tell you what the situation is.

TONY JONES: But is it economically wise to be recommending the Government back financial institutions if they don’t need backing?

PETER COSTELLO: If an institution gets into trouble in Australia, there has been backing. HIH is an obvious example.

That has to be the understatement of the week! The government is watching and monitoring this situation closely. The government is in daily contact with all of our regulators. We stand ready to take any action that is required. But our system is healthy—and you can see that from the report today from the Reserve Bank.