Harry Jenkins (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Wentworth proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The failure of the Government to act in an economically responsible manner, by taking major economic decisions without regard to the recommendations of key financial regulators.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

On 29 February 2008 the Prime Minister said:

Trust is the key currency of politics, and unless you can be trusted to honour that to which you’ve committed to do, then, I’ve got to say, you’re not going to obtain the enduring respect of the Australian people.

The Australian people today are bewildered by the recent announcements of the government and the uncertainty that has been created by their bungling and mishandling of them. We have been told today, on the front page of the Australian newspaper, that the Reserve Bank has warned the government about the problems arising from an unlimited guarantee on bank deposits. We know that an unlimited guarantee is unusual. Deposit guarantees of this kind, historically—and indeed around the world—have had a cap on them. They have a cap in the United States, they have a cap in the United Kingdom and it is proposed to have a $20,000 cap here in Australia. But, apparently, on the weekend of 11 and 12 October, the strategic policy and budget committee of cabinet met and decided that there should be an unlimited deposit guarantee, and that was announced. The Prime Minister has gone to great pains to stress that this policy was taken on the advice of the Reserve Bank. He said that it was based on the advice of the bank. He said that on the day. On 15 October he said, ‘These measures have been implemented in the closest possible coordination with our financial and economic regulators.’ He said that again and again in talking about the importance of acting on the advice of our regulators. On 14 October in question time he said:

... we will act in accordance with the regulator’s advice in this difficult time rather than take short-term, populist positions in order to secure a headline.

The people of Australia were given the very clear impression, the unequivocal impression, firstly that the government was in close and direct contact with the regulators, the most important of which in this context was the Reserve Bank and, secondly, that the policy, the measure, being proposed and which has now been incorporated in law through an act of parliament passed through both houses, had the support, so the Prime Minister said, of the Reserve Bank. It has become clear in the course of question time today that on that weekend there were in fact no discussions directly between ministers and the Reserve Bank of Australia. We heard the Minister for Finance and Deregulation earlier today, who is a member of the committee, saying he was not aware of the advice of the Reserve Bank. I noticed his attempt to explain himself and he quoted somewhat from his transcript with Sky News earlier today. In one section, he said:

Oppositions routinely accuse governments of misleading parliament and a lot of the time it is stretching the truth to suggest that that is the case. Not being aware of what the Reserve Bank Governor is supposed to have said to the government, if anything—

and it goes on to say:

I note there are newspaper reports where there is no direct material from the Reserve Bank Governor.

He says that he is not aware of what the Reserve Bank governor is supposed to have said. So how did the government become aware of this? How did the Prime Minister become aware of this? What the Prime Minister has said—and he said it twice in question time—is that at the end of the meeting when they had gone through the options and reached their conclusion, he put a question to the Secretary of the Treasury, Dr Henry. The question was: is the position being recommended here—in other words, the unlimited deposit guarantee—that of the regulators? He said that Dr Henry said: ‘It was, and that includes the Reserve Bank.’ So the Prime Minister has said unequivocally twice in question time that the position being recommended was the position of the Reserve Bank and that that advice had apparently been given to the Secretary of the Treasury, who passed it on to the Prime Minister.

We on this side of the House have the utmost respect for both the competence and the integrity of Dr Henry. That is why we would not throw him to the wolves and use him as a human shield in the way the Prime Minister has done. Let us be very clear about the analysis of this. If the Reserve Bank governor did not recommend an unlimited guarantee on deposits to the Secretary to the Treasury, the Secretary to the Treasury could not have said that the position being recommended was that of the Reserve Bank. I think that is plain enough. If that had been the case—if he had misrepresented the position of the Reserve Bank—that would obviously be a very serious matter.

We do not imagine for one minute that Dr Henry misled the cabinet committee. We do not imagine for one minute that there was any misleading being done in the course of these events other than by the Prime Minister, Mr Rudd. The fact of the matter is that he has set out to create an impression that he is acting totally in accordance with the advice of the Reserve Bank. He hid behind the skirts of the Reserve Bank and, when the front page of the Australian revealed that that was not right, he then sought to verbal the Secretary to the Treasury.

Dr Henry deserves better than that. But what has happened to him today is that he has been verballed by the Prime Minister and put in the position where, if the Governor of the Reserve Bank did not recommend an unlimited cap on deposits—and it is plain enough from his speech today that he has the gravest of reservations about an unlimited deposit guarantee; you do not need to rely on the front page of the Australian to see that—one of two outcomes must be right. Either Dr Henry misrepresented the Reserve Bank’s position to the cabinet committee or the Prime Minister is misrepresenting what Dr Henry said to the cabinet committee. I can assure you that on our side of the House we have no doubt what the actual factual outcome is.

There has been a betrayal of trust. Do we imagine that there are any Australians today who thought prior to question time today that the Prime Minister had made these momentous decisions without speaking directly to the regulators themselves? Only today we had the Minister for Finance and Deregulation on Sky News saying:

Throughout the international financial crisis, the Government has been in very regular contact, almost constant contact, with the key regulators including the Reserve Bank and we have paid a lot of attention to the advice we have received from the regulators.

Yet it is plain enough that on that crucial weekend they paid no attention to the Reserve Bank other than, allegedly, at second hand via Dr Henry. I am sure that Glenn Stevens was available to take a call. I am sure Dr Laker at APRA was available to take a call. But, no, the Prime Minister was too busy to talk to them as he planned his unlimited guarantee.

We have talked about in this House on many occasions the moral hazard problems of deposit guarantees, and they exist whatever the level of the guarantee. We took an unlimited guarantee on trust because we believed the government was acting on the express advice of the Reserve Bank of Australia, the agency and regulator responsible for the systemic stability of our whole financial system. If you have an unlimited guarantee, it means that a deposit of any size—it could be $100 million; it could be $1 billion—with the smallest guaranteed institution in Australia, such as a credit union, will have a higher credit rating than a deposit with any other financial institution, such as a foreign bank branch that is not covered, a large corporation or a cash management trust. It is no wonder that the announcement of this unlimited guarantee has caused so much difficulty.

If we are to believe the Prime Minister that the Reserve Bank recommended an unlimited guarantee on that weekend, why is it that only a matter of days, not weeks, later the Reserve Bank governor is saying to the government: ‘You’ve got to change it. You’ve got to install a cap.’ Why would you pass this bill through the House and through the Senate? It may have received royal assent today. I am not familiar with that detail. Perhaps the Treasurer can tell us. It may now be the law of the land. Why would the government take it through both houses of parliament if it was going to turn around and amend it, if it was seriously considering doing that?

The fact is that in the second reading speech the Treasurer said quite expressly and very clearly that it was proposed to review it in three years with the intent of having a cap after three years. Indeed, when the shadow Treasurer and I recommended there be a $100,000 cap because we thought $20,000 was too low, we also said it should be reviewed in three years by the Productivity Commission.

We know that confidence in this economy in these difficult times is absolutely vital. Trust and confidence are co-extensive, and the public has put enormous trust in the Prime Minister. It has taken him on trust. These are extraordinary measures that he has announced. Yet what we are seeing is an indignation, a resistance—a petulance—when confronted with the most basic questions. We have a proposal to grant guarantees to the wholesale funding of banks. The Prime Minister, in the course of one of his answers, made it quite clear that he did not understand the distinction at all between deposits with banks which have priority under the Banking Act and the other sources of funding for banks, in particular their wholesale term funding.

The government is proposing to offer guarantees there, and they will be the subject of a fee. This could involve the Commonwealth taking on hundreds of billions of dollars of contingent liabilities. The taxpayers of Australia could be on the hook for an enormous amount of money. Those term funding obligations do not have priority under the Banking Act—they are, if you like, right at the top of the risk profile of a bank, other than for its capital. The most protected are the deposits; after that are the other liabilities; and then there is the capital. So if a bank were to fail, the wholesale term funding that we are talking about providing Commonwealth guarantees for would be at far more risk than deposits. That is the scheme of the Banking Act, and has been so for many years.

The government is proposing that this not be the subject of legislation, so the parliament will have no say in how those fees may be set. Of course, we saw the bizarre, if somewhat hilarious, example of the Treasurer who did not understand the difference between a BBB credit and an AA credit. When asked a very simple question by the shadow Treasurer as to whether you charge a higher fee for a BBB bank than for a AA bank, and prompted by the finance minister, ‘Just say yes,’ he either didn’t hear him or was too vain to accept the prompt and so gave another bumbling response. But, as I said, this momentous step is apparently not going to be the subject of legislation. Consider the absurdity of the government’s position: it is proposing to have the Commonwealth take on its book hundreds of billions of dollars of contingent liabilities without legislation and yet it knows that were one of those guarantees to be called it could not be paid out without an appropriation bill being passed through the parliament. What a ridiculous— (Time expired)

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

We just saw on display in the House, and the Australian people have just seen, how reckless and slippery the Leader of the Opposition is—how he will say anything and do anything for personal political power. We saw his personal alternative energy policy on display here today: he is powered by his own sense of self-satisfaction—and God forbid anyone who gets in his way. That has been the history of his political life, as those opposite will certainly learn as time goes on. People on this side of the House are very familiar with the member for Wentworth. They know that slippery barrister talk is no substitute for a sense of public policy and it is no substitute for committed values and a commitment to the national interest; there is only commitment there to the personal interest.

What we saw today is a leader of the opposition who is out of touch and out of control. Times like this do actually demand responsibility from political leaders. Yet what we saw today was an act of recklessness from a political leader who will say anything or do anything for political power. We have become reasonably familiar with that through the member for Wentworth’s political career and his time outside parliament. We have also become familiar with it over the past 12 months. It was only some months ago that he was attacking the Reserve Bank and also attacking the Treasury secretary, but he has already forgotten that because he simply moves on, day after day, hoping that people will forget what he did the week before and the week before that. But to do all this at a time of international financial turmoil shows just how reckless the Leader of the Opposition is. To do this in the worst financial conditions since the Great Depression shows that he will say and do anything for political power. That proves how unfit the member for Wentworth is for the high offices of Leader of the Opposition and alternative Prime Minister of this country.

Dr Henry, the Secretary to the Treasury, is one of Australia’s highest and most respected public servants. In the history of this country, he is one of our most pre-eminent public servants. He has served all sides of politics. He worked with the member for Higgins, might I say, for 12 years, and that is certainly a substantial achievement. He has proved he can work with both sides of politics and is therefore held in the highest regard, not just by those familiar with political life but by those out in the business community. He is also known for his commitment to a decent set of values when it comes to issues as important as conservation. So what does the Leader of the Opposition do in this House today? He irresponsibly asks the Prime Minister the question: ‘Will he sack the Secretary of the Treasury?’ That is exactly what he said. He has attempted to crabwalk away from that, using slippery barrister talk in his remarks here earlier—

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Morrison interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order!

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Morrison interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The member for Cook is warned!

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

but nothing will substitute for a full apology on the floor of this parliament from the Leader of the Opposition to Dr Henry and to the Australian people. That is what is absolutely demanded by his reckless behaviour in question time today, so the Leader of the Opposition has still got time. At some time in the next 24 hours he ought to come into this House and apologise for his behaviour in question time.

This is just the latest evidence of reckless behaviour that we have seen through the past few weeks. There was the extraordinary discussion the Leader of the Opposition had on Insiders on Sunday. He went on that program and said: ‘The global financial crisis is just all being hyped up. Don’t worry about it. It’s no massive challenge for the globe or the country. It’s all been hyped up by Kevin Rudd.’ That demonstrates something very fundamental about the Leader of the Opposition. Firstly, it demonstrates how out of touch he is. He does not understand the impact of that on superannuation and what that means to the lifestyles of retirees. He does not fundamentally understand the impact on the profitability of small business. He does not understand any of those things if he thinks that the global financial crisis is hyped up. It proves he is absolutely out of touch with what is happening to average Australian families and businesses. But, perhaps even more importantly, he has demonstrated he does not understand the magnitude of the challenge Australians are facing in the middle of this global financial crisis by coming into the House and questioning the deposit guarantee.

This deposit guarantee is very important to confidence, and that is why we made it comprehensive. We made it comprehensive because there was a need to assure everyone that their deposits were safe. Of course, he made the remark before that there should be a cap—$20,000 or $100,000. A cap will not work in these circumstances, and that just proves that he does not understand what we are doing. We are in the middle of a global financial crisis and under the proposal of the Leader of the Opposition 40 per cent of the deposits in the banking system would not be covered. That is the proposition that he is putting to the Australian people. That is absolutely irresponsible, absolutely reckless and shows that he does not have an understanding of the fundamental challenge the nation faces in the circumstances that we are in.

The bank guarantee is very important to confidence, very important to assure all Australians that the financial system is stable. And he comes into this House raising questions about it, quoting an inaccurate report on the front page of the Australian, irresponsibly blowing it up before he had heard from the Governor of the Reserve Bank. He was prepared to do that because he will say anything and he will do anything for his personal political power. The Governor of the Reserve Bank has stated the situation in his speech today. He has made it very, very clear that the Reserve Bank supports the position of the government. Might I just add that, as the Treasurer, I have been meeting regularly with the Council of Financial Regulators—something my predecessor rarely ever did. I have been meeting with them because the times have demanded it and the times have been like this all year, just as we stated in the budget.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Morrison interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Cook has been warned. He has one more chance.

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

But he simply does not understand the magnitude of the challenge. That is why he blunders in here, recklessly, with these propositions and then throws into the middle of that a proposal to the Prime Minister: ‘Would you sack the Treasury Secretary.’ How irresponsible! How reckless to throw that into the middle of a situation where we do actually have a global financial crisis, where what we absolutely need is confidence across the board and where the Australian people are looking for unity.

He had the gall to claim that he was looking for bipartisanship, and when we brought out our package he said he would support it. There were statements, all on the record, in the days following of bipartisan support. But they all disappeared, because it was just phoney—phoney like the rest of his approaches in this House because there are no core values. The Leader of the Opposition does not actually believe in anything other than himself. That explains his progress through the political system. It explains his attempt to join the Labor Party. It explains the fact that he led the Republican Movement and now he has become a monarchist. Can you believe that? Somebody who led the Republican Movement is now a monarchist. He has no core values, because what he is really on about is personal political power. That is all that matters to him.

But what matters to us on this side of the House is the national interest. I will tell you why the guarantee is so important. What we have seen in recent days have been very substantial interest rate cuts from a number of banks who have all cited this guarantee as a very significant influence in their decision to reduce interest rates for households and businesses and the rural sector. But of course if you are so out of touch, you just think that interest rate rises were overdramatised, as the Leader of the Opposition has said on a number of occasions. He does not actually live like ordinary people live; he does not actually understand that an interest rate rise of 25 basis points or a cut of 25 basis points or a cut of 80 basis points is really important to households and really important to business. That is because, once again, he does not understand. He does not understand how important the guarantee is to bringing down rates, to putting confidence back into the system, to getting behind Australian households, to getting behind Australian businesses.

Of course, all he can do is to walk into this House with more slippery barrister talk, nitpicking and so on, but no substantial policy. But on Sunday his alternative policy was on display on the Insiders. So he wants a cap of $100,000 on bank deposits. That leaves 40 per cent of all deposits out of the system. I could not think of anything more reckless than that. But, of course, the Leader of the Opposition thinks he knows all. He is unconcerned. He is moving on to his next nitpick somewhere, to construct his next phoney argument to somehow resuscitate himself before his colleagues. But we take these things seriously. That was demonstrated massively this morning at his press conference when he said—

Andrew Robb (Goldstein, Liberal Party, Shadow Minister for Infrastructure and COAG and Shadow Minister Assisting the Leader on Emissions Trading Design) Share this | Link to this | Hansard source

Mr Robb interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Goldstein is warned!

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

‘If you look round the world, deposit guarantees of this type all have caps. As far as I am aware they are in the order of 100, 200 and so on and so on. They all have them.’ Wrong! Absolutely, categorically wrong. Comprehensive guarantees in Ireland, Germany and Denmark—all comprehensive, unlimited guarantees. but he is not up there.

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

Mr Turnbull interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order!

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

There we go! We should set him an exam about what is happening around the world. He is such a clever boy. He wants to amuse us all; he’s such a clever boy! The problem is he does not actually have the values, and because he does not have the values, he does not have the commitment, he does not have the dedication. Now of course he is at odds with the Governor of the Reserve Bank again. What the governor said today does not seem to matter to him. This is what the governor said today:

Steps in these directions, in the context of what other countries were doing, were sensible and the RBA supported them.

He somehow thinks he knows more than that. I have read the speech and it is very important.

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

Mr Turnbull interjecting

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The Leader of the Opposition had his turn; he was heard in silence.

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

It is very important that you do not walk into this House and once again question either the Reserve Bank or the Treasurer, because what we really need in this country is a degree of unity and commonality of purpose in these times of challenge. That is what we thought we had when we brought the package down. It is why we gave briefings to the opposition, briefings the likes of which the previous opposition never, ever received. I received one briefing in three years from the previous government, and I venture to say that my predecessors barely got that. We will take them into our confidence but not when they are behaving as recklessly as they are now—prepared to say anything and prepared to do anything to score a political point, but it is not even for the Liberal Party; it is just all for Malcolm. All of those backbenchers over there, as they get dispirited as time goes on, will understand what Malcolm is doing up the front: he is not there representing the Liberal Party, he is not there representing them, he is there looking after himself. That is what it is all about. It is all about Malcolm.

As I said in the House the other day, it reminds me of the old Mark Twain saying: ‘All you need in life is ignorance and confidence.’ And the Leader of the Opposition has got plenty of both—plenty of ignorance and plenty of confidence. But he has got one choice left. He can retrieve this situation, at least for the day. He can come back into the House straight after this debate and apologise to the Secretary of the Treasury for his reckless behaviour.

Opposition Members:

Opposition members interjecting—

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

Come in here and apologise. Be man enough to say you have got it wrong. He can reaffirm his full support for the Treasury. If he does not, he must resign. (Time expired)

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

The Treasurer’s shallow and unconvincing performance today was only matched by the Prime Minister’s shallow and unconvincing performance in question time today when the Prime Minister was so unconvincing that he objected with such outrage at every question put to him and not once did he give a direct answer to a direct question. He equivocated, he ducked, he weaved. The Australian people are none the wiser about the advice that the government received from the Reserve Bank on the question of an unlimited guarantee for bank deposits. After a series of questions today to the Prime Minister and to the Treasurer, the Australian public are none the wiser about this significant issue and the specific advice given to the government by the Reserve Bank.

There is a lot at stake here. There are billions of dollars of taxpayers’ funds at stake here. The government has been warned of the distortions that are now occurring in the market and the Prime Minister should be very clear, very concise, honest and give the utmost clarity around the circumstances that gave rise to this unprecedented decision to provide an unlimited bank guarantee for deposits. The Prime Minister had led the Australian public to believe that this significant announcement, this announcement on an unlimited government guarantee for deposits, was on the advice—the unequivocal, express advice—of the Reserve Bank. In fact, prior to question time today, the Prime Minister has literally clothed himself in the advice of the Reserve Bank. At his press conference on Sunday, 12 October, where he announced this unlimited bank guarantee, the Prime Minister said:

The measures I’ve announced today are based on the advice of Australia’s economic regulators.

He said:

The measures I’ve announced today have been the product of extensive deliberation between myself, the Treasurer and other Ministers who are members of the Strategic Policy and Budget Committee of the Cabinet.

But, on the following days, he has said it to an even greater extent. He said on the Sixty Minutes program that evening:

The decision was based on the advice from our regulators.

He went on to say:

… our advice as the Government comes from the regulators.

In question time on 13 October, in response to a question from me about the whole bank guarantee package, the Prime Minister said:

… this measure has been recommended to the government by the Australian regulators—the Reserve Bank, the Prudential Regulation Authority and the Treasurer.

He went on to say to the Press Club on 15 October:

Again we took this decisive action in close consultation with the regulators.

In his address to business last Friday, he said:

This brings us to the dramatic decisions of recent days, those announced by myself on Sunday and through close collaboration again with the regulators and the Treasurer on the phone from Washington, and also with the other members of the strategic policy and budget committee of the Cabinet.

The judgment we took, based on the advice of the regulators …

So it is fair enough that the Australian people and the coalition should take the Prime Minister on trust in relation to the probity and the integrity of this decision on an unlimited bank guarantee. We accepted the statements and the assurances that the Prime Minister and cabinet were in close and regular and, indeed, as the finance minister said today, constant contact with the regulators throughout this international financial crisis. Today, however, we read on the front page of the Australian that that is not in fact what occurred. This is what was reported in the Australian:

The Government ignored the RBA’s strongly voiced concerns about the impact of an unlimited guarantee scheme in its rush to announce a guarantee of all deposits in Australian deposit-taking institutions on October 12.

The report went on to say:

The Government faces severe embarrassment that its emergency measures are now creating new problems, given that it refused to heed RBA advice at the time.

Given that that statement appeared on the front page of the Australian newspaper, you would have expected that the Prime Minister would come into this parliament and explain to the parliament the confusion that has arisen in the mind of the Australian newspaper. How could the Australian newspaper get it wrong? The Prime Minister should come in and explain to the Australian people. When parliament opened at two o’clock today, we had no statement in explanation, no clarification from the Prime Minister. Never mind that the markets are in uproar about this. Never mind that the Australian public are totally confused about whether or not the Prime Minister acted on the specific advice of the Reserve Bank. We heard not a word from the Prime Minister.

However, in answer to the first question today from the Leader of the Opposition during question time, the Prime Minister said for the first time that, in fact, neither he nor any member of the strategic policy unit, nor anyone present on that day, actually spoke to the Reserve Bank. This is incredible. For the first time the Australian public was told that, in fact, neither the Prime Minister nor the Treasurer, who was in Washington, nor the Acting Treasurer—the Minister for Finance and Deregulation—spoke to the Reserve Bank. What happened to the constant contact, daily advice and collaboration with the Reserve Bank on the very day that the government met to make one of the most significant decisions of the life of the government—in fact, probably the only decision that the government has made? They did not contact the Reserve Bank; they did not seek the advice of the Reserve Bank; they did not get any written advice; they did not pick up the phone and speak to the governor, Glenn Stevens.

The Reserve Bank is the regulator responsible for the systemic stability of the financial sector. This decision goes to the very heart of the systemic stability of the financial sector. The Reserve Bank is the regulator that the government should heed on this issue above all others. And yet the very regulator whose job it is to advise the government on precisely this issue is ignored. On the one issue that they should consult the Reserve Bank on above all others, they do not—they ignore it in the rush to get the photo opportunity and the cameras into the cabinet room. The Prime Minister does not roll his sleeves up; he pushes them up above his elbows. He puts Ken Henry on one side and Treasury officials on the other to get the photo opportunity. They do not have the time to pick up the telephone and ask the Reserve Bank its opinion.

It seems that Kevin Rudd can ring every world leader on a constant basis. How many times has he been on the phone to Dominique Strauss-Kahn over the last few weeks? How many times has he been on the phone to Gordon Brown? He is on the phone to George Bush. He is ringing up Hank Paulson. But he does not ring the Governor of the Reserve Bank of Australia on the day that the government makes an unprecedented decision that puts at risk billions of dollars of taxpayer funds.

What happened when the Prime Minister finally admitted today that he had not spoken to the Reserve Bank governor? Once his deception to the Australian people was revealed he did what has become standard practice for this Prime Minister. He hung someone else out to dry. He placed the Secretary of the Treasury squarely in the frame. Can you believe this? The Prime Minister has now said that, after the decision was made and they had had Swanny on the phone, the only question that was asked in a cabinet meeting specifically called on a Sunday to address this question of an unlimited bank guarantee was directed at the Secretary of the Treasury. According to the Prime Minister at 2.05 in question time today, he asked Dr Henry:

‘Is the position being recommended here that of the regulators?’ He answered, ‘It was, and that includes the Reserve Bank.’

That is the extent of the inquiry made by the Prime Minister about one of the most significant decisions that this government has made and one of the most important decisions that would impact on the stability and the confidence in the financial markets.

Then the Prime Minister forgot the answer that he gave, because it was asked again about this unprecedented decision that the government had made. This time, at 2.21, in answer to another question from the Leader of the Opposition, the Prime Minister’s answer was:

… at the time that the options which were then adopted were being considered by that committee of the government, the question was explicitly put to the Secretary to the Treasury, ‘Is this the advice of the financial regulators, including the Reserve Bank?’ to which the answer was unequivocally, ‘Yes.’

That is all that Dr Henry— (Time expired)

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

If there is one thing that you can always guarantee about the opposition, living in denial, is that they will without exception walk both sides of the street. They will act for themselves, in their own interests, before the interests of the Australian community. They did it when they were in government and they continue to do it now that they are in opposition. They have learnt no lessons from their defeat at the last election. It is all about them and their politics; it is never about the public good or the national interest. We had 12 long years of that. That is exactly what this trumped up matter of public importance put forward today is all about. It is a weak and directionless attempt to smear the government, but instead what it does is create fear and doubt in the community, in the markets and in the banking sector. They are a weak opposition, divided in their own ranks. They are out of touch. They are out of control. They are walking both sides of the street.

They say on the one hand that they support Labor’s necessary and vital Economic Security Strategy, which is taking strong, clear and decisive action to fight the global financial crisis, while at the same time the Leader of the Opposition and the opposition themselves do everything they can to undermine the economic strategy that we put forward. Our Economic Security Strategy will deliver at a time of great need for ordinary Australians, pensioners and families. This is something which the opposition actually find really funny because, you see, it does not even factor in their thinking that you could possibly put forward an Economic Security Strategy that actually deals with the real economy—that is, people: families and pensioners. They are not in the game of delivering for ordinary Australians, they are not in the game of delivering for first home buyers and they are certainly not in the game of bringing on vital infrastructure spending that supports the real economy and people’s jobs and livelihoods. That is left up to us. That is why we have been elected and that is the job we are going to do.

In comparison, this is an opposition that does not know where it stands and that walks both sides of the street on economic policy, infrastructure policy, health policy and education policy. In fact, on any policy you will find opposition members walk on both sides of the street. Except for one. In fact the only policy which this opposition very clearly still stands for unambiguously and defends every single day is Work Choices. It is the only policy that opposition members are truly committed to retaining. Suddenly they go silent, because suddenly it dawns on them that that is exactly right. The only policy they unanimously, unambiguously defend in this place day in, day out is Work Choices. When it comes to every other policy, they all have separate views—whether it is the Leader of the National Party, whether it is the Leader of the Opposition or whether it is the backbenchers sniping from the back about their own views, they are all divided except for on one policy: Work Choices. That is, tragically for all Australians, an example of how walking on both sides of the street actually does some real harm; significant harm to the confidence of our economy and the confidence ordinary people have in what we are trying to do as a nation, as a country and as a parliament—that is what it should be—not just as a government.

The Leader of the Opposition, Malcolm Turnbull, has got it horribly wrong. He has got it wrong on the economics, he has got it wrong on the action needed, and he has got it wrong on what his role is in maintaining confidence and restoring confidence in the Australian economy. Again, he is just out of touch—he only thinks of himself; he does not understand what ordinary people need—and he is out of control, because he only thinks of what he needs to do to survive. He talks the economy down when all other leaders around the world are working together. That actually should be part of the responsibility and job of the Leader of the Opposition, but he does not do that. The central theme of the contribution the Leader of the Opposition made during the MPI debate today was he is right and everyone else is wrong—he is smarter than everyone else; everyone else should just get out of the way and let him get on with the business of what he thinks is his right and duty. He has got very little right at all, and I will come back to that point in a minute.

What is very clear is that we are facing a global economic slowdown and that will impact on Australia. The shadow minister thinks his only role is to flap his gums in this debate, but he offers no contribution. The only thing that he has actually got half right is that there is an economic slowdown and it will impact on Australia. I will come back to that because the Leader of the Opposition did make a specific comment on it. It is clear that we now have a recession in the US, and we also face the possibility of a recession in Europe. The global financial system is experiencing its most significant upheaval in living memory. What does the Leader of the Opposition say in his rhetoric? He says that it is all just hyped up—this is somehow a hyped-up myth; this is somehow not correct. It does not matter where you turn, you can go through a whole list of world leaders and economic experts who all agree on this. In one way or another, they all say the same thing: we are facing a global financial crisis not seen possibly in history, possibly in the last hundred years but certainly since World War II.

Australia is not immune from these developments, and that is the tragedy of this. But we are in a much better position to weather the storm than most other countries. Australians actually understand this. They are a bit smarter and more sophisticated than the opposition would give them credit for. Australians do understand this. They do not expect that their leaders in this country actually tell them that it is all just hyped up. They do not expect that they would actually work against government efforts to deliver key public policies and an Economic Security Strategy that will help them.

Our May budget forecast that problems abroad would slow the Australian economy and impact on employment, and we have taken steps which were reflected in a carefully structured, carefully measured and conservative budget where we protected the surplus. We did that, very importantly, because we suspected, while we did not know its size or the impact it would have, the crisis that was before us. That is why we have been able to do this. The good news for Australia is that we are in a better position than most other countries because over a long period of time Labor governments have better regulated this country and made those tough decisions. We are the ones who set up the superannuation structures which give Australia a unique position in the world in terms of national savings. It has always been Labor governments which have put in place the sort of governance arrangements, often argued against by the conservatives, that are now delivering that somewhat better position compared to others around the globe.

Our package does a number of things. It is clear, strong, decisive action introducing a $10.4 billion Economic Security Strategy that will strengthen Australia’s economy and will support Australian households during this global financial crisis. We needed to act. People expected us to act, and that is what we have done. But what the opposition do not understand is that people expect them to act as well—they actually expect them to act responsibly and they expect the Leader of the Opposition to act responsibly as well. He almost feigned that for a brief moment. For just a brief moment he came in and almost acted responsibly by saying that he would support Labor’s package. But since then he has spent his time, every breath he draws, undermining it, white-anting it and destroying the confidence that the Australian public has in what their government are doing to make sure that we can weather the storm before us. We are doing that not just in terms of the $10.4 billion package; we are doing it in terms of first home buyers and we are doing it in terms of infrastructure. We have always said that we are the party of nation building, and we are true to that commitment. We are not just committing the funds and the institutions that will deliver on this but also committing to bring those forward.

Just for moment let us compare one thing: the utter hypocrisy of the Leader of the Opposition and the opposition. When they were in government, we saw policy made on the run on a daily basis. There was no consultation with the community or anyone else. They operated directly against departmental advice, removing anyone who disagreed with them and silencing dissent. They spent any amount of money on a political outcome rather than a judgement. There is example after example of a do anything, say anything, spend anything reckless government—they were reckless when they were in government and they continue to be in opposition. The tragedy is that their single-minded mission to destroy the surplus has been a trick. Malcolm Turnbull has become the Australian Harry Houdini. Not only does he walk both sides of the street; he actually does a bit of a sleight of hand with both hands. With the left hand he steals the surplus and with the right he steals it all over again. If he had a third hand, he would try to steal the surplus three times, which would have left the Australian government and the Australian public— (Time expired)

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

What we have seen over the last couple of days is the obvious fact that this government has no capacity to manage an economy. Whether they be in good times or bad, Labor inevitably fail when it comes to economic management. Like every other Labor government around Australia and like its predecessors, this Labor government cannot manage an economy in good times or in bad. Today we have seen the extraordinary situation of the Prime Minister’s pathetic attempt to explain away the Reserve Bank’s concerns about the government’s guarantee on bank deposits.

When the government announced its stimulus package they verballed the Reserve Bank. The government said they had the Reserve Bank’s support for the package in its detail, including the fact that the package was uncapped. They claimed that this had the support of the Reserve Bank and the regulators, but it is apparent from what we have seen in today’s Australian that that was not true. That was never true. Indeed, the Reserve Bank has made it clear that their clear advice was ignored by the government. When they made this decision, in their mad rush to announce a guarantee for all deposits in Australia on 12 October, they completely ignored the concerns of the Reserve Bank. And when this came out into the open today, did the Prime Minister take it on the chin? Did the Prime Minister acknowledge that he had misled the Australian people? After asking the people to trust him and assuring the Australian people that he wanted to take them into his confidence, we found that he had not told them the truth. He told them that the regulators approved this package when clearly they did not.

Now, when it has come into the open today, what did the Prime Minister do? He blamed the staff. He did not blame the butler this time but a person no less senior than the Secretary of the Treasury. It was the fault of the Secretary of the Treasury for misleading and giving wrong advice to the government. It was the Secretary of the Treasury who misled the government and who provided advice which was incorrect. And as the government dithered and stammered their way through question time today it has become abundantly clear that this was an attempt to blame a senior respected public servant for the fact that the spin doctors had overstated the case and made claims which simply were not true. So what we have now is the Rudd Labor government not willing to take responsibility for their own actions and seeking to defame a respected public servant and suggest that he gave them advice which few people will really believe he ever did.

The reality is that he knew what the problems were. The government was determined to seek to trump the opposition. They had, after all, rejected and ridiculed the idea of caps on guarantees. A few days earlier they had rejected and ridiculed the idea of guarantees at all. But bit by bit they had been forced to follow the guidance of the Leader of the Opposition—the policy advice provided by this side of the House—and come kicking and screaming to the reality of what had to be done. Now, during the dithering and stammering from the Prime Minister today what has come out quite obviously is that the government is about to do another backflip. There will be a cap on the level of the guarantee. It may be $1 million; it may be a little more than that. Above that you will have to pay a fee if you want to have the privilege of this guarantee. That is not what the Prime Minister announced when he released this stimulus package. This has been invented since that time.

It is quite clear that the public believed the government when they said that there would be a guarantee on deposits, and many people have taken their deposits out of one institution and put them into one that the government said would be guaranteed. But now there is going to be a limit on that guarantee. What sort of compensation is the government going to pay to those people who were actually foolish enough to believe them when they said the guarantee would be unlimited now that it is clear that it is not going to be guaranteed?

This whole package was always very poorly designed. Labor even bungled the guarantee. Many billions of dollars are invested in funds that do not have the privilege of the access to this guarantee. The nation’s biggest mortgage fund, the $2.9 billion Challenger Howard Mortgage Fund, complained today that there has been a run on their deposits because they do not have the guarantee that is available to even quite small building societies. There are many other organisations, like the solicitors investment mortgage companies and other organisations, which provide very worthwhile financial services. They do not have this guarantee. The government bungled it. And now they have also bungled the maximum amounts that are to be guaranteed. (Time expired)

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

Clearly the mob opposite have shown their true colours today, and I want to remind the people of Australia in general, and my electorate of Braddon, exactly what the opposition are and what they have demonstrated clearly today. Firstly, they are pretenders. They pretend that they support this package but they do not. It is as clear as that.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

Mr Hunt interjecting

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

And there is a great pretender at the table right now. Secondly, the opposition are nonbelievers. What is happening globally is all hype, according to the Leader of the Opposition. They do not believe and they pretend they do. Thirdly, the opposition are irrelevant. This is what hurts them more than anything. They are irrelevant in the crafting of a bipartisan solution to the crises we now face.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

Mr Hunt interjecting

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

And the member at the table is more irrelevant than most. Fourthly, the opposition are in denial. This follows from the other three points. They cannot accept the verdict of 24 November 2007, that we have a mandate to govern and they do not. Get used to it!

Fifthly, the opposition are desperate. Their desperation today was demonstrated by what they do best—and that is, play the man. Today they played the man when the Leader of the Opposition called for the resignation of Don Henry, the Secretary of the Treasury. If they want to make the man the main game they should go and play somewhere else. Finally, they are hypocrites. And the biggest hypocrite is at the table right now.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: I am sure that the member did not mean to defame the leader of the ACF and I am sure he will correct the record.

Bruce Scott (Maranoa, National Party) Share this | Link to this | Hansard source

The member for Flinders does not have a point of order.

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

Ken Henry! Finally, they are hypocrites.

Warren Truss (Wide Bay, National Party, Leader of the Nationals) Share this | Link to this | Hansard source

Mr Deputy Speaker, on a point of order: the honourable member referred to members on this side as hypocrites, and I think that that is inappropriate language and that he should withdraw it.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Braddon did use the word ‘hypocrite’ describing, in general, the opposition. I would ask that he assist the House by withdrawing that reference.

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

I withdraw the reference to the hypocrites.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

No, the member for Braddon will withdraw.

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

I withdraw. Where were they when they took over the Mersey hospital and when they did the Murray-Darling Basin and the Northern Territory interventions? Where was the funding for those? Where did the Australian people see the Treasury’s figures for these interventions? There was none at all. That is why some would be drawn to use the word ‘hypocrites’ when we deal with the mob opposite. What we have done responsibly, sensibly and in a considered approach is to try and deal with the financial situation as it exists today and to take a pre-emptive step to try and deal with it in the future. We began this in the 2008 budget, and with the wise use of a surplus built on savings we made sensible tax cuts and considered expenditure on costed commitments.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The time for the matter of public importance has expired.