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

The Speaker has received a letter from the honourable member for Curtin proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government’s flawed and hasty introduction of an unlimited deposits guarantee which has created unnecessary risk to the financial security of small businesses, self-funded retirees, farmers and households across Australia

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—

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

I thank the Minister for Finance and Deregulation for supporting this matter of public importance today. The Prime Minister and the Treasurer demonstrated today their callous disregard for Australians—those self-funded retirees, families, small businesses and households across Australia—whose cash and savings are held in cash management trusts, in property trusts, in certificates of deposit, in debentures and in deposits in entities across this country. The Prime Minister and the Treasurer seemed not to know or care what turmoil and confusion the government has created in the deposit market.

Today, on top of the confusion, the turmoil and the chaos that has been caused by the government’s hasty, ill-informed and misjudged announcement of an unlimited guarantee on bank deposits, the Treasurer added to the confusion by announcing in question time a new tax. The government are introducing a new deposit tax on deposits of around $1 million—they are not quite sure whether it is going to be just over $1 million or right on $1 million. They are going to introduce a new tax on deposits. The Treasurer said that this new tax will be compulsory—it is not just a commercial arrangement; it will be compulsory—and he agreed that it will be on deposits, to be paid by depositors and by the banks holding the deposits whether or not the depositors wish to have the unlimited guarantee and whether or not the bank wishes to avail itself of the unlimited guarantee. That is a new tax. This raises so many questions in the minds of the Australian public. The people listening to question time will have been totally dumbfounded to find that this announcement the government made 10 days ago about an unlimited bank guarantee, apparently designed to ensure stability in the financial markets, has now created enormous uncertainty in the financial markets within Australia.

The government’s own actions have caused greater instability in the Australian financial markets than any event that has occurred overseas. What the Treasurer announced today was a new tax on deposits. Yet he was unable to answer even the most basic questions about this tax. He was asked whether or not a small- or medium-sized business with $1 million in its cheque account, put there to cover wages and working capital, would be obliged to pay the new deposit tax. The Treasurer had no answer for that question. What if the small business had $1 million in the cheque account one month, which would attract the new tax, but then the next month it fell below $1 million? What if the funds in the cheque account fluctuated week by week and month by month? How is the government going to calculate a tax on the fluctuating amounts in a deposit that is held for working capital or wages? The Treasurer had no answer on that.

What if, under the government’s new tax, an investor with, say, the Commonwealth Bank has a $1 million deposit and has to pay this tax, and another investor decides to put their deposit in two separate accounts, with $500,000 in one and $500,000 in another? Will the depositor who put in $1 million—or whatever threshold figure the government eventually comes up with—be treated differently from the other investor? The announcement by the Treasurer today was obviously news to the Secretary of the Treasury. In Senate estimates today the Secretary of the Treasury was asked about this new tax. To be fair to the Secretary of the Treasury, he had no idea what the opposition was asking him.

So obviously this is not one of those things where you can hide behind the regulators. The government will not be able to come into the House and say, ‘No, this is advice we received from the Secretary of the Treasury,’ or from Treasury, the Australian Prudential Regulation Authority, the Reserve Bank or anybody else. No, this was a decision and an announcement by the Treasurer. This was a new tax announced by the Treasurer without advice from Treasury. The government will not be able to hide behind public servants this time. They will not be able to hold up public servants as a human shield to cover their mistakes—their bumbling of the introduction of this new unlimited guarantee for bank deposits.

The government’s flawed and hasty introduction of the unlimited deposits guarantee has in fact created a high level of domestic financial crisis. This morning, however, on ABC Radio National, the Treasurer stated:

The government always recognised there would be consequences of the decision to introduce an unlimited deposit guarantee.

The Treasurer said today that the government always knew there would be these consequences. So the flight of deposits from non-guaranteed institutions into guaranteed institutions was a consequence that the government always knew would occur. And the Minister for Finance and Deregulation, who is sitting at the table, also said on ABC radio in Melbourne that the government ‘always acknowledged that there was always going to be a need for finetuning of these propositions’. He went on to say:

At some point you get to a grey area—and that’s the issue we’re currently grappling with—to define precisely where the line ought to be drawn. And of course that involves getting detailed advice from people like the Reserve Bank. This was always intended.

Well, Minister for Finance and Deregulation, you are damned by your own words. The minister for finance was a member of the cabinet committee that was sitting in Canberra on that Sunday when a decision was made—one of the most significant monetary policy decisions made in the last 30 years, at least. The minister—

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

Monetary policy is about interest rates.

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

I beg your pardon? The minister for finance just said that this is not a monetary policy. The unlimited bank guarantee is monetary policy. It is not fiscal policy; it is not regulatory policy; it is monetary policy. And that is why the Reserve Bank’s advice should have been sought. You ought to speak to the Reserve Bank about this, Minister for Finance and Deregulation. This is monetary policy.

The minister for finance was sitting around that cabinet committee table and, according to the Prime Minister, when a decision was made by the collective genius of the minister for finance, the Minister for Education, the Prime Minister and the Treasurer—on the phone from New York—to have an unlimited bank guarantee for some institutions in Australia and exclude others, the Prime Minister turned to the Secretary of the Treasury and said, ‘Is this the advice of the Reserve Bank?’ or words to that effect, and the Secretary of the Treasury said, ‘Yes.’ And not one person around that table asked: ‘What, is there no downside to this? Is there no risk? Are there no consequences for the segment of the market that will be excluded from this unlimited guarantee?’ Not one person sitting around that table said, ‘Hey, perhaps we’d better pick up the phone and speak to the Governor of the Reserve Bank to hear from the man in charge of monetary policy in this country’—the man who has responsibility for the systemic stability of the financial system in Australia. No-one said, ‘Perhaps we should ask his advice as to whether or not there’s any downside, any risk or any consequence to the financial markets in Australia.’

I challenge the minister for finance to name one occasion when a cabinet of this country, in, let’s say, the last 15 or 16 years, has made a significant decision on monetary policy and not sought the advice of the Reserve Bank governor and had him either physically in the cabinet room or on the line—

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

Or waiting outside

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

or waiting outside to answer questions. Name one occasion when a cabinet would make such a momentous decision about monetary policy and not seek the direct advice of the Reserve Bank governor. I find it inconceivable that people who hold themselves out to be economic managers of this country did not make a phone call or seek the physical attendance of the Governor of the Reserve Bank when they were announcing an unlimited guarantee and excluding a segment of the market.

What also happened, it seems, is that nobody asked APRA. Nobody bothered to ring the head of APRA, John Laker, or contact anybody from APRA and say, ‘APRA, there are institutions that are prudentially regulated by APRA. They are authorised deposit-taking institutions but they are to be excluded from this guarantee.’ Take, for example, the foreign bank branches. ‘We are going to exclude authorised deposit-taking institutions that are regulated by APRA. I wonder what the consequence will be to their market. I wonder what the consequences will be to those institutions that are excluded from this unlimited guarantee.’ Did nobody in cabinet think to contact either APRA or the Reserve Bank to find out the impact—the consequences—for the banks? These are banks under APRA’s responsibility and jurisdiction. They are banks that are authorised deposit-taking institutions. Nobody asked, ‘What is the impact on those banks of excluding them from the unlimited bank guarantee?’

Take, for example, the foreign bank branches. They have about $100 billion in certificates of deposit. They are excluded from the unlimited bank guarantee, and yet not one person sitting around the cabinet table had the nous to ask APRA or the Reserve Bank whether there would be an impact on this market. It is inconceivable that the Prime Minister’s version of events in fact occurred.

The Treasurer and the Minister for Finance and Deregulation seem to be claiming that they act on the advice of the regulators, including the Reserve Bank, that they knew what the consequences would be—because the finance minister and the Treasurer said on radio this morning that it was always intended and recognised that there would be consequences—but that they do not ask the Reserve Bank or APRA to express any view about those consequences. It is unconvincing at the least.

Following the announcement of the unlimited deposit guarantee, the government—including the Prime Minister, the Deputy Prime Minister, the Treasurer, the finance minister and the Assistant Treasurer—participated in numerous media interviews. Not once in those interviews did they raise the issues we are discussing today. Not once did they say, ‘We know there will be consequences from the unlimited bank guarantee; we know there will be an impact on the market.’ Not once was that raised in the numerous media interviews that numerous government ministers gave on 12 October or, indeed, 13 October. Not once did the government raise the question of a fee. They did not raise it on the 12th, the 13th or the 14th, and the Treasurer did not raise it in his second reading speech on 15 October. The Treasurer has been holding up his second reading speech as if it contained all of the information that we are learning about only for the first time this week. It does not. The Treasurer’s second reading speech, in fact, refers to a cap. The Treasurer said last night on The 7.30 Report: ‘Oh, no, the government is not considering a cap. No, the Reserve Bank have not given us advice on a cap.’ In his own second reading speech, the only issue that the Treasurer referred to was a cap that they propose to put in in three years time, so it is government policy and the government have been thinking about a cap. The Treasurer raised it in his second reading speech. But what he did not raise was the fact that this unlimited bank guarantee would now attract a fee that is compulsory in return for the guarantee—therefore it is a tax.

This will impact on depositors who on 13 October, learning that the government was giving an unlimited guarantee to certain institutions, moved their funds from cash management trusts or property trusts—maybe even sold shares in the stock market—into the banks listed by the government as receiving the government’s unlimited guarantee. Are those depositors, who moved their money in good faith, now to be subjected to a tax if their deposit is over the threshold that the government eventually determines? Is this going to be a retrospective tax that is imposed on depositors who, in good faith, took the government on trust and believed that the Prime Minister was seeking to ensure stability in the financial markets? Will those people now be slugged with a new tax? What if they put their money into, say, the Commonwealth Bank and the Commonwealth Bank says: ‘We’re not going to pay a fee to the government. We’re the Commonwealth Bank. It’s safe with us; we’re not going to pay a fee to the government’? The Treasurer said today that the tax will be compulsory. So that means that the depositor who put their funds in the Commonwealth Bank on the basis that it would be guaranteed by the government now finds that the Commonwealth Bank will not pay the fee and therefore is not covered by the government’s guarantee. This is a confused mess. (Time expired)

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

As you know, Madam Deputy Speaker, I have spent a long time, far too long, in opposition in this place and over that time I prosecuted a few arguments in things like MPIs and censure motions on the waterfront scandal, the Dubai exercise, Peter Reith’s telecard, the travel rorts, the CASA board scandal—a variety of things. I have seen others prosecute similar arguments, but rarely have I seen so much noise, so much dishonesty and so much misrepresentation with so little merit in an argument being prosecuted by an opposition through the substantive mechanisms of this chamber. In fact, it is amazing that the member for Curtin even has the gall to turn up today after her complete evisceration by Tony Jones on these issues on Lateline last night, because in response to the question, ‘What evidence do you have to demonstrate that the Secretary of the Treasury failed to convey to the cabinet concerns that the RBA, the Reserve Bank of Australia, held with respect to the government’s proposed guarantee of bank deposits and what evidence do you have that the Reserve Bank was expressing serious concerns with respect to those guarantees to the government before the announcement on 12 October?’ over and over again she was unable to provide any evidence, and she kept resorting to a word she used a couple of times again today—‘inconceivable.’ So, from her point of view, it is inconceivable that it did not happen and therefore it did happen. It is inconceivable that the Reserve Bank did not make these statements to the government; therefore, by definition, that is evidence that it did occur.

Off the back of zero evidence, off the back of literally no substantive evidence whatsoever, the member for Curtin and the Leader of the Opposition, and by implication all the people who are in the chamber on the other side today, are happy to slander and impugn the reputation of one of Australia’s outstanding public servants, who gave good, loyal, high-quality service to governments of both persuasions over an extended period of time. They are happy to suggest that he lied to the government of Australia and to the cabinet subcommittee that was dealing with these situations in a highly charged environment. They are happy to imply that and to include that within a question. Today, even more disgracefully, Senator Abetz—who is usually up to this kind of thing—said in response to answers by the Secretary of the Treasury in Senate estimates hearings that the secretary’s answer ‘does not sound to have the ring of truth about it’. Not content with accusing him of lying in question time yesterday, the opposition are accusing him of lying to the Senate today. I learned in opposition that, whatever the temptations of pursuing issues in question time may be, you do not ask a question unless the implication behind the question is backed up by some evidence. You do not ask a question that has a serious implication to it and that casts aspersions on ministers, other members, members of the public or public servants unless you have some substantive evidence to back that up. What the opposition did yesterday was completely disgraceful. It showed total contempt for the democratic process, total contempt for the parliament and particularly total contempt for the good public servants who have served this government, the previous government and the one before that loyally and diligently and done their job—in this case somebody who is right at the top of the list of those good public servants.

It is perhaps a slightly smaller matter, but, of course, the Treasury secretary is not the only person who has been the subject of dishonesty and misrepresentation by the opposition. I copped a little bit of it yesterday myself. The suggestion was made by the member for North Sydney that on television I had stated that when I was acting Treasurer I did not know about any of these things, I did not understand them and I had no role to play in these decisions. This was allegedly on the basis of statements I had made on the Agenda program on Sky TV. In fact, it is very clear when you read the transcript that the statements that I had made with respect to not knowing about specific matters were about matters happening now, because they are not in my portfolio. Yes, I could be expected to have some knowledge of them were I dealing specifically with them as either the minister or the acting minister. Deliberately misrepresenting my comments again and exercising complete dishonesty in the debate, the member for North Sydney yet again sought to mislead and completely muddy the waters on these issues.

For the benefit of the House, I would just like to give an explanation of the issues that have been involved here for the government in dealing with these questions about bank guarantees. I notice that in her contribution today the shadow Treasurer, the member for Curtin, was yet again doing the same thing—a little bit of slippery misrepresentation to suggest that comments that I had made on Melbourne radio this morning meant something quite different from what they actually did mean. I will get to that in a second. If I give a bank $100, that is a deposit. If I give the bank $100 million, that starts to take on the categorisation of some kind of wholesale loan. There are two obvious differences here, and you will note that the government has proposed two different regimes of bank guarantees for these two things. Between those two obvious and stark examples, there is a plethora of different circumstances—1,001 different products and a variety of situations. There is a question about at what point a deposit moves into a different category. These are the kinds of issues on the cusp between those two things that the government has been dealing with. Those were the issues that my comments related to: the grey area where clarity and finetuning was required.

The government has always made it absolutely plain that these issues would need to be dealt with by the regulators and by the government. Notwithstanding all of the suggestions of grand conspiracies, of lying public servants and all of the other suggestions that the opposition have made, it is perfectly reasonable and proper that these issues be dealt with. I note that the Deputy Leader of the Opposition is now claiming that the government’s approach on the question of guarantees of bank deposits and borrowing is ‘flawed and hasty’. That is extraordinarily different from the position that was taken by the Leader of the Opposition on the same decisions little more than a week ago. When they were announced—we gave him a briefing prior to the announcement—he went into his best statesmanlike, Churchillian bipartisan mode. He was on the verge of proposing a war cabinet, with him as Prime Minister, but he probably did not think it was going to get any traction. He did not quite get to that stage, but he was pretty close. We had 24 hours—maybe 48 hours—of love, cuddles and bipartisanship coming out of the opposition. Then the sniping started. Then the undermining started. Then the attacks started. And, gradually, bit by bit they walked away.

Where are we at now? It has been confirmed by Senator Brandis today that the opposition’s previous policy stands—in other words, bank guarantees for deposits up to $100,000 only. We have also had the Leader of the National Party in the Senate, Senator Joyce, state in response to Senator Cameron that he does not support the government’s Economic Security Strategy. In other words, all those pensioners, carers and families out there that are going to get significant one-off payments to help stimulate economic activity had better have a chat to the opposition and ask them what their real position is: ‘Do you support this stimulus package? Do you support the Economic Security Strategy? Yes or no? Because the Leader of the National Party in the Senate has said today that he does not support it.’

The Deputy Leader of the Opposition made some reference to particular matters in regard to the boundaries of these bank guarantee issues—and I will get to those in a minute. I would like to conclude on the question of the allegations with respect to the Reserve Bank’s advice to the government and the alleged lying on the part of the Secretary to the Treasury. I would like to walk you through the sequence of events. On the weekend of 11 and 12 October, the strategic policy and budget committees were meeting extensively—myself included as a member—and the Secretary to the Treasury advised the government at that meeting that the proposals being put to it to had the support of the other regulators, including the Reserve Bank. I would remind the House that the Secretary to the Treasury is a member of the board of the Reserve Bank, so there is a reasonable chance that he might actually know what the Reserve Bank’s position is. On 12 October, when these were announced, the media release put out by the Prime Minister said, ‘details will be finalised in the next few days’. The opposition seems to have missed this point. There was an explicit statement at the time this was announced saying ‘details remain to be dealt with’ and acknowledging that these issues needed to be resolved.

On 15 October—a few days later—the Treasurer introduced legislation and made reference to the fact that finetuning of the detail was underway and that there was still some finetuning required. Indeed, on 17 October—still within what I consider to be a few days—the Reserve Bank wrote to the government outlining some of its views on some of the issues involved in that finetuning. Then, on 21 October, some of this material appeared in a newspaper report, suggesting this meant the Reserve Bank was contradicting the government’s position. Then the opposition took off into the stratosphere—suggesting this meant that the government had acted contrary to the Reserve Bank’s advice, that the Treasury secretary had lied and that it was all a giant conspiracy—beating the whole issue up to a level of hysteria that I have rarely seen in this chamber; that is a big statement, I can tell you. Then, on the same day—October 21st—the Governor of the Reserve Bank made a statement saying that the Reserve Bank supported the government’s position on the deposit guarantee, therefore revealing how totally bankrupt and how totally threadbare the claims on the part of the opposition actually are.

I will turn to the question of non-ADI institutions—non-approved deposit-taking institutions—and the questions that were raised by the opposition during the course of question time today and indeed during the contribution by the Deputy Leader of the Opposition. The important point is that we are dealing here with organisations that are not regulated by APRA, that are not approved deposit-taking institutions, and the issues are indeed complex and varied. So it is difficult to be absolutely specific about particular institutions without detailed knowledge of their circumstances. There is no question that, in some of these cases, the turmoil in international markets and indeed the Australian stock market in recent times has had a significant effect on their circumstances. Of course, some of these institutions, well before the government’s guarantee was put in place, have had significant problems and we know of several high-profile difficulties that occurred during the earlier part of this year amongst institutions of this kind. So there have been other factors involved in issues that are currently afoot in this sector of the market.

But there is an underlying implication that is a question for the opposition. They clearly support at least some guarantee of deposits. It appears that it is up to $100,000; that appears not to be in doubt. They now appear to be suggesting that this guarantee should be extended to organisations that are not regulated by APRA, that are not approved deposit-taking institutions. That takes this matter to a whole new and different level, because, where you have got organisations that are strictly regulated by the prudential regulator, the prospect that the government has of ensuring that moral hazard does not run amok is genuine; it is substantial. But, where you have a situation where organisations that are not within the purview of the primary regulator and therefore, by definition, are much further removed from the capacity of the government to scrutinise their activities and their risk taking, inevitably you have a very different situation. A government guarantee that is given willy-nilly, across the board, to a wide variety of these organisations raises a whole lot of questions about what risk-taking activity they would then potentially engage in or some of them would potentially engage in—and indeed what marketing activity—knowing that they were backed by a government guarantee.

There are complex issues involved here; there is no question about that. The government, as I said, whether in this area or the other areas, is proceeding to deal with these questions. I would suggest that it would be a good idea for the opposition to cease hyperventilating. I do not think it does you any great benefit. If you took a step back and looked at these issues seriously, you would see that there are really major issues that any government in the circumstances of the past couple of weeks would have had to have come to terms with and that we have been clear and open about our position as a government all the way through. We indicated in the statement that was put out by the Prime Minister on Sunday, 12 October that there were detailed issues that still needed to be resolved and that they would be resolved in the ensuing days.

In conclusion, I think what we have here is an explanation for the behaviour of the opposition. They are desperate to insert themselves into the story. They are shackled by their initial bipartisanship and they are desperate to break away from that and to attack the government and to attack every element of the government’s strategy while pretending to support it. We are not going to be diverted by this nonsense. We are going to govern responsibly. (Time expired)

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

I rise in the House this afternoon to speak to this very important matter of public importance. It is in times like these that the Australian people need a government that is in control and a government that, above everything else, can instil confidence—confidence in our country and confidence in our financial system going forward. Australians need that confidence because they themselves need confidence in their own future. They need confidence so that they can make their everyday life decisions. They need confidence so they can invest in themselves and their families and their businesses, if they happen to own and operate a business, for their long term. So being a government, particularly an Australian government, is a great responsibility.

Instead of us having the fortune of having a government that is instilling confidence across our economy, we have instead Kevin Rudd, the Prime Minister, and Labor overall working as hard as they can in every way possible to undermine that confidence across our entire country. They have undermined that confidence through a series of different things that have been done in recent days. The first is that they have undermined that confidence by, if you like, undermining themselves and our key economic regulators, such as the Reserve Bank of Australia. They have undermined the RBA, they have undermined the Australian Prudential Regulation Authority and they have undermined the Australian Securities and Investments Commission by not consulting directly with those regulators. Instead they have led the Australian people down the path to a perception that they are walking hand in glove with those regulators, when in fact in the House yesterday we learnt from the Prime Minister the revelation that he has not been talking to those regulators directly. They have also undermined that confidence by undermining key officials within the Treasury department—none other than the Secretary of the Treasury. He has been hung out to dry big time by Kevin Rudd. And, of course, they have undermined confidence in our country by ignoring the parliament and ignoring the parliamentary process through their contemptuous and pernicious attitude to debate and transparency in this very important democratic institution of parliament.

The issues of confidence and certainty, as I am sure you would appreciate, Madam Deputy Speaker, are critical matters. They are critical because we need confidence and certainty in order for the stability of our financial system to go forward. I want to very briefly cite a couple of examples in the media today and yesterday that go to this area of the undermining by the government of confidence and certainty. In the Australian today, Dennis Shanahan says:

At a time of need for the utmost confidence and certainty, a decision of fundamental importance to Australian financial and economic stability was rushed without due consideration.

An article in the Financial Review today indicates how this government has undermined confidence and certainty in the market:

The country’s largest mortgage fund, the $2.9 billion Challenger Howard Mortgage Fund, and the—

associated—

$40 million Challenger Mortgage Plus Trust stopped daily withdrawals yesterday after the AFR reported ... a hefty increase in full redemption as nervous investors flocked to the safety of big banks.

‘Nervous investors’. Why are they nervous? They are nervous because this government is undermining the confidence and the certainty in our markets.

An article in the Age today says that there has been a run on the Macquarie Cash Management Trust. And yesterday a respected economic and business journalist, Terry McCrann, said in the Daily Telegraph:

He—

that is, Kevin Rudd—

trashed the fundamental framework for managing the economy that has prevailed over the past 12 to 15 years.

There you have four examples of how this government is going about undermining the confidence and certainty in our financial system.

What should be happening is that the government should be going about its business in a steady, reliable and confidence-building manner. But of course we have nothing more—and this has been demonstrated very much in this place over the last couple of days—than what could only be described, in the kindest possible way, as an erratic, panic-stricken and clearly befuddled government that is making policy on the run. Let’s just look at the most recent backflips that we have got from Kevin 747—

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

The member will refer to ministers by their appropriate titles.

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

Yes, Madam Deputy Speaker. He said that there would be a cap of $20,000 on bank deposits, and at the time that was the right policy. One week ago he said that there would be no cap and that there would be an unlimited guarantee on bank deposits, and of course one week ago that was the right policy. Yesterday and today he said that there may be a cap and that there is going to be a new deposit tax, and—you have guessed it—that is the right policy. So we have got three policies on the same issue in the space of two weeks and, on top of that, we got an announcement in question time today of a new tax. Madam Deputy Speaker Burke, as you know: if it looks like a tax and it walks like a tax and it smells like a tax, it is a new tax. So there were three policy positions on the same issue in two weeks, and they have all been the right policy.

I presume that is what the Prime Minister meant when he swanned around the country before the last election saying that there would be new leadership. That is certainly new leadership: three policy positions on the same issue in two weeks. That is the sort of leadership that we have not seen in the parliament of this country since Gough Whitlam, and that, I presume, is supposed to be new leadership. Some time ago, Kevin Rudd said ‘it takes a long time to turn around the ship of state’. To be fair to the Prime Minister, I think we can say that he has veered the ship in a new direction. The trouble is that, because of his leadership, the ship is being veered in a new direction and, guess what, it has crashed straight into an iceberg and a pretty substantial iceberg at that.

What has become clear in this House over the last couple of days is this: it is clear that Kevin Rudd did not seek the advice of the Reserve Bank of Australia; it is clear that Kevin Rudd has misled the people of Australia by implying that he was personally engaging directly with the regulators; it is clear that a bill introduced in this House only seven days ago is now defunct; it is clear that Kevin Rudd and Labor are making policy on the run; and what is clear and very concerning is that, if this all goes wrong, it is the Australian people who will be left to foot the bill.

I know that Kevin Rudd wanted to be Prime Minister of Australia—

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

The member for Aston will use the appropriate titles for members.

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

I know that the member for Griffith wanted to be the Prime Minister of Australia, but it has become clear in recent times that he is very interested in running for the position of Secretary-General of the United Nations. I realise that the last couple of weeks have not gone well in terms of his job application. What he really needs to do urgently in order to get his application back on track to be secretary-general is jump into the 747, leave Australia quickly again and roam the globe, swan around the globe again, so he can get his application back on track and pretend he is the leader of the free world.

It has often been said that the Australian economy is like a finely-tuned racing car, and the driver needs to be highly skilled. But the Prime Minister and, of course, the Treasurer have ignored the pit crew. They have careered right over the chicanes, they have swerved all over the track, they have ignored the warning flags along the way, and here we are, on the final stretch home and, guess what, we are running on empty. Clearly the drivers—that is, the Prime Minister and the Treasurer—are still on their L-plates. We know that the Labor Party have quite often been on their L-plates over the years, but I think it is important to remind the House that these are not homemade go-karts that are being driven. The economy is a finely-tuned car and, of course, it needs a highly skilled driver, and it is time Australia— (Time expired)

Gary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | Link to this | Hansard source

I am once again surprised by the dross that gets presented as matters of public importance. Those opposite usually bring forward a matter that looks like an all-purpose resolution from a Young Liberals conference. It is usually a life support system for a sound bite and not much more than that, but today it is simply extraordinary. I have been around politics and public policy for long enough to remember some incidents of importance: mortgage brokers in Western Australia, people who went broke, taking with them families, seniors, investors—decent people, many of them in my electorate. The shadow Treasurer’s political party did nothing to support them, nothing to back them, nothing even to rein in the minister, her friend, who at the time was responsible for mortgage brokers. After that, we walked into HIH. I come to the conclusion that, when those members opposite stand up and talk about prudential regulation and the matters that are so important to managing the current global financial crisis, those listening to our broadcast should not listen to them. Why shouldn’t they listen to them? Because when it came to HIH and even to appointments to the Reserve Bank—the most significant of the prudential advisory bodies to any Australian government—both HIH and the Reserve Bank had one common thread for those opposite: they were full of donors to the Liberal Party. What do we mean by that? We mean those opposite appointed Liberal Party donors to the Reserve Bank, believing somehow they were attending to the prudential affairs of the Liberal Party, not to our nation.

It was a disgrace, and those opposite know that it was a disgrace. It brought our nation into disrepute and it framed those opposite, as they should be framed, as low-rent seekers of nothing more than pockets full of votes who were filling their own pockets with donations from grubby individuals seeking nothing more than their own personal advancement. Those opposite have worked very hard to create as much instability and uncertainty as they can in our financial and banking systems. What do you think that other nation states around the world have done as they have grappled to understand the current financial crisis? What do you think the oppositions have done in countries around the world that are trying to deal with this issue? They have not acted as those opposite have—not even in the US, where this problem started, where the cost is measured in the tens of billions or even the trillions, where families find themselves out of jobs, where communities are finding themselves in pain and where there is currently a presidential election. Not even in the United States has anyone acted to undermine the banking system like those opposite attempt to do here today, did last week and did the week before that. It is not simply disgraceful. It is not simply shameful. It is, regretfully, acting true to form.

When this crisis began to unfold in Australia, we got the first offers of bipartisan support. Then we got undermined. As always, we see the Leader of the Opposition using the banking system merely as a life support system for sound bites and TV grabs. Why work to create as much instability as possible in our banking system? It is about political expediency. It is about political opportunity. It is about seeking to do as much as you can to damage the government; to damage the surplus, which you have been working at for the last four months now; to create uncertainty in the community—to create uncertainty amongst our retired community, amongst our age pensioners, amongst our retired services veterans, amongst small business and amongst self-funded retirees. And, as if farmers did not have it hard enough, your matter of public importance here today specifically references farmers. It is not just a disgrace; it is an embarrassment.

The Leader of the Opposition and shadow Treasurer are lawyers. They are used to mastering a brief without engaging in morality, ethics or propriety. They are lawyers; they prosecute their brief. They turned up in this place on the first day, I have no doubt, thinking they had all the integrity of Atticus Finch. No, they do not. They are just grubby politicians seeking a vote under whatever rock they can find it under by creating whatever nervousness and instability they can create in our banking system.

Stuart Robert (Fadden, Liberal Party) Share this | Link to this | Hansard source

A Labor politician talks about grubby politicians? You guys are the ultimate grubs!

Arch Bevis (Brisbane, Australian Labor Party) Share this | Link to this | Hansard source

Order! The parliamentary secretary will be heard in silence. As much as it would pain me, I will remove you if you keep it up.

Gary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | Link to this | Hansard source

I notice those opposite reserve for this parliament the same lack of courtesy that they do for senior public servants—the same lack of regard that they reserved for our significant prudential institutions like the Reserve Bank when they lined up to appoint their own donors as members. It is why they turn around and attack the Secretary to the Treasury this week. It is why they turn around and attack the Reserve Bank itself. It is why those opposite impugn the integrity of public servants and prudential regulators, most of whom they appointed. It is why they feel no twinge of conscience as they set about doing damage, because the damage to our banking system will, those members opposite hope, deliver a vote dividend. It will lift their profile. Damage the banks, win votes is the equation. Who cares about the damage? Damage to whom? To the very people those opposite would seek to represent. They also seek to damage the very character of the Secretary to the Treasury. We have seen the Leader of the Opposition call upon the government to sack the Secretary to the Treasury for doing his job. This is the very same Secretary to the Treasury who has served multiple federal governments. He served the Hawke government and the Keating government. He served the Howard government with great distinction. One might wonder why they so hate the Secretary to the Treasury. I wondered that myself. Could it be his work ethic—he has one; they don’t? Could it be his ethics—he has them; they don’t? Could it be his character—he has one; they don’t? Could it be that he understands that they do not understand the issues that they drag around our parliament and community like a dead rat?

I found the answer to my question by going back through newspaper clippings. I found why the Leader of the Opposition, who has not fronted in this debate at all, dislikes the Secretary to the Treasury so much. I will put it on the public record again today. Those opposite will remember that parliamentary secretary Turnbull, as he then was, had responsibility for water policy. I will read from a story published in the Australian last year:

ON Friday, November 3, John Howard gathered a small group of bureaucrats and advisers in his parliamentary suite.

I wonder why he would have done that. The key federal departments, including Treasury, Finance and Environment, had been cut out of a process to determine whether or not $10 billion would be spent on the Murray-Darling system. It is fascinating because the key figure in the room at the time was Malcolm Turnbull. As these newspaper articles, which I am happy to table, demonstrate, what happened subsequently was that the details were kept secret. Senior public servants found the lack of scrutiny, the lack of diligence, the lack of documentation, the lack of consideration, the lack of discussion and the lack of process deeply alarming, so they rang a bell. The Secretary to the Treasury made clear that Treasury had not been consulted in the matter of the $10 billion water policy. For that reason the hatred of those opposite has festered since. (Time expired)

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

Consumer confidence and business confidence in this country have collapsed. Businesses are reporting plummeting sales. Households fear for their future. At such times Australians look to their leaders to make the tough decisions. At such times Australians look to their Prime Minister to get it right. They expect their Prime Minister to call on the very best expertise available. But what happened on 12 October? On 12 October this year the Prime Minister and his government’s economic team made a decision to give an unlimited guarantee to one part of the financial system with little or no idea of how it could cause massive disruption to the rest of the financial system. This disruption is now occurring in finance companies, in mortgage funds, in cash management trusts, in debenture-issuing institutions, in residential mortgage backed securities and with regard to short-term money market instruments. There is disruption in the financial markets.

The current crisis is not playing out on the set of The Hollowmen and it is not a re-run of an episode from Yes, Minister. We have a crisis affecting the nation, affecting small business, affecting farmers, affecting retirees and affecting every household in the country. Yet this Prime Minister on 12 October failed this nation. He failed to pick up the phone and consult the Reserve Bank, APRA or ASIC on possibly the most important decision he will make in his term as Prime Minister. Why would a responsible Prime Minister not speak directly to those organisations? Why would he not pick up the phone? What excuse could he give? Did he do it because he feared that his decision was flawed? Perhaps he feared he would miss the news cycle, so he had to cut them out of the loop in order to get to the news cycle. Perhaps he feared they would not tell him what he wanted to hear. We can only speculate on why our Prime Minister did not consult the very best advice before making that decision. He was negligent, he was reckless, he was irresponsible and the institutions who fell outside the guarantee are now paying the price. His super is safe, but the savings of many retirees hang in the balance because of the Prime Minister’s hasty ‘Hollowmen’ fix, a simple political fix.

On 12 October we had a grievous error by this Prime Minister, and now we endure the cover-up. In question time in this House we saw the Prime Minister ducking, weaving and avoiding the questions asked on behalf of the people of Australia. We saw Dr Henry in estimates today failing to give answers rightfully asked by the Senate. We also had the confirmation by the Treasurer in question time today that there would be a new deposits tax, a new scheme to tax banks and depositors. But in estimates today Dr Henry was quite clearly unaware of that tax. He had no idea of the policy on the run that was formulated between two and 3.30 in the House today. If ever there was an example of policy on the run, that was it. Will this policy on the run take account of the needs of retirees? Will this policy on the run take account of the needs of those institutions that are currently outside the guarantee regime?

I looked at a report in the Telegraph today that was quite interesting. It said that 63 per cent of people are concerned or very concerned about the economic outlook, 44 per cent fear for their job security, almost half believe they are doing worse than a year ago, two-thirds believe New South Wales will fare worse than the rest of Australia, 42 per cent plan to put away spare cash towards debt because of their fears for the future and 25 per cent of Australians do not think the Prime Minister is doing enough. But 100 per cent of Australians want to have truth from this Prime Minister, and 100 per cent want the Prime Minister to level with the Australian people as he promised. The Prime Minister has been covering up his lack of consultation on this matter and he should be ashamed.

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

Here is an opposition in search of a narrative. Here is an opposition who does not know what it is on about. Those opposite are out there grappling around for a story. They were out there grappling around for an issue, they got the front of the Australian and for the last two days they have been running with that. They are running with what was a headline in the Australian. There is no more substance than that. It was a headline in the Australian. There is actually no substance or backing to it, but that has become their narrative. Now they are onto something. They have a story and they are running with it. They are running very fast with it but they are running nowhere. They are running on the spot to stand still.

At the same time they are reading all the newspapers. The member for Cowper has just quoted from a newspaper. I am not condemning the newspapers, but if you want to find a story then go and find your information, go and find some corroborating evidence for your story. They were hoping it was going to happen in Senate estimates today—and aren’t they so disappointed? I have sat through a lot of Senate estimates in opposition and I have been very happy on occasion when it has become the story of the day. But they have been very disappointed today that Senate Estimates has not thrown up the information and the story they want. It did not corroborate the front of the Australian yesterday. They say we have created panic in the markets. Instead, it is the opposition that has created panic in the market.

The global financial crisis is too important to play with. It is too important to take cheap political shots with. The global financial crisis will inevitably have effects on the Australian economy. In some respects we could have weathered this because we are outside of the subprime crisis. But we are not outside the global world. We live within a global financial market. Two key themes stressed by the IMF at the G20 in respect of the global crisis were the need for early and decisive action and for countries to work together in a coordinated fashion to tackle this crisis. That is what the government has done, yet we now stand condemned for it. We have given confidence. We have taken decisive action. At the time the opposition were calling for deposits to be guaranteed. They were the ones out there saying: ‘Go on, go on. Do it.’ And when we did it they said, ‘Terrific.’ But then that was silence because they thought: ‘What we do now? Who do we bag now that we have agreed with it?’ So now they are going to bag it after having agreed with it.

Governments around the world have been moving to strengthen their banking systems. In lots of respects Australia did not have to because we have got one of the strongest banking systems in the world. Our financial regulations are some of the strongest in the world. I sat through hours and hours of the Wallis inquiry in my previous existence with the Finance Sector Union. I even drafted submissions to the Wallis inquiry and I am pretty au fait with how APRA now works. I am on the record in this place on numerous occasions praising APRA. Not many people talk about APRA or know APRA. But as the member for Boothby will attest, having been on a committee with me, I have been a fan of APRA because they do good things. What they do is protect your money, because our banks already have fiduciary responsibilities about deposits that they must keep under protection. They already had that; we already had strict banking regulations. So we did not need to be as strident as other sectors because our markets are already so regulated.

The opposition has been struggling today. Instead of getting the story they wanted out of Senate estimates, what did they get from Ken Henry? He said: ‘In respect of the advice that was tendered to the government and that supported the decision that it took on Sunday, 12 October, Mr Stevens and I were of one mind.’ ‘I tendered the advice to the government, and the governor and I were of one mind in respect of that advice.’ ‘I know there has been considerable public interest in this matter, following a rather unfortunate and fallacious story that appeared on the front page of yesterday’s Australian newspaper.’ ‘We, the Treasury, the RBA and APRA came to the view that it was time to act and act decisively and that was our collective view and we informed the government of that.’ ‘We noted there would be matters of detail to be sorted out in the implementation of the package; we did not express reservations.’

So instead of the opposition finding hope out of Senate estimates today, Ken Henry, the man they abused and said we should sack, has come forward and said, ‘We were of one mind and we supported the decisive action.’ The action the government has taken has shored up our financial systems and should ensure the strength of our markets. We cannot underwrite everything. That would be irresponsible. People moving their money around at the moment are looking for such things as surety. One of the sureties is to move things into cash, and that has nothing to do with bank deposits.

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

Order! The time allotted for the discussion has well and truly concluded.