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

My question is addressed to the Prime Minister. I refer the Prime Minister to an answer given by the Treasurer at 2.23 pm in this House yesterday to a question as to whether the new fee for guaranteeing bank deposits over $1 million will be compulsory and to the Treasurer’s response:

The very simple answer is that the fee will be paid by all depositors in the deposit-taking institutions that are regulated by APRA, and the fee will be paid either by the depositor or by the bank.

I also refer to the Prime Minister’s subsequent observation in question time yesterday:

I stand by everything the Treasurer has said.

Prime Minister, does this compulsory deposit tax apply from the time of the Treasurer’s announcement yesterday?

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

When the Treasurer introduced the Financial Claims Scheme into the parliament on, I think, Wednesday of last week, the Treasurer made it absolutely clear at that time that the interrelationship between the Financial Claims Scheme on the one hand—that is, the guarantee on bank deposits—and the guarantees for term wholesale funding on the other would be coordinated in the implementation arrangements between both the bank and the Treasury and others, and that is the process which has unfolded over the last week or so, as is normal. The Treasurer indicated that was the process. We have had the regulators at work on this process. That is the normal thing to do because there are complex negotiations on implementation between not only the regulators, on the one hand, including the Treasury, but also the banks themselves and also relevant international jurisdictions. So these matters will be resolved and published in their finality when these deliberations by the regulators with the banks are concluded. That is the proper way to do things, and that is what we indicated when the Treasurer introduced his legislation last week. Can I say this to the Leader of the Opposition, who finds this entire exercise entirely amusing: the basic facts are these. The government acted decisively in the middle of a financial crisis. Secondly, what happened was that we took action to—

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

Mr Speaker, a point of order on relevance: this is a very simple question about the commencement date of a new tax announced yesterday. The Prime Minister should address himself to that.

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

Order! The Leader of the Opposition will resume his seat. The Prime Minister will respond to the question.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

As the honourable member knows, as in my previous answer to his question, I am dealing with the process for the final determination of the arrangements for the premiums to be attached to term wholesale funding arrangements and those which may apply to depositors at the upper range of a million dollars or slightly beyond. In the normal course of events, that will be determined after proper consultation with the regulators. That is the proper way to do business. I would say to the Leader of the Opposition, having answered his question, that we on this side of the House have taken decisive action to ensure that we have soothed financial markets. We have taken decisive action because every mum and dad in the gallery today would like to know that their deposits are guaranteed. Under the actions of this government, that guarantee has been provided. Furthermore, as a consequence of that action, we have also seen, through the other actions taken by the government, downward pressure on interest rates.

The Leader of the Opposition does not want to hear this, but what has happened in the period since the government took this action? We have seen confidence increasingly restored, when we had so many mums and dads out there concerned about the banks, having watched all the negative news on their television sets coming from abroad, because we acted with a decisive policy statement on the guarantee. Those opposite, wedded to this position, maintained that they would make a guarantee available only on deposits up to $100,000, leaving therefore unguaranteed, unprotected, according to Liberal Party policy, 40 per cent of all deposit accounts. That is quite extraordinary—40 per cent of deposits.

So what I would say to those opposite is simply this: on this question, those opposite need to reflect long and hard on the consequences of the actions which the government has taken in providing confidence to mums and dads out in the community. Secondly, on the question of the impact which these decisions by the government have had on the banks, look at what has happened with interest rates in the last week or so. We have had all four major banks bring down interest rates by between 20 and 25 basis points. If you look at the statements which have been put forward by the NAB and the ANZ, what have they said? The NAB have said:

... policy measures announced by the Australian Government earlier this month have started to have a positive effect ... we hope to be in a position where we can pass on further interest rate cuts to our customers.

That is as a direct consequence of what the government has done—unwelcome news on the part of the Leader of the Opposition but I would say a good piece of news when it comes to those out there with mortgages. Listen to what the ANZ Chief Executive Officer has said:

We are pleased to deliver on the promise we made in January to pass on reductions in funding costs as we see market conditions easing.

Then he goes on to say:

... policy measures both here in Australia and around the world have restored some confidence in the global investment community and this is resulting in an easing of high wholesale funding rates.

These are the concrete actions which have flowed as a consequence of what the government did Sunday week ago. The Leader of the Opposition is out there with his own policy on guarantees of deposits up to $100,000 but not beyond that, leaving everyone else out there without guarantee. That is his approach. Our approach is strong decisive action which has not only helped in terms of confidence in the general community, with mums and dads concerned about their deposits, but also with the cost of finance for mortgages.

Our action has also been supported by the Treasury and by the Reserve Bank. The Leader of the National Party laughs at this. I would suggest that those opposite should not laugh when it comes to further undermining of this country’s independent financial institutions. The Reserve Bank said the other day that the decisions taken by the government were sensible and that the RBA supported them. Furthermore, Dr John Laker of APRA said:

The government’s deposit term and funding guarantee, which APRA fully supports, has calmed what was a growing disquiet on the part of some depositors.

Put all these things together and you had the Australian Prudential Regulatory Authority backing the government’s actions when it took its decision; you had the Reserve Bank of Australia backing the government’s actions when it took its decision; you had the Secretary to the Treasury doing the same; you had the mainstream commercial banks saying that because of these actions the actual cost of finance flowing through to consumers has been reduced and they themselves saying so explicitly in their statements. That is what the government has done. We have the support of these independent financial regulators.

Those opposite, lead by the Leader of the Opposition, have spent their entire time undermining the integrity and the independence of these independent institutions. Earlier this week, the Leader of the Liberal Party came to the dispatch box and said—

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

Mr Speaker, I rise on a point of order as to relevance. The question was about a date. We have not got to that yet.

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

Order! The Prime Minister has the call.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The Leader of the Opposition is sensitive to the attacks he has come under legitimately because of his attacks on the independent financial regulators. We know that Malcolm believes that Malcolm knows best; we actually believe the Reserve Bank knows better, that the Prudential Regulatory Authority knows better, also that the Secretary to the Treasury knows better. Here we have the alternative Prime Minister of Australia standing up in this place and calling into question whether the Secretary to the Treasury should be dismissed. That is what he said. He refused to come in and repudiate that. He then unleashes the dogs of war in the Senate yesterday through Senator Abetz, in a scripted script from the Leader of the Opposition’s office, where Senator Abetz attacked the integrity of the Secretary to the Treasury. And what did the Leader of the Opposition do about that? Nothing whatsoever.

Early this week, the member for North Sydney questioned whether the word of the Secretary to the Treasury counted for anything at all. I say to those opposite that that was just phase one. Phase two was the member for Canning this morning attacking the integrity and independence of the Governor of the Reserve Bank of Australia. That is what you did and you did so in orchestration, I presume, with the Leader of the Opposition’s office. I say to the member for Canning, acting again as one of the dogs of war, unleashed by—

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. The opposition—

Government Members:

Government members—Get it right!

Don Randall (Canning, Liberal Party, Shadow Parliamentary Secretary for Energy and Resources) Share this | Link to this | Hansard source

The member for Grayndler has tabled my letter of apology.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

The Leader of the Opposition, of course, has not retracted his comments earlier in the week when he canvassed the possibility of dismissing the Secretary of the Treasury because he disapproves of the Secretary of the Treasury. He then unleashed the dogs of war in the Senate to launch a further attack on the Secretary of the Treasury; finds that entirely amusing. His office today then unleashed the member for Canning to launch an attack on the Reserve Bank of Australia. His remarks said that Glenn Stevens had been caught out: he put up interest rates before the election, during the election, when the rest of the world were bringing down interest rates. In other words, it was an orchestrated attack by the Liberal Party, attacking the independence and the integrity of the governor of the Reserve Bank of Australia and attacking the Secretary of the Treasury. And earlier we had the attack on ASIC itself on the question of the future of short selling. These are three of the principal arms of Australia’s independent financial regulators. What we have is the Leader of the Liberal Party launching a short-term political attack on their independence. I would say this to the Leader of the Liberal Party: if you have any interest in the long-term—

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

Mr Speaker, on a point of order: I know it is a long time since I asked the question but it was about a date.

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

The Leader of the Opposition will resume his seat. The Prime Minister has the call and will bring his answer to a conclusion.

Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

What we have had from the Leader of the Opposition, the alternative Prime Minister of Australia, is an attack on our independent institutions. The Leader of the Opposition, Malcolm Turnbull: so arrogant, so out of touch and now so out of control that he cannot even bring himself to support the independent financial institutions of Australia in the midst of a global financial crisis.

I conclude with this. I would say to the Leader of the Opposition: in the midst of a global financial crisis, leadership requires supporting the independence of our financial and economic regulators; the abandonment of leadership, as you have demonstrated, lies in taking short-term political pot shots at them. I would say to the Leader of the Opposition: get behind our independent regulators, support the confidence that we need in this economy for the future, rather than simply pandering to your own short-term political advantage; arrogant, out of control, out of touch.