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

My question is to the Prime Minister. I refer the Prime Minister to advice from the Governor of the Reserve Bank to the Treasury secretary, Dr Henry, on 17 October in which the Governor of the Reserve Bank said ‘not only must there be a cap, but the lower the better’. Given this advice, does the Prime Minister agree with the Treasurer’s statement on national television four days later, on 21 October, when he said, ‘The Reserve Bank is not arguing for a cap’?

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

As I indicated in my answer to the Leader of the Opposition in his first question today, the process in which the Reserve Bank and the other regulators, including the Treasury, have been engaged since Sunday a week ago has been, firstly, to resolve the implementation detail of the premium to be attached to the term wholesale funding arrangements for the banks; and, secondly, to resolve the implementation arrangements concerning the deposit guarantee. The interrelationship of those two matters was explicitly canvassed at the time that the Treasurer introduced the financial claims legislation into the House last Wednesday. Since then, as you would normally expect there has been a lot of exchange between the Reserve Bank and the other regulators, including the Secretary to the Treasury, on the detail of that. That is the normal way in which public policy is conducted. Once these matters have been resolved in finality they will be made public, as I have said repeatedly at this dispatch box and as the Treasurer has said repeatedly at this dispatch box.

I say this to the Leader of the Opposition: this entire process in the midst of a global financial crisis would be made much easier had we had bipartisan political support for the key financial institutions of Australia. In the space of one week, we have had the Leader of the Opposition launch a political attack on the Secretary to the Treasury, we have had an orchestrated continuation of that attack by his senators in Senate estimates yesterday and on top of that we have had an orchestrated attack on the Governor of the Reserve Bank at the doors this morning and on the independence of the Reserve Bank. Up until now we have had no single statement of repudiation at the dispatch box, let alone an apology, by the alternative Prime Minister of Australia. This is also a pattern of behaviour—

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

Mr Speaker, on a point of order on relevance: this question went to a statement made by the Treasurer which contradicted that which has been provided by the Governor of the Reserve Bank. The Prime Minister has not answered in any way that part of the question.

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

The Prime Minister is responding to the question and I will listen carefully to him.

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

Mr Speaker, in my answer to the question I said that these matters would be determined when the regulators have concluded their discussions internally and with the banks and with other relevant financial institutions, when they would be placed in the public domain. That goes to the substance of the question which has been asked. Secondly, I have said that the entire process—

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

Mr Speaker, on a point of order—and the point of order is on relevance: I am complaining about lack of relevance. The questioner asked the Prime Minister to address a statement by the Governor of the Reserve Bank and a statement by the Treasurer. What he is doing is giving another lengthy description of his long process.

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

The Leader of the Opposition will resume his seat. The Prime Minister is responding to the matters that were related to those comments.

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

The Leader of the Opposition may be unhappy with the answer. He normally is when it does not suit his short-term political purposes. But what we on this side of the House are on about are the long-term interests of the economy of this nation—and that is the difference. I would say to the alternative Prime Minister of the country, as he would describe himself, that one of the qualifications for office in this country is to support the independence of our financial regulators—a quality and a character element that we have not seen evidenced in his behaviour this last week at all. Can I say to the Leader of the Opposition that he was a member of the Howard government and this goes to a question of a pattern of behaviour by the Howard government in relation to public servants who do not toe the political line. Remember the attack on the then Secretary to the Treasury—who is also the Secretary to the Treasury now—when he made an internal speech in the Treasury about why Treasury should be included more in the then government’s deliberations on climate change and water. What was the response to that? They unleashed the dogs of war. But much worse—and the member for Higgins knows the detail of this and he should hang his head in shame because it happened under his watch—the bonus which would normally be attracted to the Secretary to the Treasury at that time was then—

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

Mr Speaker, a point of order on relevance: this question goes to a statement made by the Treasurer which did not reconcile with the advice that was received by the Governor of the Reserve Bank. This has nothing to do with what the Prime Minister has gone on with for six or seven minutes now. He has to answer that part of the question.

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

The member for Dickson will resume his seat.

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

The independence and reputation of our financial regulators is key and critical to each of the matters which the Leader of the Opposition has raised in his question today. Furthermore, the maintenance of the independence of the regulators is doubly important. We had a pattern of behaviour which occurred when the member for Higgins was Treasurer, when the then Secretary to the Treasury had his bonus cut because he had the temerity to deliver a speech which did not meet with the political support of those opposite, and what we see today is a continuation of that pattern of behaviour. This government has a great relationship with the Treasury.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker, a point of order on relevance: this is an absolute diatribe.

Opposition Members:

Opposition members interjecting—

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

What was that comment? Order! Before we continue, I think that all of us should take a collective deep breath. I think that this illustrates the fact that perhaps both sides are not quite used to the fact that they have swapped sides and that there is not a real will to change the nature of question time. If members of the House are aggrieved, they might think about whether they would like the Procedure Committee to look at these matters. I remind the House that the standing orders say a lot about questions. They make one particular statement about answers, and that is on relevance. The relevance does not have to be interpreted by some specificity in the eyes of the questioner, and that has been the case for a long time. The Prime Minister will respond to the question and we will get to the conclusion of his answer.

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

So, on the matters raised by the Leader of the Opposition in his question, as I said before in the earlier part of my answer, the final detail of the premiums which would be attached to term wholesale funding and those which are attached to the guarantees for deposits will be released once the regulators have properly concluded their discussions with the banks and other relevant foreign jurisdictions. What I have been seeking to make is simply the associated point: to maintain the integrity of that process, we must maintain and support the integrity of the institutions which are party to that process, one of which is the Treasury.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

Mr Speaker, a point of order on relevance: this goes to a statement made by the Treasurer as to whether or not he has lied to the Australian people. The Prime Minister is refusing to answer that part of the question, and it is completely unacceptable that he will not be accountable to this parliament.

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

I will just illustrate, without taking any action on the member for Dickson, that that was not a point of order in the way it was constructed, and he knows that. I am suggesting that the House take a collective deep breath and get on with the business. I will not now allow people to approach the dispatch box and debate a point of order.

Anthony Albanese (Grayndler, Australian Labor Party, Leader of the House) Share this | Link to this | Hansard source

I ask that that be withdrawn.

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

In what the member for Dickson claimed to be the repeating of the question, he did use an expression that should be withdrawn. I ask the member for Dickson to withdraw.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

I withdraw, Mr Speaker.

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

I thank the member for Dickson.

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

The government, in our relationship with the Treasury, respect its independence. We respect the independence of the financial regulators. That is very important in dealing with the grave challenges we face in the global financial crisis right now. My simple appeal to those opposite is that they do the same.

Brett Raguse (Forde, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on his consultations with the financial sector on the implementation of the retail deposits and wholesale funds guarantees?

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

I thank the member for Forde for his question, because the government is committed to protecting all depositors in these uncertain times. Following our announcement on 12 October, we have seen a marked improvement in the operation of financial markets, with spreads falling, resulting in cuts in mortgage rates. This morning, I think, in estimates, Dr John Laker, from APRA said: ‘The government’s deposit term in funding guarantee, which APRA fully supports, has calmed what was a growing disquiet on the part of depositors.’ When the second reading legislation was introduced into the House, I made it very clear to the House that finetuning would take place in the days ahead. That is of course what has been happening. That is what the RBA, APRA and ASIC have been doing. It is what the government have been doing. We have been consulting widely on this question and continuing a series of consultations through today and tomorrow on all of these matters with banks, building societies and credit unions; with financial markets participants; and with those institutions that are not covered by the government guarantee. We do take our responsibilities very seriously, and we are liaising very closely with all of our regulators. We are doing this to ensure deposits are protected and to ensure the ongoing efficient operation of financial markets.

As for the details, which have been the subject of some comment—the level above which large deposits will be treated as wholesale funding, how much the fee will be, how a fee will be structured, whether it would be flat, whether it would it be tiered, who would pay and whether it was compulsory or opt in—all those things have been on the agenda, and all of these things which have been on the agenda have been highlighted by me both publicly and in the meetings with regulators and with industry. These are commercially sensitive matters. This is where the opposition really do not get it. This material is commercially sensitive. It has been worked out thoroughly. It has been worked out in accord with the wishes of our regulators. It has been worked out with industry. We will reach a sensible conclusion in a timely manner in the interests of a stable financial system.