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

I seek leave to move a motion of censure against the Prime Minister and the Treasurer.

Leave not granted.

I move:

That so much of the standing and sessional orders be suspended as would prevent the Leader of the Opposition moving immediately—That this House censures the Prime Minister and the Treasurer for their inept and incompetent economic and financial management since coming to office, and in particular:

(1)

failing to re-act responsibly and effectively to the global financial crisis;

(2)

establishing an unlimited free deposit guarantee scheme which, in the words of the Reserve Bank Governor himself, “is creating … serious dislocation in the financial system”;

(3)

ignoring the warning of the Reserve Bank Governor when he wrote to the Treasury Secretary last Friday that “we have been going around and around on this but I think we need to get something out to the markets soon”;

(4)

expediting the passage through the Parliament of a deposits guarantee law which at the very moment the Treasurer delivered his second reading speech he knew, but did not say, was misconceived and in need of drastic amendment;

(5)

announcing in the course of Question Time yesterday a new deposits tax which would impose a massive cost increase on Australian banks, a cost they would seek to recover by increased interest rates and fees;

(6)

when the global financial instability became a crisis, failing to directly consult the Governor of the Reserve Bank of Australia on a central element of the Government’s response which falls directly within the Governor’s responsibilities because it affects the systemic stability of Australia’s financial system;

(7)

right from the beginning of this year consistently putting its short term political strategy ahead of responsible economic management by talking up inflation and talking down the economy in the early part of 2008;

(8)

undermining business and consumer confidence and increasing inflationary expectations thereby causing the Reserve Bank to increase rates; and

(9)

attempting to run the Australian economy on the basis of the 24 hour news cycle, causing him to develop policy on the run without due proper evidence, proper analysis, and proper consideration.

What we have seen today is an urgent need to debate this issue. We have been calling on the Prime Minister to come into this House and debate his mismanagement of our economy. We have asked him to come in here to give a ministerial statement, to have a debate. We have sought to hold him to account and all we have had is one stunt after another, one picked fact after another, one grand gesture after another.

We saw that on 12 October a momentous decision was taken to guarantee all of the deposits in Australian authorised deposit-taking institutions without any cap. This is almost without precedent in the world. The Treasurer said in the House the other day that Germany had the same unlimited deposit guarantee. Well, they do not. Their deposit guarantee is limited to private accounts. The deposit guarantee the Prime Minister announced was completely universal and it was inevitably going to create severe dislocation and distortions in the market, so much so that by the Treasurer’s own say-so we know that by the Wednesday, less than 72 hours after it was announced, he was already, according to him, getting ready to change it, getting ready to install a cap. We have had the most slippery performance about that cap, trying to debate the difference between a cap and a threshold.

What we have seen plainly is that any deposit guarantee will distort the market to some extent. If you provide some classes of funds or some classes of institutions with a guarantee they obviously have an advantage that others do not. That is why around the world deposit guarantees are set at levels that are designed to provide security and comfort to households and small businesses. That is why in the United States for many years it was $100,000. It has been raised to $250,000. In the UK is £50,000 and so forth. On the Friday previously, given what was clearly an increasing flow of funds to the big banks, we recommended that the deposit guarantee proposed by the government and supported by us in these times be increased from $20,000 to $100,000.

The response was a classic hollow men panic. After meetings over the weekend, instead of coming to a level, a cap, that was a reasonable one calculated to pick up household and small business accounts, what did we get? We got an unlimited guarantee. We have seen what it has done. We have seen cash management funds and institutions that are not covered by the guarantee losing money to those guaranteed institutions. We have seen some funds putting a stop on redemptions. We have seen people with their savings frozen and we know that within days the Reserve Bank of Australia was saying, as I stated in the motion, ‘We have been going around and around on this’—this was on 17 October—‘but I think we need to get something out to the market soon.’ It is 23 October and nothing has gone out to the market.

We see the absurd manner in which the Treasurer in his extraordinary incompetence announced yesterday a new tax. He answered a very clear, very simple comprehensible question: was the new deposits fee going to be compulsory? He said that it will apply to all deposits over the $1 million mark and it will be paid by either the bank or the depositor. He repeated that. He said he did not apologise for it being compulsory. He said he was not going to give the banks a free kick—not the Treasurer; he was not going to do that. The Prime Minister endorsed him. Then, when we asked the Prime Minister today another clear question, ‘When is the starting date of this deposit tax going to be announced?’ we got a 10-minute-and-six-second ramble and not one fact—not an answer to the question. He did not disown the compulsory deposit tax at all. He did not throw the Treasurer to the wolves. That is probably touching for the Treasurer. But then, in a subsequent answer from the Treasurer today, there were little weasel words slipped in. So now there is a bit of doubt whether this deposit tax will be compulsory—whether the deposit fee will be a tax at all.

The fact of the matter is that we know that this agenda has been driven by a media strategy, a political strategy, and nothing else. You can see that at its height in the nearly two hours of the time of this House that was taken up today with the absurd motions from the member for Grayndler. The Prime Minister loves to talk about leaving no stone unturned. It might be better to say, in his case, he leaves no cliche unuttered. One of his favourite cliches today is ‘letting loose the dogs of war’. There is no snappier dog of war than the member for Grayndler, and he was in here, full of indignation, taking up two hours of the parliament’s time because he was concerned about the reputation of Dr Henry—so it was said. The record shows I did not call for Dr Henry to be dismissed. I spoke as warmly of Dr Henry as his greatest admirers could, and yet we had the ridiculous—indeed, tragic—example of this government, led by the ultimate control freak, proceeding with a motion not by the book, not by the standing orders, but by The Little Red Book of Chairman Mao.

The government have a resolution, passed with their majority, calling upon a member of parliament to say certain words. They have not censured the Leader of the Opposition. They have not condemned the Leader of the Opposition. They have passed a motion to say that the Leader of the Opposition should utter certain words. That is certainly by the book. It is not the standing orders. It is not the Magna Carta. It is not the Constitution.

Opposition Member:

An opposition member—It’s Mao’s Little Red Book.

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

Yes, it is The Little Red Book. My colleague is right. It is The Little Red Book and there they are, the Gang of Four—Comrade Kev, Comrade Wayne, Comrade Albo—

Opposition Members:

Opposition members interjecting—Madame Mao!

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

Ah, yes, and Madam Julia—there she is. That is the Gang of Four. It is fine for the Prime Minister to embrace Asian values, but I do not think we should start with the Red Guards and The Little Red Book of Chairman Mao. Messy and disconcerting though it may be, we live in a democracy and this is a parliament. We have a right to debate these issues and we will, and no control-freak Prime Minister is going to be able to silence the opposition, take his activities away from the scrutiny of the press and deny the people their say. (Time expired)

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

Is the motion seconded?

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

Mr Speaker, I second the motion moved by the Leader of the Opposition. The consequences of the Prime Minister’s hasty and ill-considered decision to provide an unlimited deposit guarantee are not abstract. The consequences have been felt by Australians across this country every day since 12 October, and that is why we need to debate this matter now in this House. The Prime Minister has refused to come into the House in accordance with precedent to give a prime ministerial statement on one of the most important and significant decisions that a government has made in a long time. This Prime Minister has refused even to grace the parliament with his presence to speak about the decision made on 12 October which is now having such serious consequences in financial markets across this country.

This decision has caused massive confusion in the financial markets. As of 12 October, when the Prime Minister announced his unlimited guarantee on bank deposits, there has been a massive movement of funds from those excluded from the guarantee into those institutions that are included in the guarantee. Let me take one example that was provided in evidence today to Senate estimates by officers of APRA. They were asked about the fact that the government’s decision has created two classes of institution within the APRA regulated, authorised deposit-taking institutions. What the government has done is exclude the foreign bank branches. Foreign bank branches are APRA regulated, they are authorised deposit-taking institutions, yet the government has excluded the foreign bank branches from their unlimited guarantee. Guess what has happened? This is evidence from APRA officers. As of 13 October, billions of dollars of funds have moved from the foreign bank branches that were APRA regulated, authorised deposit-taking institutions under the laws of this country and have moved into the banks included in the government’s guarantee.

We are not talking about abstracts here. We are not talking about some foreign investments here. What we are talking about are the funds, the investments and the savings of ordinary Australians. These institutions hold aggregate funds. They hold pools of investments and savings from mums and dads, small businesses, superannuants and self-funded retirees across Australia and, because these banks were left out of the guarantee, they believed that they could offer the confidence to these people that banks with the guarantee could offer, so they have moved billions of dollars of these people’s money into those banks included in the guarantee. But what happened yesterday? At 2.23 pm the Treasurer, in answer to a question about a fee he had mentioned the day before, announced a new and compulsory deposit tax on all the deposits that are now in the banks included in the guarantee. He was not talking about a fee in his second reading speech; that is rewriting history. He did not mention a fee in his second reading speech on 15 October. The Treasurer made a fundamental mistake, of course, as he has in so many answers to so many questions. He said it would apply to all deposits in APRA regulated institutions, but in fact he forgot that he had already excluded some APRA regulated, authorised deposit-taking institutions from his guarantee.

We have now got billions of dollars of funds that have flowed in since 13 October into the big four banks in particular and other banks. The Treasurer announced a new tax. I have now been contacted by asset managers who say they want to take the money out of the big banks because they do not want to attract a fee which would be passed on to their deposit holders. They want to take the money out of the bank. Is that an intended consequence—to take deposits out of the big banks? Was that an intended consequence of the announcement of a new tax or are these people stuck with paying the tax that was announced at 2.23 pm yesterday?

The Treasurer has not resiled from that. The Prime Minister took 10 minutes to answer a question and not once did he say that this tax was not compulsory, nor did he say that it would not apply from 2.23 pm yesterday. So the Australian public must assume that they will be subject to this new tax on their deposits. They were told that the guarantee was going to be free of charge; they now find that their savings will be subject to a new tax. I ask the Prime Minister: does this mean that the savings of ordinary Australians will now be diluted by the fact that they must pay this tax? (Time expired)

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

I noted with some keen interest the statement by the Leader of the Opposition today in reference to the Secretary to the Treasury. He said that his remarks about the Secretary to the Treasury at the dispatch box the other day were the warmest remarks that he could make about Dr Henry. It is strange that, in the process of this extension of warmth, you threaten to sack them. That is a strange expression of warmth in the part of the world that I come from.

Can I just say to the Leader of the Opposition that, whether it is the Secretary to the Treasury, whether it is the Governor of the Reserve Bank, whether it is ASIC or whether it is the other regulators, the importance of the independence of these financial institutions goes to this country’s long-term economic interest. What we have had here instead from Malcolm Turnbull is a man prepared to slur our economic institutions during a global financial crisis just to pursue his own personal political interests. What we have had here is arrogance. What we have had here is recklessness. What we have had here is a lack of control.

For some time we have said in this place that the Leader of the Opposition is out of touch. Remember what he said about interest rates: a mere 25 basis point increase in interest rates was something which people had become ‘overdramatic’ about. Well, that is out of touch. But the remarkable thing we have seen in the last week is not just out of touch behaviour but behaviour which is, in fact, out of control.

Christopher Pyne (Sturt, Liberal Party, Shadow Minister for Education, Apprenticeships and Training) Share this | Link to this | Hansard source

Mr Speaker, on a point of order: with due respect, the suspension motion is very clear in its terms. This would have been relevant to a motion if the government had had the guts to bring a censure motion against the Leader of the Opposition, but it has not. And therefore it should be brought—

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

The member for Sturt will resume his seat. The debate has been a fairly wide suspension of standing orders debate.

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

The underlying principle in all of this is: at a time of global financial crisis, do the men and women of Australia, the working families of Australia, want to have confidence that we have an independent Secretary to the Treasury, an independent Governor of the Reserve Bank, an independent ASIC and an independent Prudential Regulatory Authority? Do the Australian people want to have confidence in those institutions? Yes, they do. Do they want to have the alternative government of Australia simply taking out the machete and trying to hack them down at every opportunity? That is exactly what the Leader of the Opposition has given his sanction to. He smiles as if this is some small, passing matter. I would say to the Leader of the Opposition: in his attack on the Secretary to the Treasury he has failed at the first and fundamental character test for occupying the prime ministership of Australia. This is an Australian institution. It should be beyond political and partisan attack. The Reserve Bank is an Australian institution. It should be beyond political and partisan attack—a principle which the Leader of the Opposition does not grasp.

The weekend before last, the world was beset by a global financial crisis which was getting right out of control. If you looked at what had happened in stock markets the previous Friday, you would have seen the massive collapse across the world. What you saw were stocks plummeting, credit markets out of control and credit markets drying up. But, beyond that, you saw the visible sapping of confidence of deposit holders around the nation as they became concerned about the security of their deposits. That was the real problem that the democratically elected government of Australia was dealing with. And that is why we sat down with our regulators to work out what to do about it. We met for that weekend. We took tough decisions. We took hard decisions. We were decisive and our decisions were taken with this core interest in mind: how to provide security and confidence for the working men and women of Australia—those in the gallery here today concerned about the security of their deposits and the ability of their banks to provide funding for future loans to business. These were the concerns which drove the government. Those were the concerns which drove the regulators. That is why we spent the entire weekend working here. We acted and we are proud of the decisions we took.

The Leader of the Opposition does not understand the depth of the crisis that we are in. He has said that this crisis is simply mere ‘hype’—his word, not ours. Therefore, when the superannuation policyholders of Australia—there are 10 million of them—are concerned about the impact of stock market collapses on the earnings of those funds, he is saying that they are simply responding to hype. He is saying that those pensioners who are in need of extra support at this time are responding to mere hype. He is saying that those concerned about the security of their deposits in banks were responding to mere hype. Can I say to the alternative Prime Minister of Australia: fear and anxiety are not the products of hype. Fear and anxiety are the products of the events across the world that they saw unfold on their television screens. They were looking for governments and responsible political parties to show leadership and to act. This government did so. This government is proud of the action that it took, which was necessary to deal with the reality of the crisis that we were confronted with.

If you look at the response across the business community, if you look at the response across the banks of Australia, if you look at the response in terms of what the regulators have said about the actions we have taken subsequently, it is quite clear that the decisions taken by the government on that critical weekend were absolute and necessary in the interests of the working men and women of this country, of retirees, of superannuants, as well as those needing loans if they were out there in small business. There is not just that action on deposits; there is also the action for the term funding arrangements for our major retail banks and, on top of that, of course, a $10.4 billion Economic Security Strategy for the future, delivering additional help and support for pensioners, for families and to assist those out there in the hard business of trying to fund the purchase of their first home. That is our policy. We stand by it and we are proud of it.

What is the policy of the alternative government of Australia on the guarantee on deposits? What is it? Five times last night on television—they all hang their heads at this moment—the alternative Prime Minister of Australia was asked this question: ‘What is your policy on guaranteeing the deposits of the men and women of Australia? What is it?’ What those opposite have said and confirmed most recently, depending on who you listen to on what day, is maybe a $100,000 limit, maybe not—depending on the weather, depending on the day, depending on the spokesman. I would say to the Leader of the Opposition: the Australian people want certainty at this time. They have a clear decision from us, which is to provide certainty of guarantee of deposits for the future. That is our policy. We have announced it, we stand by it and we defend it, and it is supported by the regulators.

We turn to the alternative government of Australia. They do not just walk both sides of the street; when challenged repeatedly to name a number, name a limit, name a condition, they cannot do so. I would say to the Leader of the Opposition again, if he seeks to occupy the prime ministership of this country, having a clear position on something as basic to the mums and dads of Australia as whether or not their deposits are going to be secure in the bank is the first ask of leadership, a test of leadership the Leader of the Opposition has failed.

The government has also been acting domestically and internationally, because, in terms of dealing with the confidence crisis which exists across our country and beyond, we are dealing with the problem of financial regulation at home and abroad, we are dealing with the problem of economic growth at home and abroad, and with jobs. We are also dealing with the harmonisation of policies across the globe. Across the last week, together with the foreign minister, together with the Treasurer, together with the trade minister, the government of Australia, apart from attending to these matters domestically, has been engaged in every capital in the world, through our embassies and directly, in ensuring that we would have a place at the table for Australia to argue our case for the future financial order of the world.

The decision, announced this morning Australian time, by President Bush to convene a G20 meeting in Washington, a Group of 20 meeting in Washington at heads of government level, is in direct response to the representations by this government and other governments around the world. There were those in the international community who argued that the G7 alone could handle this challenge. Our argument, looking at the Asia-Pacific region and looking at the significant economies here, is that if we are to deliver a global solution to this problem, it requires a global response. Australia will be arguing internationally for an effective response, just as we have been arguing a decisive case through our actions here at home. This government stand up for the long-term economic interests of the economy. We stand up for the long-term interests of families within the economy. We stand up for the interests of those deposit holders who are here in the gallery in parliament today. We stand up for pensioners, for families doing it tough and for those who are seeking to buy their first home. That is the hallmark of a government exercising proper leadership in the midst of a global financial crisis. I would suggest that those opposite support the government.

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

Order! The time for the debate has expired.

Question put:

That the motion (Mr Turnbull’s) be agreed to.

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

Mr Speaker, I ask that further questions be placed on the Notice Paper.