Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer update the House on the outcomes from the G20 leaders meeting with regard to financial regulation and any implications for Australia?

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

I thank the member for Dobell for his very important question, because the G20 endorsed the most comprehensive reforms to the global financial system in decades. These are very important reforms, because we have seen what a global financial crisis can do. It can produce a global recession, and nobody is immune from that. So reforming the international financial system is absolutely essential to prosperity, not just globally but in countries like Australia.

What we saw at the height of the global financial crisis was a dramatic impact on our financial system. But fortunately we were able to avoid the worst impacts of that global financial crisis and global recession. What the global financial crisis indicated was the importance of having a stable financial system globally, and the overriding objective of having that globally is so that we can secure jobs so that we avoid the destruction of capital and the destruction of lives that flowed from the global financial crisis and global recession.

The G20 endorsed the work of the Basel Committee on Banking Supervision—very important reforms when it comes to capital adequacy for our banks nationally and for banks internationally—and endorsed the work of the Financial Stability Board. Of course, our banks will comply in full with these new international standards, but they will do it in a way which takes into account our unique circumstances, because we did not have the excesses in our banking system that we saw in the United States or that we have seen in Europe. We have certainly had a much more stable system and we have certainly had a better supervisory system in this country. So we did not see the risky behaviours that we have seen overseas.

But of course we were not immune and that is why we moved comprehensively and swiftly to put in place our bank guarantees for depositors and the guarantees for wholesale funding. And those guarantees for wholesale funding will bring to the Australian taxpayer $5 billion in revenue over time. The banks have paid for that wholesale funding guarantee, which was so important to the supply of credit to the Australian economy.

Of course, there will be some differences in the way in which these rules are implemented in Australia, and this is particularly the case when it comes to liquidity standards. In this country we simply do not have enough government debt to comply with those standards in the way in which they will be implemented in other countries, and the G20 has recognised that and will work with the Australian authorities to ensure that we do comply in a way which does not push up domestic costs. Why do I make that point? Because there will be absolutely no excuse for any Australian bank to force up its costs as a result of these important international rules.

So what our work to the G20 has done is bring further stability to our banking system, so important to the prosperity of our country and so important to the peace of mind of anyone in this country who has their money in a bank and is a depositor in a major financial institution. These reforms are absolutely critical to our future prosperity and they have been put in place with the very strong support of the Australian government.