Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

Thank you, Senator, for that question. The government’s deposit guarantee scheme covers off around $800 billion in deposits and provides additional stability to the entire Australian financial system. The scheme covers 100 per cent of individuals’ and businesses’ cash deposits. Obviously, it is not possible or desirable to provide cover for all investments that individuals or companies might make. The government has provided a guarantee as to cash deposits that are held by APRA-regulated bodies. However, there are a broad range of other high-quality financial institutions that provide good, high-quality investment products. The government’s announcement of a guarantee should not impact on the willingness of individuals to invest in these products.

More generally, the government’s deposit guarantee and guarantee of wholesale funding will support confidence in the financial system in general and contribute to the eventual recovery in financial markets. The likelihood of any government expenditure arising from these guarantees is both remote and difficult to estimate. ADIs are subject to prudential regulation by APRA which is designed to ensure that their financial promises are met. In the unlikely event that a guarantee is called upon, the government is likely to be able to recover any such expenditure through a claim on the relevant institution. So these guarantees are fully disclosed as a contingent liability—