Joe Ludwig (Queensland, Australian Labor Party, Manager of Government Business in the Senate) Share this | Hansard source

I assume that at some stage Senator Brown does want the bill to come back. I will assume for the purposes of the debate that in moving that amendment he will adopt the original position that he put to the committee itself, which did have a reporting date.

The government in this instance did move quickly and decisively to ensure that there is confidence in the banks. This was done in an environment where our international competitors were moving, and if we had not acted our banks would have been seen as second class internationally. Our action was taken on the advice of the Council of Financial Regulators and gave 13 million Australians certainty over their deposits. The RBA governor said that actions like this averted a ‘potential systemic collapses that would have had massive repercussions throughout the world’.

Since the initial guarantee announcement, the government has been engaged on a daily basis with putting in place the detailed arrangements. We have consulted with regulators and industry to manage new developments as they have arisen. Providing a standing appropriation is part of that process. It is part of our ongoing effort to work quietly and methodically through the complex issues that the nation confronts, and this will continue as global circumstances change. Obviously the consultative approach that we have taken to these matters means that information can leak out from time to time, including in circumstances such as these, to the opposition. Our promise is that we will continue to consult. It is important that we work collaboratively with regulators and with industry and that we act in the national interest.

There is a need to introduce a standing appropriation to pay any possible claims made under the government’s guarantee scheme for large deposits and wholesale funding. The Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008 will provide international markets with the assurance that Australian institutions are supported by government guarantee and that any payments will be timely. This bill will guarantee financial system stability, confidence in our banks, building societies and credit unions and help to ensure the flow of credit to businesses and households. The bill has two measures: a standing appropriation that enables claims to be paid in a timely way in the unlikely event that claims are made, and a borrowing power. There is a necessity to ensure that we have those in place as soon as possible. It is the view of the government that we need it before the end of this week.

Action is needed on the basis that the appropriation may have been viewed on one measure as not a legal necessity, according to our legal advice. Nor would it have been a commercial necessity if the international market could be confident that there would be bipartisan support for an appropriation in the unlikely event that one was needed. Unfortunately, we are now in a position where the actions of the opposition have been a real threat to the stability of our banking system, which is one reason why we have acted responsibly again today. The Australian community and their banks would have been more comfortable if the Leader of the Opposition had stuck to his initial pledge of support. Unfortunately the Leader of the Opposition’s growing attacks on the guarantee scheme have sowed the seeds of doubt in the minds of global investors. This shows again that we really do need to ensure that we move forward in Australia’s national interest.

The scheme will bolster the stability of the financial system, bring confidence to our banks, building societies and credit unions and help to ensure the flow of credit to Australia’s businesses and households. The scheme will ensure that Australian institutions borrowing in the international wholesale markets are supported by an Australian government guarantee and that payments made under the guarantee will be timely. For those reasons, it is necessary to deal with it in the way that we have. It is the view of this government that we continue to consult. We have consulted with regulators, and that, in part, is why we are here today. I do take Senator Brown’s point, and where we can we have undertaken to refer bills to committees so that proper consultation with the community can be had. The workplace relations bill is one such bill where we do see that necessity and we have had extensive consultations to date to ensure that the Senate has that opportunity to undertake that consultation, unlike the opposition when they were in government when they reduced it to a one-minute committee. (Time expired)