Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Hansard source

I thank the senator for his question. He accurately identifies that the government has put in place I think three tranches of residential mortgage backed securities which are administered by the Australian Office of Financial Management. This was part of our approach during the GFC and beyond and part of our approach to ensuring that we seek to maximise competition within the banking sector to the benefit of Australian consumers.

It was not the intention of the residential mortgage backed security investment program to support major banks or their subsidiaries, whether partially or fully owned. Obviously, this assessment is different for each lender. It is clear that Aussie Home Loans is not independent of the Commonwealth Bank given the CBA’s strong involvement in board decisions and strategic settings and the CBA’s financial interest in Aussie Home Loans’ profitability. I am advised the government has been clear since the outset of this program that funds would not be available to subsidiaries of major banks, whether partially or fully owned. That has been the position that the government has taken on this issue. That has been consistently applied in relation to Aussie Home Loans and across this program.

The government did make clear that this was a program intended to support institutions other than the major banks or their subsidiaries. It was expressed quite clearly to be a program that was about supporting competition in the banking sector, recognising that, as a consequence of the GFC, the non-major sector—the smaller lending sector—was having some challenges in securing this particular type of finance.