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

I give notice that, on the next day of sitting, I shall move:

That the provisions of paragraphs (5) to (8) of standing order 111 not apply to the Banking Amendment (Covered Bonds) Bill 2011, allowing it to be considered during this period of sittings.

I also table a statement of reasons justifying the need for this bill to be considered during these sittings and seek leave to have the statement incorporated in Hansard.

Leave granted.

The statement read as follows—

STATEMENT OF REASONS FOR INTRODUCTION AND PASSAGE IN THE 2011 SPRING SITTINGS

BANKING AMENDMENT (COVERED BONDS) BILL 2011

Purpose of the Bill

The bill amends the Banking Act 1959 to allow Authorised Deposit-taking Institutions to issue covered bonds and to establish a regulatory framework for the Australian covered bond market.

Reasons for Urgency

As announced in the Government’s Competitive and Sustainable Banking System package, allowing Australian banks, credit unions and building societies to issue covered bonds is a critical step in securing the safety and sustainability of Australia’s financial system.

Given the current volatility in offshore bank funding markets, the Government intends to urgently provide ADIs with the ability to issue covered bonds – which they have indicated they will do during November and December – because this critical to maintaining the flow of credit to the Australian economy.

The offshore covered bond markets are currently the only term funding market which are effectively open, and were the only term funding markets which remained open during the global financial crisis. Our banks were not then able to issue covered bonds and the Government was required to introduce a wholesale funding guarantee to allow our banks to raise funds on competitive terms.

Covered bonds will allow the Australian banking system to diversify the range of funding sources it uses to meet the borrowing needs of Australian households and businesses, including at longer tenors and lower cost.

(Circulated by authority of the Treasurer)