Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Conroy. Can the minister update the Senate on recent important developments in the continuing global financial crisis?

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

I thank Senator Wortley for that very worthy question. As we know, and as has already been stressed by both me and my colleague Senator Sherry, these are challenging times in global financial markets. It has been a tumultuous two weeks. Two large US investment banks ceased to exist as independent entities, the world’s largest insurer required a US government bailout and two of the largest UK banks had no choice but to merge.

Towards the end of the week, we saw some recovery in global markets and the US government announcement that it is developing a comprehensive approach to address the bad loans in the US financial system. Central banks around the world injected large amounts of liquidity into global financial markets. These are welcome initiatives, but we should not imagine that we are out of the woods yet. We will continue to see volatility in global financial markets over the period ahead.

The government continues to receive briefings on developments by Treasury and our regulators. We remain in close contact with our international counterparts. To understand and help solve these global problems, you have to engage internationally with both policymakers and financial market participants. That is why it is so important that the Prime Minister is attending the United Nations this week. Over 100 world leaders will be there, and the global economic crisis will be foremost on their minds.

The Rudd government has continually made it clear that Australia is not immune to what is going on in international financial markets. At the same time, however, we need to recognise that the circumstances in the United States are different to those in Australia on a number of levels. For one thing, we should recognise the different quality of the institutions and the regulatory framework that we have in this country. Australia has a world-class regulatory system. The Australian Prudential and Regulation Authority is the regulator—

Nick Minchin (SA, Liberal Party, Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

After 11 years of a coalition government.

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

Senator Minchin, I know that you have been demoted.

John Hogg (President) Share this | Link to this | Hansard source

Senator Conroy, address your comments through the chair.

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

That is an own goal. He shadows you.

John Hogg (President) Share this | Link to this | Hansard source

Order!

Honourable Senators:

Honourable senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Those on my left will come to order.

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

I am still in the government’s economic team; Senator Minchin is not. Senator Minchin has already distinguished himself by announcing that he intends to question me about Labor’s uncertain plans for a digital switch-off. I look forward to that, Senator Minchin, because we are not planning a digital switch-off. We might be going to turn the analogue system off, but not the digital system. So, I would stick to the economic game, Senator Minchin.

It is worth noting that Australia’s largest four banks are among only 12 of the world’s top 100 banks with AA credit rating or above. That is, there are 12 banks with AA credit rating or above and we have four of them in this country. It is also a fact that the exposure of our banks to subprime loans is significantly less than in the US. In Australia, subprime mortgages account for only one per cent of the mortgage market, compared with 15 per cent in the US. Our default rates are nowhere near theirs. (Time expired)