Anne McEwen (SA, Australian Labor Party) Share this | Link to this | Hansard source

I present the 16th report of 2008 of the Selection of Bills Committee and I seek leave to have the report incorporated in Hansard.

Leave granted.

The report read as follows

SELECTION OF BILLS COMMITTEE

REPORT NO. 16 OF 2008

(1)

The committee met in private session on Wednesday, 26 November 2008 at 10.30 am.

(2)

The committee resolved to recommend—That—

(a)

the Freedom of Information (Removal of Conclusive Certificates and Other Measures) Bill 2008 be referred immediately to the Finance and Public Administration Committee for inquiry and report by 10 March 2009 (see appendix 1 for a statement of reasons for referral); and

(b)

the provisions of the Tax Agent Services Bill 2008 be referred immediately to the Economics Committee for inquiry and report by 12 February 2009 (see appendix 2 for a statement of reasons for referral).

(3)

The committee resolved to recommend—That the following bills not be referred to committees:

• Families, Housing, Community Services and Indigenous Affairs and Other Legislation Amendment (Miscellaneous Measures) Bill 2008
• Tax Laws Amendment (Luxury Car Tax—Minor Amendments) Bill 2008.

The committee recommends accordingly.

(4)

The committee considered a proposal to refer the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008 to the Economics Committee, but was unable to reach agreement on whether the bill should be referred (see appendix 3 for a statement of reasons for referral).

(Anne McEwen)

Acting Chair

26 November 2008

I move:

That the report be adopted.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I would like to get a copy of that report. I note that in the report there was an inability of the committee to come to an agreement on the move I made to have the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008 referred to the Economics Committee. In the absence of that decision, I foreshadow that I will move:

At the end of the motion, add “and, in respect of the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008, the provisions of the bill be referred to the Economics Committee for inquiry and report”.

I am moving this amendment, because we are being asked to deal with the legislation this afternoon. I believe that it is such an important piece of legislation that it does deserve an inquiry.

One of the things that distressed me about the three years of the government dominance of the Senate between 2004 and 2007 was that it seemed that referrals to committee tended to become inversely proportional in importance to the significance of the legislation. Here we have an extremely significant piece of legislation that is aimed to have the public become guarantors of loans made by banks overseas. The committee could not make a decision as to whether or not there should be a Senate inquiry into the matter.

At the same time, where requests were made, all the other matters were effectively referred. The freedom of information amending legislation, which I think is important, and the Tax Agent Services Bill, which I think is also important, were referred immediately—the latter to the Economics Committee—and it is beyond me to see why the committee could not recommend that the guarantee for the bank funding bill could not also have been referred. I am therefore moving, as an amendment to the motion, that the bill be referred to the Economics Committee.

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Do you have a reporting date for the referral?

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

No.

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

Alan Ferguson (SA, Deputy-President) Share this | Link to this | Hansard source

Before I call Senator Coonan, Senator Brown I must remind you of standing order 24A relating to the selection of bills, where in moving an amendment of this kind you are required, and it is specified, that you should have a day on which the committee shall report. I just advise you to reflect on that while I call Senator Coonan.

Helen Coonan (NSW, Liberal Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

It is very disappointing to hear from Senator Ludwig today a long diatribe that is almost word for word from the Treasurer’s second reading speech when introducing the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008 but does not really address what has gone on here in relation to the saga of the retail deposit guarantee and the wholesale term funding guarantee. That has been comprehensively bungled and mismanaged by the Labor government from the time of its introduction until today.

I have a degree of sympathy for Senator Brown’s proposed amendment. This has not been handled properly. The Labor government should have accepted the recommendation of the Leader of the Opposition and the shadow Treasurer, who advised weeks ago that, in order to introduce a wholesale term guarantee, it needed an appropriation in the unlikely event that the contingent loan would be required to be paid out. The circumstances in which this has been handled by the Labor government, I warrant, Senator Brown, does deserve a committee investigation. There is no doubt about that. But it has taken six weeks for the government to concede that legislation should be introduced into the parliament to support the government’s bank guarantee of large deposits and wholesale term funding—six weeks when people, who are reliant upon accessing funding to support their borrowing and to support their lending, have not been able to proceed because of the uncertainty caused by the way in which the Rudd Labor government has handled this. Mr Turnbull has, from time to time, said that.

This is an instance where, despite the position that Australia is in, which is perhaps as good as any country in terms of withstanding the global financial crisis, we are distinguished by Mr Rudd and Mr Swan having actually made it worse by the way in which they have tried to address the problem. They ignored the warning signs and ignored the bipartisan advice offered by the Leader of the Opposition and the shadow Treasurer, which said two things. Firstly, in respect of the retail guarantee, if you were to make it unlimited, it would have unintended consequences. So what are we seeing? We have seen the non-guaranteed institutions with funds frozen and 270,000 Australians who are locked out from accessing their deposits because of bungling of this unlimited guarantee. We have now seen a cap placed on it but still institutions are begging the government to make the cap lower so that this problem might be addressed. It is still not fixed. Secondly, in respect of the wholesale term guarantee, we know that, because of the requirements of the rating agencies, particularly Standard and Poor’s, unless there were legislation underpinning the appropriation, it would not have the desired and called-for effect.

We will be supporting the bill not because we in any way commend the government for the way in which this has been handled but because we accept that all of this delay is causing ongoing uncertainty for financial institutions, for consumers and for the economy more broadly. We accept that this matter should be dealt with urgently and expeditiously. It is why we are responding to the government’s request that we deal with it without reference to a committee. Whilst I have a degree of sympathy for Senator Brown’s natural curiosity as to how this appalling situation could come about, it is important that I place on the record the opposition’s reasons for opposing it being sent to a committee.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move:

At the end of the motion, add “and, in respect of the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008, the provisions of the bill be referred to the Economics Committee for inquiry and report by 4 December 2008”.

Question put: