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

I ask the minister: is it the intention of the government to move any amendments to any of the bills that we are currently considering, or is the government willing to support any amendments from the crossbenchers—the Independents or the Greens—in relation to this package and, if so, when might we get to see a copy of these amendments? We as a coalition are ready, willing and able to discuss those amendments immediately upon them being tabled.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

At this point in time I am unable to give a response to your two-part question, Senator Abetz.

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

Can I suggest to the minister that, in those circumstances, he might like to reconsider that which he said earlier on in the chamber today about the Labor Party not being engaged in a filibuster. Here we are as a coalition, ready, willing and able to assist the consideration of this matter, and the Labor Party are deliberately stretching it out to see if they can cobble together a deal, the details of which they are still unable to tell this chamber about. It really does expose as a complete farce, and indeed mischief, the assertion made by the leader of the government in this place, Senator Evans, when last week he told the Senate that this package of legislation had to be passed by Friday last week or else there would be all sorts of problems.

We have heard from officials that that was wrong, that consideration of the bills throughout this week would not delay the package in any way, shape or form. So one wonders why the Senate was being bullied and hectored by the leader of the government in this place, who was saying the legislation had to be passed, when departmental advice flew in the face of Senator Evans’s assertions. Clearly his assertions were not based on departmental advice, and so I think we have a very serious situation developing where the Senate was given information which was clearly incorrect. Now we have a circumstance where we as a coalition are saying we are ready to proceed and vote on these bills and the Labor Party are unwilling to either adjourn this debate or deal with it in another manner. They are deliberately filibustering this debate so that they can try to stitch something together. I am sure that as soon as I sit down they will get a backbencher to stand up and give a 15-minute talk to try to buy the government more time, and if that happens it will be proof positive of exactly what I was saying.

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

Senator Arbib.

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

And there we go: Senator Arbib.

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

Order! No, you know it is the way in the chamber that I must call someone from this side of the chamber.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution to this very important committee stage of the debate. I do apologise beforehand—I picked up a cough from my daughter, so I may need to take regular breaks just to clear my throat. Yesterday in the United States anyone who was watching CNN or some of the business channels would have noted that President Obama gave a major interview about the state of the United States economy and the scale of the crisis that he has inherited as president. President Obama put it like this:

And if there’s anyone out there who still doesn’t believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside down because they don’t know where their next paycheck is coming from.

He went further:

We have inherited an economic crisis as deep and as dire as any since the Great Depression. Economists from across the spectrum have warned that if we don’t act immediately, millions more jobs will be lost …

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Point of order, Mr Chairman. My point of order goes to relevance—whether this dissertation on President Obama in the United States has anything to do with the legislation that is currently before the committee or any amendments that are currently before the committee.

Kerry O'Brien (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

Mr Chairman, on the point of order. I think, frankly, that is a rather frivolous point of order. The senator is talking about an economic crisis that impacts on not just Australia but the world and the response of another head of state to the crisis. Given that this package is a response to the crisis and Australia’s economic circumstances arising from it, I would suggest that nothing could be more relevant to the committee stage of this debate, which is in its general phase at this stage, than the contribution being made by Senator Arbib.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Mr Chairman, on the point of order, Senator Joyce is correct: this is not relevant. It is, as Senator Abetz said, a filibuster. I have some serious questions to ask in the committee stage and I am being prevented from doing that by someone delivering what is effectively a 15-minute second reading debate speech in the committee stage of the bill. I know the government are not ready and that they do have to make time, but I think it would be appropriate to deal with some of the questions of the minister relating to the package whilst the government try to work out what they are doing next.

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

In general terms, we allowed very wide ranging speeches at the second reading stage of the legislation. It is also true to say that we are dealing with this bill and five other bills cognately. We are at a stage of general discussion, so at this point I will rule Senator Arbib in order.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr Chairman. I also thank senators on the opposite side of the chamber. They actually illustrated the point that I was trying to put forward. To return to the quote from President Obama:

We have inherited an economic crisis as deep and as dire as any since the Great Depression. Economists from across the spectrum have warned that if we don’t act immediately, millions more jobs will disappear … More people will lose their homes and their health care. And our nation will sink into a crisis that, at some point, will be much tougher to reverse.

That was what President Obama said, and I am happy to announce that today the United States Senate approved an $838 billion stimulus package. Three Republicans crossed the floor to vote with the President to try to stimulate the economy.

This is not just happening in the United States. Countries across the globe are taking action to stimulate their economies using monetary policy and fiscal policy to try to protect and support jobs and maintain economic growth. The IMF recently put out a report which I found most helpful in understanding the scale of the economic crisis and also a way forward for governments. The IMF report notes that the global recession has dramatically intensified: ‘The global economy is in the midst of a deep downturn, with the financial crisis driving an abrupt slump in the real economy. All major advanced economies are in recession.’ The report notes, ‘Merchandise exports have fallen globally by 30 to 40 per cent.’ Commodity prices, so important to our country, have collapsed over the last three months. Metal prices are 50 per cent below their peaks of March last year and global growth is forecast to fall to just 0.5 per cent in 2009. That is how deep this global recession is and how big an issue it is for this chamber. Both the IMF and the OECD have urged governments of all persuasions to do everything they can to stimulate their economies.

On Thursday last week I was lucky enough sit in on the hearing of the Senate Standing Committee on Finance and Public Administration inquiry into the stimulus package and to hear from the Secretary to the Treasury, Dr Ken Henry. Anyone who has ever listened to Ken Henry has had a real economics lesson. I learnt a great deal from it. I would like to put on record a couple of things he said, because they go to the importance of what the government is doing with this package. Dr Henry told senators:

… the global circumstances confronting Australia are simply unprecedented.

…            …            …

The forecast growth for our major trading partners is as weak as we have seen quite possibly since the 1930s.

…            …            …

… there is a clear case for a very substantial fiscal stimulus and for that to be delivered to the Australian economy before unemployment starts to increase. From our history and also from the experience of other countries, the evidence is that the earlier a macroeconomic policy response is taken, the better the prospects for the macroeconomy going forward.

That is what Dr Henry put forward to senators during the inquiry.

Our position is to take action now. What is the position of senators on the other side of the chamber? The best way to understand their position is to look at the words of their shadow Treasurer, Julie Bishop. The shadow Treasurer has put forward her plan for government policy to deal with the global recession: let’s wait and see. Let’s wait and see how bad it gets before we take action to stimulate the economy. Almost every developed country is now in recession. The Liberals say: let’s wait and see. Six of our top 10 trading partners, including China, the United States, Britain, Singapore and Germany, are all in recession. What is the Liberals’ plan? Let’s wait and see. Yesterday the National Australia Bank released some awful figures showing the depth to which business confidence has fallen in our economy. The Liberals’ response? Let’s wait and see how bad it gets.

The government are not waiting to see how bad it gets; we are taking action now. This global crisis, this global recession, is like a cyclone. It started in the United States, wreaking havoc on the domestic economy, wreaking havoc on financial markets, on financial institutions, on the banks. It then moved to Europe, wreaking havoc on their economy, with most of the EU now in recession. The hope was that it would not spread to the developing world, that they would be able to withstand the drop in the United States and Europe and continue to create growth. Unfortunately, the cyclone was too strong, and now we are seeing growth in the developing world slowing dramatically. Growth in China has slowed dramatically, from 13 per cent down to six per cent. In Korea there has been a huge drop in their economic growth. In Japan they are talking about a serious recession that it will take them years to recover from. The cyclone has been too strong. It is on its way to our shores. This is not a time to wait and see how bad it gets. This is the time to take action.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

We’re waiting.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I note that Senator Joyce has been doing a fair bit of media recently. He has been playing a great deal of politics with the stimulus package and has been carrying out a scare campaign on deficits.

I will talk about the first stimulus package that the government put in place and the way the Liberals have approached that stimulus package. It goes to how they are approaching economic management at the moment. In the chamber this morning coalition senators, time and time again, talked about the first stimulus package, in December last year, as ‘the cash splash’. That is what the coalition call it. That is what Malcolm Turnbull, the member for Wentworth, calls it. I have raised this previously, but I am happy to raise it again for Senator Joyce. Take the time to look at the Liberal Party website. I am a bit of a boring person, so I was happy to go to the Liberal Party website. The Leader of the Opposition now says that the first stimulus package is a cash splash and it has not worked. What did he say on Tuesday, 14 October, when we introduced the first stimulus package?

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Shut the door. I can hear the cows coming home!

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Senator Joyce, if you quieten down I will let you know. He said:

We welcome the Government’s announcement today, especially for Australia’s age pensioners who have been denied justice for too long.

He welcomed it, Senator Joyce. Then he went on to say:

But nonetheless we are not going to argue about the composition of the package or quibble about it. It has our support. It will provide a stimulus to the economy, that’s for certain.

That was the Leader of the Opposition. Today you are calling it a cash splash. This was him giving it his full support. Let me just read it again to you.

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

It was out of the surplus, in October.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I know, Senator Abetz, that you want to hear it again. He said:

It has our support. It will provide a stimulus to the economy, that’s for certain.

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

What date?

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am happy to take that interjection. It was Tuesday, 14 October 2008, on the Liberal Party website.

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

That was the first stimulus package, paid for out of the surplus—not going into debt.

Mark Arbib (NSW, Australian Labor Party) Share this | Link to this | Hansard source

That is right, Senator Abetz. I am talking about the first stimulus package. That was the Leader of the Opposition’s position. Let us talk about what the first stimulus package has achieved. Quite frankly, it has achieved a great deal. Let us talk about sales in the retail sector. Official figures were released showing a 3.8 per cent increase for the month of November—the biggest percentage rise in retail since the introduction of the GST in August 2000. Let us talk about first home ownership and the housing industry. Housing finance data from the ABS for November showed that the number of first home buyers increased by 17.8 per cent. The Real Estate Institute of Australia said:

Yes, we are starting to see a lot of activity in the first home buyers market and I think we’ll see a lot more of that as we go forward.

Today, Senators, I would like to raise new ABS figures released today which go to the extent of the first stimulus. The ABS figures show a surge in new housing finance for the month of December. First home buyer grants have absolutely stimulated the housing market. First home buyers are the real winners out of this. The first home buyer share of housing finance hit a six-year high in December as the stimulus kicked in. They are fantastic results. So the cash splash that the Leader of the Opposition and senators on the other side of the chamber talk about is doing its job.

This $42 billion package has a strategy behind it. If senators on the other side of the chamber had been listening to the Treasury officials during the Senate inquiry they would understand it. In the short term, the cash bonus payments are about getting money into the economy straightaway, to bolster aggregate demand, helping confidence in the marketplace. This injection takes place now, then the second part of the strategy comes to the fore—infrastructure. That is when you will start seeing projects taking off. These projects have been put together with this in mind. These are not huge projects that are going to cost billions and billions of dollars and take years to put together. These are projects that can be put out into the system quickly, punched out by tradesmen, by builders, by suppliers. This is the strategy behind it, to get our tradesmen and tradeswomen working, to get our suppliers providing, to get our transport workers using their vehicles to provide for housing. This is what it is about: a stimulus for the economy. This is what we stand for. On the other side the attitude is: ‘Wait and see. Let’s wait and see how bad it gets.’ In the end, that will mean a loss of jobs and a loss of production.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

I feel inclined to ask the minister at the table, the Minister for Superannuation and Corporate Law, how many of the promised 75,000 jobs that Mr Rudd guaranteed would eventuate from the first ‘cash splash’ have actually been achieved, but I will not do that because that is contrary to standing orders and it is not relevant to the bills before the chamber. It is quite clear, as Senator Abetz said earlier, that the previous speaker has just spent 15 minutes delaying the Senate because the government are quite incapable of managing this vaunted $42 billion package—the package they have been working on for ages and wanted us to pass, rightly or wrongly, by last Friday. Here we are today and the government are in disarray. They have absolutely no idea of what they are doing and are therefore getting backbencher after backbencher up to speak for 15 minutes on irrelevant matters, as in the last speech, simply to delay the Senate in order to try to hide their abject mismanagement of this bill. When they cannot even manage a bill through the chamber, what chance have we got of them managing $42 billion in an economic package? It really shows that Labor cannot be trusted with money or even with managing the business of this chamber.

I rose to seek a response from the minister on a question relating to the spending package that is before the chamber and I am sure his response will engender some follow-up questions, so I would ask other senators to give me 10 minutes or so to pursue the particular piece of information I am seeking. I mentioned both the issues I want to pursue in my second reading debate speech. Fortuitously, the minister at the table, Senator Sherry, will be well aware of the financial disaster caused by the collapse of Storm Financial, a company that was headquartered in Townsville, where I have my office. The collapse impacted upon investors that I know of on the Sunshine Coast and the Gold Coast and in other parts of Queensland, and I know there were many people in Melbourne who were also caught up in that financial crisis. I want to raise this with Senator Sherry while he is in the chamber because he may be able to assist those people today in the response he gives to this question.

My question relates broadly to how this package might impact on the big four Australian banks. We do know that the Rudd government—using taxpayers’ money, of course: governments do not have money of their own; they use taxpayers’ money—has guaranteed the deposits of the four big banks in Australia to the extent of $600 billion to $700 billion. Because he is the relevant minister in this area, apart from being the minister in charge of this debate at the present time, I would like the minister at the table to confirm that there is a potential liability of $600 billion to $700 billion in the guarantee given by the Rudd government to the big four banks. That was the preliminary, and I do not want to go into the question of what that guarantee has done to other financial institutions. The second part of my question to the minister is: in this spending package, are there other advantages given to the big four Australian banks? For example, in what we loosely refer to as the Ruddbank proposal, will there be funds somewhere in the $42 billion package to achieve that?

I want to go on to ask the minister if he might use today to issue, if not a warning, a reminder to those big four Australian banks that they have benefited quite substantially by the largesse of the Australian taxpayer through the Australian government—to the extent of a potential support of $600 billion to $700 billion. One would argue that perhaps that is appropriate. It is important that our banks continue. But I think we need to emphasise—and perhaps Senator Sherry could do this today—that the banks and their managements and their shareholders are being supported by the Australian taxpayer through the Australian government. That is perhaps appropriate, but it would seem to me that, as the banks are the beneficiaries of that largesse and assistance from the federal government and taxpayers, it behoves the banks then to treat all taxpayers and Australians in a similar way. And that similar way, particularly in the case of Storm Financial clients but also in relation to anyone else doing it tough with bank loans at the present time, is for the banks to act in a responsible and mature manner, recognising that it is the Australian taxpayer supporting the banks in their ‘hour of need’.

We have heard some of the stories of Storm Financial clients. These are people who have worked, scrimped and saved all their lives to put aside a nest egg so they would not be a burden on the government or the taxpayer but would be self-funded in their retirement. They have got involved with financial advisers—and I will not make any comment upon that until investigations are completed. But these people, very often retired people, were receiving margin loans from banks for hundreds of thousands of dollars when it was quite clear—and any cursory examination by the banks of their situation would have shown this—that they had little prospect of paying back the banks from their incomes unless they were able to get it by other means—that is, the share market continuing to boom ahead.

There are suggestions, which need to be investigated, that the banks acted fraudulently in lending money to people who they knew had no prospect of paying it back—shades of the subprime mortgage arrangements. I want to ask the minister at the table a question, and I would hope that he would instruct his backbenchers, who have been regimented to give their 15-minute delaying speeches, to back off a little bit so that the minister could reply to this. Will the minister, on behalf of the government, say to those banks: ‘Don’t foreclose immediately; don’t sell all the shares that people had mortgaged; but, more importantly, don’t sell people’s houses that they have collaterally mortgaged to support their margin loans’?

I think it would be helpful if someone of Senator Sherry’s standing could say to those banks that the government and, indeed, we the parliament of Australia expect the banks to deal sympathetically and understandingly with those margin borrowers so that they do not lose their houses because of capricious immediate action by banks in foreclosing and selling people up without giving them the opportunity to get out of the mess by other means. In many cases it might mean an indulgence of three, six or nine months but, because of the largesse the banks are getting from this package before us and from other packages from the government, it should not be too much to ask.

I am sure all senators have had experience of constituents who are traumatised by the collapse in the financial market, particularly those who have been involved with Storm Financial. Senator Williams and I are looking at some form of inquiry into that, and that will come later. But I think it would be useful if the minister, who is the relevant minister, could use this debate—and it is relevant to this package and other economic packages of the government—to make a statement to the banks and give those ordinary Australians who scrimped and saved to make sure they looked after themselves in their own retirement rather than falling back on the government are given some hope that they will have an opportunity, at least, of some time to rearrange their affairs before they lose their matrimonial home. Minister, I invite you to respond to that in this committee stage of this debate on the financial package.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I do have a number of responses for Senator Macdonald and also for Senator Joyce. I go to the issues relating to Senator Joyce first. Senator Joyce, in a question to the Standing Committee on Finance and Public Administration which was taken on notice, asked for some comparative data about stimulus packages around the world juxtaposed against the stimulus package we are considering here. So, at least to that extent, Senator Joyce recognises the relevance by requesting details of stimulus packages in other parts of the world.

I will not go through all the material that will be provided but I do want to indicate that the size of the stimulus package in Australia has been a matter that has been raised throughout the debate, including this morning. To run through this briefly, the stimulus package in the USA, which apparently has only just been passed, is in total US$168 billion or 1.2 per cent of GDP; Spain, $24 billion, or 1.7 per cent of GDP, with a second stimulus of $14.8 billion, which is one per cent of GDP; and Japan, $19.9 billion, or 0.3 per cent, followed by three other stimulus packages of $66.4 billion, or 1.2 per cent of GDP, $44.3 billion, or 0.8 per cent of GDP, and $16.6 billion, or 0.3 per cent of GDP.

I move to Korea—and this is South Korea, not North Korea. I noticed there was some discussion in the committee about North Korea. Frankly, the North Korean economy is a flat earth. It is hard to stimulate an economy like the North Korean economy, but the South Korean stimulus is $8.7 billion, or 1.3 per cent of GDP, then a second stimulus of $10.4 billion, or 1.6 per cent of GDP, a third stimulus of $10.4 billion, or 1.6 per cent of GDP, and then a fourth stimulus of $37.3 billion, or 5.5 per cent of GDP. In Taiwan it is US$12.6 billion, or 3.3 per cent of GDP, and then there are three more: $2.4 billion, or 0.6 per cent of GDP, $2.5 billion, or 0.7 per cent of GDP, and then $9.6 billion, or 2.5 per cent of GDP. Now the fiscal stimulus in Australia is $7 billion, or one per cent of GDP, $10.3 billion, or 1.4 per cent of GDP, $3.2 billion, or 0.4 per cent of GDP, then $28 billion, or 3.8 per cent of GDP. I do have significant further material. In Canada, it is $32.7 billion, or 2.6 per cent.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Mr Chairman, I rise on a point of order. First of all, this goes to a question on notice I asked Treasury, not the minister. The minister is reading an answer to a question that was not directed to him, yet the inference at the start was that it was directed to him. So the point of order goes to relevance. The next point is that the minister is now verging on breaching standing order 196 on tedious repetition for the purpose of filibustering. We are going through every economy in the world. If he wants to add to something, he might want to tell us how much the American stock market fell the day after the American stimulus package. I think it was about 380 points. He might want to tell us the result of that, which goes to the efficacy of the whole purpose of this charade.

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

On the point of order, Senator Joyce, any minister can answer any question on behalf of the government so Senator Sherry is in order.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I am just trying to be helpful to Senator Joyce. I understand he has not got the detailed response. I am not going to go through all of the countries. There is a lot of detail there; you asked for the detail. It has been an issue of debate. It has been an issue of discussion this morning, and I am giving you some of that detail now. Senator Joyce has claimed that I should look at the US stock market and at what has happened as a result of their stimulus package going through the US Congress. Senator Joyce, with respect, I think you are confusing the stimulus package with the bailout package. I do look at Bloomberg and CNN; I do look at the commentary. I have done that not just today but over the last year, in this financial and economic crisis. The observations made with respect to the current market response reflect the disappointment and the lack of detail in the bailout package, not the stimulus package. The bailout package, for people who are not aware, is hundreds of billions of US dollars being passed over and paid to a range of American financial institutions. That should not be confused with the stimulus package. I want to make the point that I am trying to provide detailed information, as asked for at the Senate committee hearing—and which was not available at the time—in response to Senator Joyce’s question.

Distinguishing between a bailout package and a stimulus package leads me to a couple of issues on the guarantee that Senator Macdonald raised. I firstly would make the point, Senator Macdonald, that it is not a guarantee simply for the four big banks. It is a guarantee for all APRA regulated deposit-taking institutions. That includes all banks, credit unions and building societies.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

Mr Chairman, I rise on a point of order. I hope we are not misleading the Senate. I know that is not the intention of the minister. Luckily, we are on line now and I have just had a look. A headline says ‘Wall Street tumbles as U.S. stimulus package passes’. The article is by Sheldon Alberts, the Washington correspondent for a number of papers.

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

Order! Senator Joyce, that is a debating point. You will have a chance later in the committee stage to raise that if you wish. That is a debating point, not a point of order.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

This morning I was watching the commentary on the reaction of the markets. As I said, the commentary that I observed related to the response of the markets to the claimed lack of detail in the bailout package.

Barnaby Joyce (Queensland, National Party) Share this | Link to this | Hansard source

It’s a stimulus package, not a bailout package!

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I have made my point. I am not going to waste time by adding to that. You have your view. I have expressed my view and observations and what they are based on. I will come back to the position of ADIs. As I was saying, Senator Macdonald raised the issue of the guarantee to the four big banks. It is a guarantee to all ADIs, Australian deposit-taking institutions, regulated by the Australian Prudential Regulation Authority, APRA—that is, all banks, all credit unions and all building societies. I am pleased to say that that was supported by the Liberal-National Party opposition. It was not an issue of enormous contention. It was recognised last year that there had to be a guarantee provided to ADIs.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

That’s not the question.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

You made a claim about four big banks. It is not accurate. You have your view; you have stated your position. I am stating what I believe is a broader and more accurate reflection of what happened in respect of the guarantee.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern Australia) Share this | Link to this | Hansard source

Look, my point’s the same, though, Nick.

Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Link to this | Hansard source

I will get to Storm issues in a moment, because I do have concerns. I will get to the details in a second, because you have asked about the issue. We have given a guarantee. Unlike the US and the UK and a number of other European countries, we have not given a bailout to any Australian financial institution, thank goodness. We have not had to pass over hundreds of billions of dollars from our budget to any financial institution in Australia, thank goodness. Earlier a senator—and I forget who—accused the government of reflecting a socialist approach in its bailout package. If you want to look at socialism in action, go to the United States, where a conservative government—the Bush administration—ended up nationalising, forceably merging and taking over a number of banks. That occurred in the UK, in Iceland and in some other countries. It was an understandable response to the collapsing world financial system. I think it is important to put these things on the record.

The other point I would make about the guarantee is that it has its origins in Australia, as distinct from the legislative action the government took coming from the HIH royal commission when it was observed that Australia, unlike most other countries, did not have a guarantee for its ADIs. These are important points to make.

To come to the issue which Senator Macdonald raised about the approach of the banks in respect of clients of Storm Financial, I would express it this way. The words are not the same as those made by the Treasurer, Mr Swan, in the Four Corners interview, but the sentiment and the message I would convey are. He rightly observed that, yes, Australian ADIs, including our four big banks, have received benefits as a result of the guarantee and they should deal—these are not his precise words but I share the sentiment and would make the same commentary—with great consideration, sympathy and concern with anyone, including the victims of the Storm Financial crisis, who faces foreclosure of their home, for example, an asset in many cases that was used to underline margin arrangements, and they should not be precipitous in respect of any foreclosure against persons in those circumstances. I would indicate the same message.

As to Storm Financial, the financial planning institution that provided the margin loans, Senator Macdonald quite appropriately has indicated that he did not want to go to specific questions about the ASIC investigation. I would point out that there is a formal investigation in respect of issues involving Storm Financial, the entity. I cannot provide information about what is an operational matter—it is an investigation. What I can say is that there is one area of ASIC action which is on the public record because it took place in the courts last week. ASIC secured a court order barring the owners of Storm Financial, the Cassimatis, from dealing with a $2 million dividend payment which they effectively gave themselves in late 2008. I understand that, as a consequence of the ASIC action, that $2 million dividend payment is effectively frozen. I can inform Senator Macdonald that I have spoken to ASIC about issues relating to Storm Financial. I cannot go to operational matters but they have indicated to me that they will be providing as much detail as they can, without going to operational investigations, at the Senate estimates. I have indicated that this is a matter of considerable and obvious interest to many thousands of investors. Also, it is an important matter of public interest. ASIC will be giving an update at the estimates without going to the details of operational matters because that may go to legal actions at some future date and we would not want to jeopardise that. There is a whole range of issues in relation to the Storm investment strategy.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My questions are related to those asked by Senator Macdonald—they are in a similar vein. In relation to the minister saying that the government is not bailing out any bank at this point, I want to be certain that the $6.6 billion to be spent on social and defence housing is not going to be used to bail out developers and ultimately the banks from the consequences of their imprudent activities during the housing boom. The reason is that I have had an email from a constituent saying that the first tranche of the National Rental Affordability Scheme, while it was hyped as a stimulus to construction, in fact was used to soak up a developing overhang of already built housing inventory on developers’ books. With the tripling of the first home owners grant for new housing, again it was about a stimulus to construction but, because there was no requirement that the construction occur after the date of the policy announcement, in fact it too was about bailing out developers and banks, effectively by stimulating the economy to the extent that young first home buyers would buy some of the stock which developers had built, much of it not energy efficient, as part of that development boom. The issue is then how much of the $6.6 billion is going to buy up stock which the developers have not been able to sell.

So what I am asking is: is there any requirement that the $6.6 billion for new housing be post the announcement so that you cannot just go back and bail out the developers with stock on their hands and therefore, ultimately, the banks? The government has said in its own materials that this will allow the purchase of some already existing housing and some greenfield sites. I would like from the minister some answer as to whether there are any associated regulations around the $6.6 billion to make sure that this is not effectively a bailout of developers and the banks but the stimulus—

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

Order! There is far too much audible noise in the chamber.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

that it is meant to be—to the building industry, builders’ labourers and so on. I want to know whether or not the stimulus package is, effectively, a bailout under another name.

The other matter I would like an answer from the minister on is in relation to energy efficiency. It pertains to a report by RMIT, International comparison of building energy performance standards, published in 2005. That says that the current five-star standard in Australia for energy efficiency is actually 1.8 to 2.5 stars below comparable average international levels of performance. In fact, it says that the Building Code of Australia’s five-star energy efficiency provision is not even close to the lowest energy efficiency standards currently mandated in the United States for similar climatic conditions. In that circumstance, I would like the minister to confirm that the five-star rating that Australia currently has is almost two stars below the lowest performance in the energy efficiency standards for new buildings in the United States and that that has been the case for some time.

Progress reported.