Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister representing the Treasurer, Senator Wong. Can the minister advise the Senate on the importance of the government's ban on mortgage exit fees?

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

I thank Senator Hurley for her question and her interest in matters economic, which sets her quite apart from those opposite, who appear to be intent—

Honourable Senators:

Honourable senators interjecting—

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

Senator Wong, resume your seat for a moment. Senator Wong, continue.

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

Those opposite appear to be intent on ensuring they have no economic credibility and no fiscal credibility. Hard-wired to oppose everything and intent on wrecking the surplus, they are also intent on blocking reforms which are about increasing competition in the banking sector—reforms aimed at assisting Australian consumers.

In December last year the government announced that we would scrap mortgage exit fees on new home loans for all Australian consumers. This was passed into law earlier this year and will apply from 1 July, just a couple of weeks from now. We understand that exit fees are one of the biggest barriers to competition in the banking system. If the opposition do not believe us, perhaps they might listen to consumers and perhaps they might listen to Choice, who said that banning exit fees 'is about giving power back to the most important people in Australia's banking sector—consumers'. Unfortunately, for those opposite the most important people in the banking sector are clearly not Australian consumers. Clearly the most important people in the banking sector for those opposite are the banks, not Australian consumers. Unfortunately, what we have seen over the weekend is the shadow Treasurer, Mr Hockey—

Senator Cormann interjecting—

Senator Cormann is interjecting endlessly. Perhaps he did not know Mr Hockey was going to say this. We know that Mr Hockey is a little bit keen on making announcements when he feels like it, but Mr Hockey has made it clear that the opposition is going to challenge the ban on exit fees in the coming weeks. Opposition: opposing this reform. (Time expired)

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

I just remind senators—

Senator Cormann interjecting—

Senator Cormann! I remind senators that constant interjection is completely disorderly. Senator Hurley.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Thank you, Mr President. I have a supplementary question. Can the minister outline to the Senate why it is important that all consumers receive protection from mortgage exit fees, not just customers of big banks?

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

Those opposite seem to have forgotten this proposition: the removal of exit fees is about pressuring lenders to compete on upfront price and customer service or face the risk that people will walk down the road and go to another bank, go to another lender to get a better deal. Unfortun­ately, there have been some who have suggested that the ban on exit fees should only apply to the big banks and that all other lenders should be exempted. However, the fact is that unfortunately it is some of the smaller wholesale lenders who are actually those who charge mortgage exit fees as high as $7,000 to lock their customers in. Exempting those lenders, as the opposition is calling for, would mean Australian con­sumers who take out loans with those lenders could be locked in. They would not be able to move even if it were otherwise financially sensible for them to do so. (Time expired)

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Mr President, I have a further supplementary question. Can the minister outline to the Senate other government reforms to support smaller banks?

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

This government has extensively assisted smaller lenders. One of the streams of the government's banking reform package was dedicated to supporting smaller lenders. This included investment in the residential mortgage backed securities market of some $20 billion, and we know that smaller lenders rely heavily on the RMBS market to fund their lending. But the fact is those opposite cannot hide behind the argument about smaller lenders when they have a government that has stepped in to assist that sector. They cannot hide behind the argu­ment around smaller lenders because the reality is that what they are actually arguing for is barriers to competition. That is exactly what the opposition are arguing for—they want Australian consumers to pay higher exit fees. The question is this: why are the opposition so intent on demanding that Australian consumers pay more fees? (Time expired)