Gerard Rennick (Queensland, Liberal Party) Share this | Link to this | Hansard source

I rise today to speak about monetary policy and the need to reform our monetary policy system. I will be presenting a number of new policies that I think are needed to reform our system. Let me say that monetary policy is the key to a nation's sovereignty. Any country that uses foreign debt to fund its way of life is doomed to destroy itself. For too long, our RBA has allowed foreign debt to control our markets and dominate our capital markets instead of using domestic equity. That starts within the government itself.

If I were to stand here today and say that I wanted to introduce a private member's bill that was going to block private companies from issuing new capital, I'd be rightly laughed out of the chamber, yet that is the attitude we have toward our own government when it comes to building infrastructure. The 1937 banking royal commission—of which Ben Chifley, the former Labor Prime Minister, was a member—recommended that the central bank must always control the volume of credit in the system. That is something that in 1985 Paul Keating, when he relaxed capital controls, threw under the bus. I'm sure Ben Chifley must be rolling in his grave, because what has happened since then? In 1985, the four major banks had $8 billion in foreign debt. By 2008, they had $800 billion in foreign debt. That basically was lent against housing, which increased the price of housing to double the price of houses relative to income. That has led to much poverty and hardship amongst hardworking Australians.

If we want to deal with capital in this country, we have to stop relying just on the one monetary policy lever of qualitative easing—that is, where we change the price of money on the first Tuesday of every month. Listening to the discussion amongst the major parties talking about how many boards the RBA has got or should have is like shuffling deck chairs on the Titanic. Instead of talking about qualitative easing and how many boards the RBA should have, we need to look at two other levers that are very important when it comes to managing monetary policy.

One is quantitative easing through the use of infrastructure bonds, which, from a government perspective, is no different to a private company issuing new shares. If you have equity in a company, you're entitled to issue new shares to raise new money.

As a sovereign country, we have title over this country. We're entitled to issue new shares in the form of infrastructure bonds against seven sovereign assets. They are: dams, power stations, road, rail, ports, airports and telecommunications. If we were to set up an infrastructure bank in this country, which is one of the policies I'm proposing, the infrastructure bank could then issue infrastructure bonds to the state and federal governments to build that much-needed critical infrastructure. We need to use that method because that way we would retain the wealth generated from those assets in this country.

What we do currently is, if we want to build a dam for a billion dollars, we will go and source that billion dollars in foreign debt offshore. That means that the first billion dollars we make in wealth from that dam has to be repaid offshore. If you're lucky, you might repay that debt over 25 years at four per cent. That's another billion dollars in interest that gets repaid offshore. So at least 200 per cent of the cost to capital goes offshore because we pay another country to use their printing press. That type of capital management is doomed to impoverish our children. Our forefathers fought for that right, for that untapped wealth in this country. It is wealth for toil. We have title over that untapped wealth and we have to retain it here.

But not only should we have an infrastructure bank as part of our monetary policy; we should also restore a public bank and a government insurance office. Since the CBA was privatised, we have seen an alarming number of bank branches close, not just in the regions but in metropolitan areas as well. There are many sectors of the community that rely on bank branches to do their banking, whether it be for cash or face-to-face services. Our regional communities and our retirees don't want to use internet banking. I think that banking is an essential service, like health and education. We should by all means have private banks, but we should have a public bank as a backstop.

The other thing we need is a government insurance office. Since the state governments privatised their insurance offices we have seen insurance premiums rise by double-digit figures year on year. We have seen many Australians unable to obtain insurance. I would rather have a government insurance office than waste $10 billion on a reinsurance pool that will end up in the pockets of foreign multinationals.