Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

I thank the honourable member for Kingston for his question. I can inform him that, as part of a six-monthly review, the Reserve Bank today has published a financial stability review of the Australian financial system. It finds that the banking system remains well capitalised and highly profitable, with bad debt levels that are low by both historical and international experience. It also notes that the rate of credit growth has been slowing in Australia from rates of about 20 per cent for household credit growth in 2003 and early 2004 to rates of about 13 per cent in 2006. Similarly, personal credit growth has slowed from around 15 per cent to 10 per cent in the same period.

The Reserve Bank also notes that households do seem to be taking a slightly more cautious approach to finances. Again, if the household sector is saving a little more, that would be a welcome thing. We are seeing a rebalancing of growth in the Australian economy out of consumption and towards the export sector. You cannot maintain credit growth at 20 per cent per annum year after year without that catching up with areas where the economy becomes unbalanced. To see stability arising in relation to the housing market and to see some slowing in relation to credit growth is actually quite a welcome thing.

The Reserve Bank also notes in its report that banks are moving to higher ratios in some of their loans and seem to be moving increasingly to what are called ‘low doc’ loans, where there is less supervision and more self-verification in the application process. The Reserve Bank notes that banks need to be careful that they do not overly relax credit standards, and that is something the government would most certainly endorse. This is a good report of a sound and stable financial system, which has been given by the Reserve Bank, noting important developments in the economy.

While I am on the subject of stability, I should also note another area of stability, in the political firmament, that I think all members of the House would want me to acknowledge and welcome, and that is that we on both sides of the House are very pleased to see that the member for Hotham has been re-endorsed in his preselection. We congratulate him for standing up to the roosters—the Shorten, Conroy, Pakula group—who tried to execute him in a chicken cull! The roosters went on a chicken cull!

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