Ms Julie Bishop (Curtin, Liberal Party, Deputy Leader of the Opposition) Share this | Hansard source

I thank the Minister for Finance and Deregulation for supporting this matter of public importance today. The Prime Minister and the Treasurer demonstrated today their callous disregard for Australians—those self-funded retirees, families, small businesses and households across Australia—whose cash and savings are held in cash management trusts, in property trusts, in certificates of deposit, in debentures and in deposits in entities across this country. The Prime Minister and the Treasurer seemed not to know or care what turmoil and confusion the government has created in the deposit market.

Today, on top of the confusion, the turmoil and the chaos that has been caused by the government’s hasty, ill-informed and misjudged announcement of an unlimited guarantee on bank deposits, the Treasurer added to the confusion by announcing in question time a new tax. The government are introducing a new deposit tax on deposits of around $1 million—they are not quite sure whether it is going to be just over $1 million or right on $1 million. They are going to introduce a new tax on deposits. The Treasurer said that this new tax will be compulsory—it is not just a commercial arrangement; it will be compulsory—and he agreed that it will be on deposits, to be paid by depositors and by the banks holding the deposits whether or not the depositors wish to have the unlimited guarantee and whether or not the bank wishes to avail itself of the unlimited guarantee. That is a new tax. This raises so many questions in the minds of the Australian public. The people listening to question time will have been totally dumbfounded to find that this announcement the government made 10 days ago about an unlimited bank guarantee, apparently designed to ensure stability in the financial markets, has now created enormous uncertainty in the financial markets within Australia.

The government’s own actions have caused greater instability in the Australian financial markets than any event that has occurred overseas. What the Treasurer announced today was a new tax on deposits. Yet he was unable to answer even the most basic questions about this tax. He was asked whether or not a small- or medium-sized business with $1 million in its cheque account, put there to cover wages and working capital, would be obliged to pay the new deposit tax. The Treasurer had no answer for that question. What if the small business had $1 million in the cheque account one month, which would attract the new tax, but then the next month it fell below $1 million? What if the funds in the cheque account fluctuated week by week and month by month? How is the government going to calculate a tax on the fluctuating amounts in a deposit that is held for working capital or wages? The Treasurer had no answer on that.

What if, under the government’s new tax, an investor with, say, the Commonwealth Bank has a $1 million deposit and has to pay this tax, and another investor decides to put their deposit in two separate accounts, with $500,000 in one and $500,000 in another? Will the depositor who put in $1 million—or whatever threshold figure the government eventually comes up with—be treated differently from the other investor? The announcement by the Treasurer today was obviously news to the Secretary of the Treasury. In Senate estimates today the Secretary of the Treasury was asked about this new tax. To be fair to the Secretary of the Treasury, he had no idea what the opposition was asking him.

So obviously this is not one of those things where you can hide behind the regulators. The government will not be able to come into the House and say, ‘No, this is advice we received from the Secretary of the Treasury,’ or from Treasury, the Australian Prudential Regulation Authority, the Reserve Bank or anybody else. No, this was a decision and an announcement by the Treasurer. This was a new tax announced by the Treasurer without advice from Treasury. The government will not be able to hide behind public servants this time. They will not be able to hold up public servants as a human shield to cover their mistakes—their bumbling of the introduction of this new unlimited guarantee for bank deposits.

The government’s flawed and hasty introduction of the unlimited deposits guarantee has in fact created a high level of domestic financial crisis. This morning, however, on ABC Radio National, the Treasurer stated:

The government always recognised there would be consequences of the decision to introduce an unlimited deposit guarantee.

The Treasurer said today that the government always knew there would be these consequences. So the flight of deposits from non-guaranteed institutions into guaranteed institutions was a consequence that the government always knew would occur. And the Minister for Finance and Deregulation, who is sitting at the table, also said on ABC radio in Melbourne that the government ‘always acknowledged that there was always going to be a need for finetuning of these propositions’. He went on to say:

At some point you get to a grey area—and that’s the issue we’re currently grappling with—to define precisely where the line ought to be drawn. And of course that involves getting detailed advice from people like the Reserve Bank. This was always intended.

Well, Minister for Finance and Deregulation, you are damned by your own words. The minister for finance was a member of the cabinet committee that was sitting in Canberra on that Sunday when a decision was made—one of the most significant monetary policy decisions made in the last 30 years, at least. The minister—

See this speech in context