Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

As the honourable member knows, as in my previous answer to his question, I am dealing with the process for the final determination of the arrangements for the premiums to be attached to term wholesale funding arrangements and those which may apply to depositors at the upper range of a million dollars or slightly beyond. In the normal course of events, that will be determined after proper consultation with the regulators. That is the proper way to do business. I would say to the Leader of the Opposition, having answered his question, that we on this side of the House have taken decisive action to ensure that we have soothed financial markets. We have taken decisive action because every mum and dad in the gallery today would like to know that their deposits are guaranteed. Under the actions of this government, that guarantee has been provided. Furthermore, as a consequence of that action, we have also seen, through the other actions taken by the government, downward pressure on interest rates.

The Leader of the Opposition does not want to hear this, but what has happened in the period since the government took this action? We have seen confidence increasingly restored, when we had so many mums and dads out there concerned about the banks, having watched all the negative news on their television sets coming from abroad, because we acted with a decisive policy statement on the guarantee. Those opposite, wedded to this position, maintained that they would make a guarantee available only on deposits up to $100,000, leaving therefore unguaranteed, unprotected, according to Liberal Party policy, 40 per cent of all deposit accounts. That is quite extraordinary—40 per cent of deposits.

So what I would say to those opposite is simply this: on this question, those opposite need to reflect long and hard on the consequences of the actions which the government has taken in providing confidence to mums and dads out in the community. Secondly, on the question of the impact which these decisions by the government have had on the banks, look at what has happened with interest rates in the last week or so. We have had all four major banks bring down interest rates by between 20 and 25 basis points. If you look at the statements which have been put forward by the NAB and the ANZ, what have they said? The NAB have said:

... policy measures announced by the Australian Government earlier this month have started to have a positive effect ... we hope to be in a position where we can pass on further interest rate cuts to our customers.

That is as a direct consequence of what the government has done—unwelcome news on the part of the Leader of the Opposition but I would say a good piece of news when it comes to those out there with mortgages. Listen to what the ANZ Chief Executive Officer has said:

We are pleased to deliver on the promise we made in January to pass on reductions in funding costs as we see market conditions easing.

Then he goes on to say:

... policy measures both here in Australia and around the world have restored some confidence in the global investment community and this is resulting in an easing of high wholesale funding rates.

These are the concrete actions which have flowed as a consequence of what the government did Sunday week ago. The Leader of the Opposition is out there with his own policy on guarantees of deposits up to $100,000 but not beyond that, leaving everyone else out there without guarantee. That is his approach. Our approach is strong decisive action which has not only helped in terms of confidence in the general community, with mums and dads concerned about their deposits, but also with the cost of finance for mortgages.

Our action has also been supported by the Treasury and by the Reserve Bank. The Leader of the National Party laughs at this. I would suggest that those opposite should not laugh when it comes to further undermining of this country’s independent financial institutions. The Reserve Bank said the other day that the decisions taken by the government were sensible and that the RBA supported them. Furthermore, Dr John Laker of APRA said:

The government’s deposit term and funding guarantee, which APRA fully supports, has calmed what was a growing disquiet on the part of some depositors.

Put all these things together and you had the Australian Prudential Regulatory Authority backing the government’s actions when it took its decision; you had the Reserve Bank of Australia backing the government’s actions when it took its decision; you had the Secretary to the Treasury doing the same; you had the mainstream commercial banks saying that because of these actions the actual cost of finance flowing through to consumers has been reduced and they themselves saying so explicitly in their statements. That is what the government has done. We have the support of these independent financial regulators.

Those opposite, lead by the Leader of the Opposition, have spent their entire time undermining the integrity and the independence of these independent institutions. Earlier this week, the Leader of the Liberal Party came to the dispatch box and said—

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