Deborah O'Neill (Robertson, Australian Labor Party) Share this | Hansard source

I am mindful of people in the gallery today, and perhaps people listening to parliament, understanding where we are up to. Last night we were having a conversation about this very important legislation that once again demonstrates the government's commitment to competition and consumer law reform, which does impact on the lives of ordinary Australians. The bill on which I was speaking when we stopped our debate last night at 7 pm so that adjournment speeches could proceed, as they normally do, between 7 pm and 8 pm is the Competition and Consumer Amendment Bill (No. 1) 2011. The bill contains a number of regulations that I consider to be very appropriate and much needed, because the banks certainly need to be responsible when they are making their pricing decisions.

We have to give significant credit to the Australian banking sector because during the global financial crisis they weathered the storm far better than many other banking sectors around the world. This was due both to good economic management by the Australian government and to generally good long-term management by the banks. But, despite this history of good management, the banks should not have the ability to engage in anticompetitive practices to the detriment of customers, who are the ordinary Australians we represent here in this place.

Our economy is greatly influenced by consumers who live in mortgage belts, and I certainly live in one of them on the Central Coast of New South Wales. We are an outer regional area on the edge of Sydney and we have a very fast growing population, many of whom have mortgages and are significantly impacted by any variation that the banks make to our credit. Gosford City local government area has experienced the 19th largest population growth in New South Wales. The Wyong Shire local government area, represented by my colleague the member for Dobell, has experienced the 10th largest population growth in New South Wales. So there are a lot of new houses being built.

These population growth numbers need to be considered in addition to the fact that the adult children of the families that moved to the Central Coast in the 1980s and 1990s are now of home-buying age. The general implication of this is that the Central Coast, as a mortgage belt, is significantly affected by unnecessary practices—if I were unkind I might even say collusive practices, at the very worst extent of behaviour—to the detriment of families in my electorate.

It is always ideal that in times of economic growth governments ensure there is downward pressure on interest rates. We must, however, always remember and recognise the important role of monetary policy, as set by the independent bank. Indeed, I recognise that it was both Labor and coalition governments that reformed monetary policy and enabled the establish­ment of our current inflation-targeting system. While increases in the cash rate undoubtedly cause mortgage holders great stress, the prospect of inflation is just as detrimental to ordinary Australian workers and their families. Indeed, inflation is often the most detrimental economic problem that a country can experience. Inflation would be very detrimental in my electorate because of the high population of retirees, many of whom rely on fixed incomes. Additionally, the effective control of inflation ensures the increase of real incomes and therefore the increase of the standard of living. While as a mortgage holder I am always concerned about rate rises, I nonetheless have great respect for the role of the Reserve Bank in making tough economic decisions that provide for the long-term, stable economic growth that is essential in our society.

The role of monetary policy is, however, eroded when banks increase their interest rates beyond the increase in the Reserve Bank target. The banks in our economy are able to make their pricing decisions independently and, in my opinion, this is acceptable. What is not acceptable is the ability of banks and financial institutions to tacitly collude in their pricing decisions following a cash-rate increase. Such actions are uncompetitive; such actions are detrim­ental to working families; such actions may be beneficial to individual banks but they are certainly detrimental to the economy as a whole. To ensure that this situation cannot continue and to ensure competition remains very healthy in our banking sector this bill will address those issues. An important aspect of the bill is that it provides exceptions to the banks relating to the information that they can disclose. These exceptions are detailed and concern the legitimate sharing of information in a variety of circumstances. They include disclosures between related bodies, corporate disclosures and disclosures covered by exclusive dealing.

This bill also contains appropriate arrangements for banks to seek immunity where their conduct provides a net public benefit. The ACCC will have the appropriate power to determine if immunity from provisions is appropriate on the grounds of a net public benefit. This bill provides a balance between providing for a free and competitive banking sector and providing sensible regulation when it is needed.

Whilst both sides of the House contributed to reforms on monetary policy, I once again affirm my strong belief that Labor is the party of competition and consumer law reform. The success of this government and this parliament in reforming and modernising the law in relation to competition and consumer law, national consumer credit law and personal property securities must not be overlooked. These reforms that the govern­ment has succeeded in passing through this parliament are empowering economic reforms. They empower communities, cons­umers and small businesses and they also ensure that regulation is appropriate for the economic conditions and circumstances of this nation as a whole. This compares with the divisive and ideology based policies that those opposite dream about implementing.

The classic is what we saw in the Work Choices legislation that the opposition put before the Australian people. If only Work Choices had remained a bad dream. Instead, the impact of that nightmare is still fresh in the minds of all those Australians caught up in a gross distortion of fairness for workers. It was enacted by those opposite, who are interested in ideology rather than the real lives of ordinary Australians. This legislation is about impacting positively on real Australians and ordinary lives.

We do have to recognise that a strong and healthy banking and financial sector is fundamental to our economic health and that the actions of our banks do affect ordinary people. Indeed, it was the actions of banks and financial institutions—certainly in other contexts—that inappropriately provided low documentation credit to people who were really unsuitable to manage that level of debt that they got themselves into. The end result was the crash of the financial system in the United States and the global financial crisis that ensued and caught all of us in its wake.

In Australia we have responded in an excellent manner to these issues and I believe that we have struck a great balance between ensuring a healthy financial sector and ensuring that consumers are not exploited. Our banks, due to their superior regulations, did not experience the same crisis that banks in the US and UK experienced. An effect of the global financial crisis has, however, been the increased difficulty for smaller lenders to effectively compete in the Australian market. The ability to compete becomes even more difficult if the larger banks are allowed to collude in relation to their pricing policies.

This legislation provides protection for smaller lenders, many of whom are regionally based. This legislation allows for the reality that we need to construct a regime in which large banks are forced to act competitively. This legislation once again demonstrates the superior economic manage­ment of this Labor government. This is a government that is absolutely committed to reforming the economy so as to ensure that our economic strength is something that not just benefits the few but, in fact, benefits all Australians, and that we all move forward together.

I believe that this bill succeeds in advancing this great objective. In saying that, I echo the words of the Treasurer who in his second reaching speech indicated clearly that the bill strikes an appropriate balance between allowing legitimate or pro-compet­itive conduct and cracking down on anticompetitive price signalling which harms consumers. It is an important reform and will help ensure that banks can no longer avoid the full force of competition in the marketplace.

The Gillard government is absolutely committed to getting a better deal for Australian families and small businesses in the banking system. I encourage all members of the House to support the passage of this bill and I commend it to the House.

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