Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

My question is to the Treasurer. Can the Treasurer please advise the House how many local councils across Australia are exposed to financing arrangements linked to overseas subprime mortgage securities or distressed lending institutions? What will be the impact of this exposure on local government rates, charges, services and infrastructure projects?

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the member for his question. The government is aware that some local government councils around Australia are exposed because they have had investments in organisations such as Lehman Brothers. Some may have had investments in other subprime type products.

Most of the high-exposure councils appear to be in New South Wales and Western Australia. All other states have relatively little exposure to these types of investments. Of course, as we all know, local government is established by state and territory legislation, and it is the responsibility of the states and territories to exercise proper financial oversight of council investments. I note that the New South Wales and Western Australian governments have commenced reviews of the local government investments in 2008 and have certainly significantly tightened up on the oversight of local government.

I am also aware that some councils in New South Wales are contemplating legal action to recover some of the investments. So that is the extent of our knowledge of the exposure of local government to these investments, but as we have been saying in this House for a long time and has become readily apparent in recent times—

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Speaker, a point of order on relevance: I was specific in my question—how many local councils and do you know?

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The member for Cook will resume his seat. The Treasurer is responding to the question.

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I know he is a new shadow minister, but the truth is that they are not accountable to us. But we certainly do take a deep interest in these issues.

Scott Morrison (Cook, Liberal Party, Shadow Minister for Housing and Local Government) Share this | Link to this | Hansard source

Mr Morrison interjecting

Wayne Swan (Lilley, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

If they want to play this silly game, when were these investments made and were they accountable to the previous government? If you want to play that serious game, when were the investments made? Many Australians, who are very genuine, and many organisations, both government and corporate, have made investments in these products. They are going to live to regret the investments in these products. People around this country and around the world have been victims of what has been the fallout from the US subprime crisis. We have said repeatedly that we need to strengthen our system as much as we possibly can. As I have said to the House on a number of occasions, we are implementing in full all of the recommendations in the Financial stability review, and we have been doing that this year. We have introduced legislation in this House to pursue those recommendations, to strengthen our financial system. We will continue to do that.