Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is again to the Prime Minister. I refer to the Prime Minister’s answers to my previous questions. Is the Prime Minister then ruling out entirely any additional prudential supervision of institutions receiving the benefit of the wholesale term funding guarantees?

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

First of all, the only institutions which would be eligible for this guarantee in the first place are APRA regulated institutions—first and foremost.

Malcolm Turnbull (Wentworth, Liberal Party, Leader of the Opposition) Share this | Link to this | Hansard source

Mr Turnbull interjecting

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

The honourable gentleman says he knows that. It is not necessarily reflected in his previous questions. Further, when APRA assess the eligibility for each institution for their individual access of this facility, APRA will further assess their circumstances, as you would expect. On top of that, APRA’s wide-ranging powers now, as the honourable member would know, enable APRA to go into the books of any institution at any time to make any assessment about their overall credit worthiness. That is the context within which the specific measures that I referred to before occur. Those specific measures go to the actual construction of the insurance fee or the fee imposed on the institution using this facility for the future. That, in turn, is designed specifically to encourage institutions, once global credit circumstances return to normal, to then return to the normal credit market. Therefore, the framework is this: APRA with enormous powers; APRA regulated institutions only being those capable of using this facility; APRA going through each institution upon application for use of this facility; and then the individual construction of the fee itself applied to each institution being designed and tailored in a way to encourage institutions to return to the normal credit market when the credit market normalises.

I conclude by saying this: this government remains determined to take whatever action is necessary to maintain the stability of the Australian financial system. We do not baulk at any measure. We have indicated our determination to take decisive action when it is necessary. We did that yesterday and we have done so ahead of the international curve.