Julia Irwin (Fowler, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. Minister, how is the government’s economic security strategy addressing the challenges presented by the global financial crisis? Are recent criticisms of the government’s strategy accurate?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank the member for Fowler for her question. We have seen in recent times unprecedented turmoil on global financial markets and, as a result of that turmoil, the Australian economy faces significant threats. The Australian economy is in good shape. It is strong, but it is not immune from the threats that flow from the unprecedented turmoil on global financial markets. In response, the government has taken decisive action to guarantee bank deposits, to guarantee the wholesale borrowing by Australian banks and to inject $10 billion as a stimulus into the Australian economy. All of these actions aggregated together, along with the fall in the value of the Australian dollar and the decline in interest rates in recent times, will ensure that we keep growth and economic activity ticking along and will help to ensure that we protect Australia as much as possible from the adverse effects of the global financial crisis.

It is true that the government strategy has been criticised, sadly. Unfortunately, it has been criticised by people who claim to support it; namely, the opposition. After initially saying they supported fully and absolutely the government’s strategy, the opposition have spent the last week walking away from that position, sniping at specific parts of the package and saying they would have done it all differently, without of course specifying how they might have done it differently—just that no, no, they would have done it all differently. Just a few days ago the Leader of the Opposition was alleging that the government was hyping up the international crisis. A few weeks ago he was saying that this was the gravest economic crisis globally in any of our lifetimes. Just a few days ago he was attacking the government for not foreseeing the global financial crisis when, a few weeks ago, he was suggesting that nobody could have foreseen the crisis.

The Leader of the Opposition is not short of an opinion on these issues. He is not short of an opinion on most issues. In fact, if you wait for a week on any issue you will get all the available opinions on that issue across the spectrum from him. He will contradict himself several times in an effort to walk both sides of the street and to insert himself into the day’s story, whatever ‘today’s’ story might be. But there is one remarkable fact in the opposition’s response to the government’s strategy on these unprecedented circumstances. There is one part of the government’s strategy, one aspect of the position outlined by the Prime Minister, on which the opposition has been remarkably quiet, and that is the government’s intention to address the issue of excessive executive salaries, especially in the financial services sector. Apart from the odd platitude on the part of the Leader of the Opposition about leaving it up to shareholders, he has said very little about this aspect of the government’s strategy.

I wonder why the Leader of the Opposition would have so little to say about the government’s intentions to pursue reform of excessive executive salaries. I think I know the answer. He is worried that we might make it retrospective. He might have to sell a few Picassos or something. I can assure the Leader of the Opposition that the government is approaching this, along with other issues, in complete seriousness. Indeed, the Prime Minister has advocated in the international forums that are pertinent to this a change to the international rules covering the capital adequacy ratios that apply to banks and financial institutions to take into account the perverse incentives that currently exist for executives in major institutions to take short-term excessive risk and be rewarded excessively for taking that risk. I look forward with great anticipation to a robust contribution from the opposition, including the Leader of the Opposition, on this issue. With any luck they might adopt a single policy and stick to it.