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

My question is to the Prime Minister. Is it the Prime Minister’s contention, based on his remarks yesterday and today, that, as at 12 October, none of the Treasury, the Reserve Bank, APRA or ASIC had advised the government that an unlimited deposit guarantee carried with it the risk of causing a flight of capital from non-guaranteed funds and institutions to those institutions benefiting from the government’s unlimited guarantee?

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

As I have said in response to questions by the honourable member before, the government took decisive action on the weekend in question based on the advice provided to us by the Secretary of the Treasury following his own consultations with the regulatory authorities, including the Reserve Bank. That is the basis of the government’s action. The government stands by that action. It was necessary in order to maintain stability in the financial system. If the Leader of the Opposition, the alternative Prime Minister, were out consulting with business at the moment and asking the business communities and the finance communities what their response to the government’s guarantee is at both levels, it would not reflect the tonality of his contribution to this debate. They have welcomed a statement of confidence and action by the government, as opposed to those opposite, who are engaging again in short-term politics.

Again, I go to the clear contrast between the policy of those opposite and that of the government. On the $100,000 guarantee which those opposite have put forward, let us be very precise: that leaves marooned 40 per cent of total deposits. That leaves marooned, according to Treasury advice, 750,000 deposit accounts in the country. In other words, the Liberal policy, the opposition policy, the alternative government policy, as reiterated again today by Senator Brandis, a member of the shadow cabinet, is to leave out there without any guarantee whatsoever 750,000—that is, three-quarters of a million—deposit accounts. That is what Mr Turnbull stands for.

Our alternative is to provide a guarantee for all deposits. Those deposits which are in excess of $1 million represent 0.5 per cent of deposit accounts. Under government policy, all deposits are covered. For the 0.5 per cent of all deposit accounts with more than $1 million, the regulators are discussing what insurance premium should apply to them. By contrast, the policy being advocated by the alternative government is to leave out there without any protection or any guarantee whatsoever 40 per cent of this nation’s deposits—750,000 deposit accounts. That is the difference between a government which has taken decisive action on behalf of the stability of the entire financial system and which is mindful of the interests of all depositors and those opposite who would cut loose three-quarters of a million depositors across the country. I say to the Leader of the Opposition: there is a difference between providing early, firm and decisive action in support of the financial system and in support of the long-term growth of this economy and the short-term, populist politics in which the Leader of the Opposition now specialises.