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

My question is addressed to the Prime Minister. Given that Australia’s banks now benefit from the Australian taxpayer backed wholesale funding and deposit guarantees, when will the Prime Minister finally change his tune and join the coalition in unequivocally telling the banks to pass on any official interest rate cut in full to borrowers across the country—no ifs, no buts, just pass it on?

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

I thank the Leader of the Opposition for his question. I have noted from the newspapers in recent weeks how convivial the relationship is between the Leader of the Opposition and the Australian banking industry. I suggest to the Leader of the Opposition that at a time of global financial crisis the stability of the banking system is of first and fundamental importance. I remind the Leader of the Opposition that of what Treasury advised me to be 13 AA rated banks around the world today four are in Australia. Some six or seven are in Canada. That goes to the effectiveness of Australia’s prudential regulatory authorities. It also goes to the way in which the banks have conducted their own financial arrangements.

On the question of interest rate reductions, I also find it remarkable that the party represented by those opposite, which presided over 10 interest rate rises in a row, would provide anyone on this side of the House with a lecture about how interest rate policy should be conducted in this country. I suggest that the Leader of the Opposition should reflect on his own statements in recent times, in which he said that a 25 basis point rise was nothing to get terribly excited about. I say to the Leader of the Opposition that the government’s position today is as it has always been, and that is that any official interest rate reduction should be passed through by the banks as rapidly as possible.