Kelly O'Dwyer (Higgins, Liberal Party) Share this | Link to this | Hansard source

I rise to take note of the Review of the Reserve Bank of Australia annual report 2012 (first report) specifically to highlight an issue that the committee was made aware of during the recent oversight hearing of the Reserve Bank, just the other month. It was at that time that the committee first had an opportunity to speak with the Governor of the Reserve Bank about an issue that had been raised in MYEFO—that is, the paying by the RBA of a half-a-billion-dollar dividend from the Reserve Bank Reserve Fund. This was the first opportunity we had to publicly scrutinise this dividend payment.

I was particularly interested in this dividend payment because less than two years ago the Reserve Bank described the Reserve Bank Reserve Fund as having a capital level of around $6.2 billion. At that time, in the annual report, it described it as:

… modestly below that which the Board regards as desirable in the long term …

Less than two years after that statement, we have seen a hit to the Reserve Bank Reserve Fund. That hit was just over $4 billion—in fact, it was well over $4 billion. This means that the bank's capital is actually below $2 billion now.

This is quite concerning. Two billion dollars is not much of a reserve fund, particularly not in today's times, and it is certainly well below the amount that the Reserve Bank itself said was adequate and desirable in the long term. So one would think that in fact every opportunity that the Reserve Bank got to put money back into the Reserve Bank Reserve Fund would be duly taken—but not so. When I queried the Reserve Bank governor about the government taking a $500 million dividend—that is half a billion dollars—from the Reserve Bank, I asked him whether his advice had been sought. He said that it did not quite work out that he was asked for approval, despite the fact that, under the law, he is required to have his advice asked for. He said that he provided his views to the Treasurer that he thought ripping $500 million out of the Reserve Bank Reserve Fund would not be a prudent course of action. I am paraphrasing him here; I am not quoting him directly, but he gave very clear evidence on the Hansard that it was not his recommendation for the government to be paid this half-a-billion-dollar dividend and that in his mind the money ought better to go back into the Reserve Bank Reserve Fund.

I raise this because this is part of a pattern. Part of the pattern of this government's behaviour is its ripping out of dividend payments not only from the Reserve Bank and the Reserve Bank reserve funds but also from other government organisations. We have seen the same pattern in the case of both the Export Finance and Insurance Corporation and the Australian Reinsurance Pool Corporation, which paid a one-off special dividend in 2012-13 totalling not $10 million, not $20 million but $300 million. We have seen other money shuffles in the 2012-13 budget, where Medibank Private was required to pay $391 million in dividends this year—more than three times Medibank Private's latest profit of $126 million—which amounts to almost $250 for every policyholder. Why is the government ripping this money out? There is one very clear answer: the government has desperately sought to bolster its budget bottom line because its spending is out of control and is going to the wrong priorities. This government is spending more than $90 billion each and every year over and above what was spent during the last years of the coalition government.

But lest you think that that is the only money being ripped out of Medibank Private, I tell you that this government has in fact taken over $850.6 million out of Medibank Private over the three years since Medibank Private converted to for-profit status in 2009. This concerns us, and I am sure that it concerns every Australian. Ultimately, when the government rips this money out and has in addition to borrow money to cover its spending, it hurts current taxpayers, who end up having to foot the bill, and future taxpayers—the next generation of Australians—who will end up footing the bill for the government's incompetence, waste and mismanagement. This profit-stripping of Medibank Private must seriously weaken Medibank Private's balance sheet, and I think it is right for us to understand how Medibank Private has funded the payment of the dividend. Has it had to borrow money to fund the dividend? Has it had to maintain higher borrowings than it otherwise would have if the dividend payments had not been made? The government has not answered these legitimate questions, and it must answer them. When you consider the money which has been stripped out of Medibank Private and the Australian Reinsurance Pool Corporation, and when you consider the money has now been shipped out of the Reserve Bank reserve fund—half a billion dollars—you can only come to the following conclusions: this government does not know how to manage the budget; this government is not prudent with the finances of Australians; this government is reckless in its disregard for the future impost on taxpayers.

The government has sought to increase the taxes on private health insurance. We have seen them rip more than $4 billion out of private health insurance. One can only ask the following question when considering Medibank Private: if this money had not been stripped out of private health insurance, would it mean that people would not have to pay higher premiums on the whole? Who knows the answer to that question?

There will be a change come 14 September, and we hope it will be a change for the better in the form of a return to the responsible economic management that we saw under the former Treasurer, Peter Costello, and a coalition government which understood that you cannot spend—

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

How many times did he get a AAA rating from all three ratings agencies?

Ms O'DWYER: That is a very good point you raise about AAA credit ratings. Let me just put on the record for my friend on the other side that, after repaying $96 billion of Labor's debt, the Treasurer was able to restore Australia's AAA credit rating in 1986 and 1989. This is something that he was able to do after repaying $96 billion of Labor's debt.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member for Moreton will cease interjecting.

Ms O'DWYER: Sorry; he was quite right to call my attention to that. Those dates were the dates when we dropped credit ratings. We were able to restore the balance sheet under the stewardship of Treasurer Peter Costello, after we had dropped our AAA credit rating in 1986 and 1989. Clearly I needed another coffee this afternoon before coming to speak in the chamber!

It is an important point that you raise: we need to ensure prudent, responsible economic management. This can only be delivered by a coalition government. It will be delivered under the leadership of Tony Abbott and the treasurership of Joe Hockey. The 14th of September cannot come soon enough for all Australians.

Federation Chamber adjourned at 17:21