Andrew Murray (WA, Australian Democrats) Share this | Hansard source

I have been known to rescue the Senate before, Mr President, but hopefully my speaking first will cause the opposition some consternation because I am not going to be speaking for long, so the opposition needs to find its speaker. With those brief remarks, I turn to the bill before us, the Commonwealth Securities and Investment Legislation Amendment Bill 2008. The bill amends three acts to empower the Treasurer to borrow money on behalf of the Commonwealth by issuing stock in Australian currency and to invest public money in authorised investments. The bill also expands the types of assets that are acceptable as collateral in Commonwealth securities lending arrangements.

The explanatory memorandum for the bill says that it wishes to ensure the efficient operation of Australia’s financial markets by paving the way for the issuance of a further $25 billion worth of Commonwealth government securities, especially fixed coupon treasury bonds. The Treasurer’s media release of 20 May 2008 said:

The Government’s decision to increase CGS issuance—

in other words, Commonwealth government securities issuance—

is consistent with the decision of the previous federal government—

the Howard government—

announced in the 2003-04 Budget, to maintain the CGS market. In announcing that decision, the previous government noted that “this will entail ensuring sufficient CGS remains on issue to support the Treasury bond futures market”.

I think the point of this bill is that it continues a sensible decision by the previous government, the Howard government, which was toying—on advice, as I understand it—with the idea of withdrawing from the bonds market altogether. I recall the discussion and consternation that that caused in the financial media and in financial securities markets, because essentially the status of the Commonwealth government in the bonds market is essential to underpin both its activity and its continuity. It is very important that the Commonwealth does indeed remain an active player in the bonds market.

One of the reasons that it was under review was that the Commonwealth felt at that time that it had no financial reason for needing to be in the bonds market. Debt had been very significantly reduced—I think the coalition will claim that it was reduced altogether, but of course there are others who take the view that, if you take an expansive view of debt, namely to do with long-term liabilities including superannuation, that is never so. But the fact is that the government’s cash flow was and is strong. It remains strong. We are generating surpluses. Our income is ahead of our expenditure. On those grounds, you would not normally need to raise funds, because you are highly liquid. So, if you were a company, you would not be in the bonds market. But we are not a company; we are a Commonwealth, and it is very, very important to the stability and the future, the certainty and the status of our financial securities markets that we remain in the bonds market.

With those remarks, you will gather that the Democrats support this bill. We have long been supporters of the bonds market. If the coalition had decided—which they did not, very wisely—to pull out of the bonds market, we would have opposed that because we would have thought it a wrong policy. But they did not adopt that policy, so that is good. We think this bill deserves the support of all parties, and I therefore commend the bill to the Senate.