Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Hansard source

We are not immune from these global difficulties, as I have said before, but we are better placed than most countries to weather the storm. It remains the case that our banks are well capitalised and well regulated and do not face the same problems as are being experienced in the US. The government is in regular contact with our regulators. The government has been advised that Australian deposit-taking and insurance companies supervised by APRA are well capitalised, profitable and well regulated and are weathering the turmoil well. Australian depositors can be confident in the soundness of Australian financial institutions.

Our major banks have announced relatively modest exposures to Lehman Brothers, and the regulators have advised the government that these are manageable and in no way take away from the very strong state of our financial sector. It is also important to point out that the Commonwealth government has negligible exposures to Lehman Brothers through the Future Fund. I am sure the states will make any announcements on any exposures, should that be appropriate, as some already have done. The merger of BankWest’s parent, HBOS, in the UK with Lloyds, facilitated by UK authorities, has strengthened the BankWest parent company and the group as a whole. APRA is in regular contact with the UK authorities to ensure the interests of Australian depositors are looked after in the merger process.

On US measures to support AIG, the Australian government welcomes the actions by the Federal Reserve which have the full support of the US Treasury. This announcement will provide much-needed support to the AIG and the broader US market. The Australian government has only negligible exposures to AIG. We are confident that banks and state governments will announce any exposures, should that be appropriate.

It is important for me to reiterate that although we are not immune to international effects we are better placed than most to weather this storm. We have a very well-regulated financial sector and our banks remain strong. Our four largest banks all have AA credit ratings or above. Subprime mortgages account for only one per cent of the mortgage market in this country compared to 15 per cent in the US, and our default rates are nowhere near those being experienced in the US.

The Rudd government are now focusing on the things we can control. We are implementing the Financial Stability Forum recommendations in full and encouraging their implementation internationally. We have implemented the Basel II capital adequacy requirements in full. Through our regulators we have called on our financial institutions to make all appropriate disclosures. Treasury and ASIC are examining the role and regulation of credit-rating agencies with reference to the FSF’s recommendations. We have taken steps to support liquidity in the government bond market to ensure our broader financial markets operate more effectively. And we are strengthening protections for deposit holders through the introduction of a financial claims scheme. We have also moved in recent days to crack down on short selling. All of these measures are designed to protect—(Time expired)