Nick Sherry (Tasmania, Australian Labor Party, Minister for Superannuation and Corporate Law) Share this | Hansard source

Thanks to Senator Bilyk for her important question. Earlier today, the Senate passed a historically very important bill. Now that it is passed through the parliament, the commencement of the Rudd government’s Financial Claims Scheme will guarantee bank deposits for the next three years and safeguard our financial system. I will turn to the effects of this critical law in a moment. First I want to note that this deposit guarantee represents yet another early, responsible and decisive action by the Rudd Labor government to bolster our economy and shore up our financial system in the midst of the global and economic financial systems crisis.

The opposition today supported the bill, as indeed did the crossbenchers. I want to thank them for their cooperation. However, I do note that, in the opposition’s response, whilst having offered up bipartisanship, they appear to be changing tack and saying the government has taken too long to take the necessary decision. I think this is an extraordinary claim so I want to run through the range of actions taken by the Rudd Labor government over the past almost 12 months.

First, in May the government announced we would provide legislative authority for an increase in the Commonwealth government securities issuance of up to $25 billion to strengthen the Australian financial system and reduce its vulnerability to shocks. Second, the government have moved to quickly guarantee bank funding. If institutions fail to lend to each other, businesses and households cannot obtain credit and therefore the financial system and economy seize up. We have acted to keep our banks in an advantageous position in very difficult international credit markets. Third, we have now guaranteed bank deposits for the next three years. Fourth, we have acted to protect financial institutions from speculators, short selling and market manipulation. We have supported the temporary prohibition on short selling in our market by our independent regulator ASIC, and we have gone further. I have released draft legislation that would require the disclosure of covered short selling, a gap in our disclosure regulation that has existed since 2001.

Fifth, we have acted decisively to support competition and liquidity in the mortgage market. On 3 October the Labor government announced the initial purchase of $4 billion of residential mortgage backed securities to support wholesale funding of financial institutions and improve competition in the market for housing finance. Sixth, we have acted to reform the regulation of financial services and credit in Australia. The states and territories have regulation responsibility for about 20 per cent of our financial sector in Australia. After almost 12 years of inaction in this regard, we have reached agreement with the states to introduce single national standard legislation in respect of the financial sector. Seventh, the government has been active all year in coordinating our actions with key global partners.