Senator SHERRY (Minister for Superannuation and Corporate Law) (2:40 PM) —I do have a number of responses for Senator Macdonald and also for Senator Joyce. I go to the issues relating to Senator Joyce first. Senator Joyce, in a question to the Standing Committee on Finance and Public Administration which was taken on notice, asked for some comparative data about stimulus packages around the world juxtaposed against the stimulus package we are considering here. So, at least to that extent, Senator Joyce recognises the relevance by requesting details of stimulus packages in other parts of the world.

I will not go through all the material that will be provided but I do want to indicate that the size of the stimulus package in Australia has been a matter that has been raised throughout the debate, including this morning. To run through this briefly, the stimulus package in the USA, which apparently has only just been passed, is in total US$168 billion or 1.2 per cent of GDP; Spain, $24 billion, or 1.7 per cent of GDP, with a second stimulus of $14.8 billion, which is one per cent of GDP; and Japan, $19.9 billion, or 0.3 per cent, followed by three other stimulus packages of $66.4 billion, or 1.2 per cent of GDP, $44.3 billion, or 0.8 per cent of GDP, and $16.6 billion, or 0.3 per cent of GDP.

I move to Korea—and this is South Korea, not North Korea. I noticed there was some discussion in the committee about North Korea. Frankly, the North Korean economy is a flat earth. It is hard to stimulate an economy like the North Korean economy, but the South Korean stimulus is $8.7 billion, or 1.3 per cent of GDP, then a second stimulus of $10.4 billion, or 1.6 per cent of GDP, a third stimulus of $10.4 billion, or 1.6 per cent of GDP, and then a fourth stimulus of $37.3 billion, or 5.5 per cent of GDP. In Taiwan it is US$12.6 billion, or 3.3 per cent of GDP, and then there are three more: $2.4 billion, or 0.6 per cent of GDP, $2.5 billion, or 0.7 per cent of GDP, and then $9.6 billion, or 2.5 per cent of GDP. Now the fiscal stimulus in Australia is $7 billion, or one per cent of GDP, $10.3 billion, or 1.4 per cent of GDP, $3.2 billion, or 0.4 per cent of GDP, then $28 billion, or 3.8 per cent of GDP. I do have significant further material. In Canada, it is $32.7 billion, or 2.6 per cent.

Senator Joyce —Mr Chairman, I rise on a point of order. First of all, this goes to a question on notice I asked Treasury, not the minister. The minister is reading an answer to a question that was not directed to him, yet the inference at the start was that it was directed to him. So the point of order goes to relevance. The next point is that the minister is now verging on breaching standing order 196 on tedious repetition for the purpose of filibustering. We are going through every economy in the world. If he wants to add to something, he might want to tell us how much the American stock market fell the day after the American stimulus package. I think it was about 380 points. He might want to tell us the result of that, which goes to the efficacy of the whole purpose of this charade.

The CHAIRMAN —On the point of order, Senator Joyce, any minister can answer any question on behalf of the government so Senator Sherry is in order.

Senator SHERRY —I am just trying to be helpful to Senator Joyce. I understand he has not got the detailed response. I am not going to go through all of the countries. There is a lot of detail there; you asked for the detail. It has been an issue of debate. It has been an issue of discussion this morning, and I am giving you some of that detail now. Senator Joyce has claimed that I should look at the US stock market and at what has happened as a result of their stimulus package going through the US Congress. Senator Joyce, with respect, I think you are confusing the stimulus package with the bailout package. I do look at Bloomberg and CNN; I do look at the commentary. I have done that not just today but over the last year, in this financial and economic crisis. The observations made with respect to the current market response reflect the disappointment and the lack of detail in the bailout package, not the stimulus package. The bailout package, for people who are not aware, is hundreds of billions of US dollars being passed over and paid to a range of American financial institutions. That should not be confused with the stimulus package. I want to make the point that I am trying to provide detailed information, as asked for at the Senate committee hearing—and which was not available at the time—in response to Senator Joyce’s question.

Distinguishing between a bailout package and a stimulus package leads me to a couple of issues on the guarantee that Senator Macdonald raised. I firstly would make the point, Senator Macdonald, that it is not a guarantee simply for the four big banks. It is a guarantee for all APRA regulated deposit-taking institutions. That includes all banks, credit unions and building societies.

Senator Joyce —Mr Chairman, I rise on a point of order. I hope we are not misleading the Senate. I know that is not the intention of the minister. Luckily, we are on line now and I have just had a look. A headline says ‘Wall Street tumbles as U.S. stimulus package passes’. The article is by Sheldon Alberts, the Washington correspondent for a number of papers.

The CHAIRMAN —Order! Senator Joyce, that is a debating point. You will have a chance later in the committee stage to raise that if you wish. That is a debating point, not a point of order.

Senator SHERRY —This morning I was watching the commentary on the reaction of the markets. As I said, the commentary that I observed related to the response of the markets to the claimed lack of detail in the bailout package.

Senator Joyce —It’s a stimulus package, not a bailout package!

Senator SHERRY —I have made my point. I am not going to waste time by adding to that. You have your view. I have expressed my view and observations and what they are based on. I will come back to the position of ADIs. As I was saying, Senator Macdonald raised the issue of the guarantee to the four big banks. It is a guarantee to all ADIs, Australian deposit-taking institutions, regulated by the Australian Prudential Regulation Authority, APRA—that is, all banks, all credit unions and all building societies. I am pleased to say that that was supported by the Liberal-National Party opposition. It was not an issue of enormous contention. It was recognised last year that there had to be a guarantee provided to ADIs.

Senator Ian Macdonald —That’s not the question.

Senator SHERRY —You made a claim about four big banks. It is not accurate. You have your view; you have stated your position. I am stating what I believe is a broader and more accurate reflection of what happened in respect of the guarantee.

Senator Ian Macdonald —Look, my point’s the same, though, Nick.

Senator SHERRY —I will get to Storm issues in a moment, because I do have concerns. I will get to the details in a second, because you have asked about the issue. We have given a guarantee. Unlike the US and the UK and a number of other European countries, we have not given a bailout to any Australian financial institution, thank goodness. We have not had to pass over hundreds of billions of dollars from our budget to any financial institution in Australia, thank goodness. Earlier a senator—and I forget who—accused the government of reflecting a socialist approach in its bailout package. If you want to look at socialism in action, go to the United States, where a conservative government—the Bush administration—ended up nationalising, forceably merging and taking over a number of banks. That occurred in the UK, in Iceland and in some other countries. It was an understandable response to the collapsing world financial system. I think it is important to put these things on the record.

The other point I would make about the guarantee is that it has its origins in Australia, as distinct from the legislative action the government took coming from the HIH royal commission when it was observed that Australia, unlike most other countries, did not have a guarantee for its ADIs. These are important points to make.

To come to the issue which Senator Macdonald raised about the approach of the banks in respect of clients of Storm Financial, I would express it this way. The words are not the same as those made by the Treasurer, Mr Swan, in the Four Corners interview, but the sentiment and the message I would convey are. He rightly observed that, yes, Australian ADIs, including our four big banks, have received benefits as a result of the guarantee and they should deal—these are not his precise words but I share the sentiment and would make the same commentary—with great consideration, sympathy and concern with anyone, including the victims of the Storm Financial crisis, who faces foreclosure of their home, for example, an asset in many cases that was used to underline margin arrangements, and they should not be precipitous in respect of any foreclosure against persons in those circumstances. I would indicate the same message.

As to Storm Financial, the financial planning institution that provided the margin loans, Senator Macdonald quite appropriately has indicated that he did not want to go to specific questions about the ASIC investigation. I would point out that there is a formal investigation in respect of issues involving Storm Financial, the entity. I cannot provide information about what is an operational matter—it is an investigation. What I can say is that there is one area of ASIC action which is on the public record because it took place in the courts last week. ASIC secured a court order barring the owners of Storm Financial, the Cassimatis, from dealing with a $2 million dividend payment which they effectively gave themselves in late 2008. I understand that, as a consequence of the ASIC action, that $2 million dividend payment is effectively frozen. I can inform Senator Macdonald that I have spoken to ASIC about issues relating to Storm Financial. I cannot go to operational matters but they have indicated to me that they will be providing as much detail as they can, without going to operational investigations, at the Senate estimates. I have indicated that this is a matter of considerable and obvious interest to many thousands of investors. Also, it is an important matter of public interest. ASIC will be giving an update at the estimates without going to the details of operational matters because that may go to legal actions at some future date and we would not want to jeopardise that. There is a whole range of issues in relation to the Storm investment strategy.