Mr KELVIN THOMSON (4:30 PM) —It is the opposition's intention to agree to the requested amendments being sought to the Retirement Savings Account Providers Supervisory Levy Imposition Bill 1998 and to the other pieces of companion legislation. I would make a couple of observations concerning the Wallis package, now that it has come back from the Senate, just to make sure that Labor's position is on the public record.

The government was very slow to start the Wallis process and very slow to introduce the legislation. It ought to be noted that there is now considerable pressure on the parliament to pass the Wallis package in time for a 2 July start date as a result of that slow progress.

Labor generally supports the Wallis package of reforms but it is worth stating again what we do not agree with. We are opposed to any mergers between the big four banks and the big two insurance companies. This so-called `six pillars policy' was opposed by Wallis, but our reasons for opposing further major mergers are simple and clear. We can all observe an extensive and painful process of rationalisation amongst the four major banks already. This has seen a considerable loss of jobs through branch closures and outsourcing. The problem is particularly acute in rural Australia, where many country towns are left without any bank at all. As an aside, I might say that the economics of all this outsourcing would be reversed by the introduction of a GST in the financial industry.

Some of the rationalisation is due to technological change, but we fail to see the merit in worsening the situation by allowing any mergers between the big four. Each of the big four banks is more than capable of competing in this country and this region. Even if all of the four banks merged, they would not rate on the US scale of mega bank mergers. The idea that Australia would want to compete in that marketplace is probably dangerous.

It is not often realised that the life insurance industry is even more concentrated than banking, with the two major players, AMP and National Mutual, accounting for about two-thirds of the market. These institutions have more than sufficient financial resources to enter the banking market on their own, thereby increasing competition. So we are not persuaded that there is any public benefit in merging them with one of the banks.

Labor's other concern is foreign ownership. We would also oppose a takeover between any of the major banks and a foreign bank. The previous Labor government let 16 foreign banking licences in order to stimulate competition and provide adequate opportunity for foreigners to establish themselves here. The results were painful for some, but the survivors have found profitable segments in the Australian marketplace and we see no need to provide any greater opportunity. In all these questions of mergers and acquisitions the government has yet to demonstrate form. We will be watching the use of the Treasurer's discretion in these areas wherever it applies.

Labor has supported the moves to create two new bodies, the prudential regulator APRA, and the Australian Securities and Investment Commission, or ASIC. The consolidation into two bodies with the responsibility for prudential supervision, on the one hand, and consumer protection amongst other things, on the other, is a positive step. However, we remain concerned that there be no diminution of consumer protection in the transfer of responsibility for the day-to-day regulation of financial services to ASIC.

The other source of considerable and abiding concern for Labor is the matter of bank fees and charges. In a process where both the regulations and the regulator are changed together we are concerned that there needs to be proper vigilance and protection for the consumer. Indeed, it is all but alarming to see that, since the screws were loosened in relation to approval of fees and charges, we have seen bank fees and charges rise by of the order of, I think, $657 million in the last quarter. So banks are collecting $3.5 billion annually, if I recall correctly, in fees and charges. From our point of view that is simply not good enough. You have the government wanting to take credit for lower mortgage interest rates, but when the banks say, `Higher fees and charges are the trade-off for this,' the government is not interested in trying to contain those fees and charges, as the previous government was. Having made those observations, we are not opposing the government's amendments on either this bill or the companion Wallis bills.

Question resolved in the affirmative.