Mr HOCKEY (Financial Services and Regulation) (3:37 PM) —What an opportunity the shadow Treasurer has presented us with today to provide to the House and the Australian people some evidence of the hypocrisy of the Australian Labor Party in relation to their calls for independent monitoring of bank fees. It is not me who is going to stand before the House and make statements about the hypocrisy of the Labor Party; I will leave it to one of their own. In the Senate on 31 May, 1995 Senator Peter Cook was asked the following question without notice:

. . . what measures will the government take to ensure that banks fulfil their community service obligations by reforming practices your government—

that is, the Labor government—

has been carping about for five years, inquiring into for five years and also doing nothing about for five years?

That question was from the member who is now leaving the House, the member for Dickson, who at the time was the Leader of the Democrats and was asking the Australian Labor Party why they had not done anything about monitoring bank fees. On 11 July 1995, the then Treasurer, Mr Ralph Willis, put out a press release with the following statement:

The Government agrees . . . on the need to supply better information to consumers so they can make the right choices about banking products that suit them. To spur this process, I will direct the new Australian Competition and Consumer Commission to formally monitor and regularly report on the financial services industry in relation to retail transaction accounts for a period of three years.

That was 11 July 1995. Nothing happened in the rest of July. Nothing happened in August. Nothing happened in September, October, November, December, January and February until we got to 26 February 1996—four days before the federal election. Four days before the federal election, Ralph Willis put out another press release: `Labor to monitor fees and charges on retail transaction accounts'. It states:

A Labor Government will write to the Chairperson—

they are going to write to the chairperson—

of the Australian Competition and Consumer Commission . . . requesting the Commission to formally monitor fees and charges on bank retail transaction accounts.

The Labor Party stands condemned by its own words, and they were the words of Ralph Willis four days before the 1996 election. It said, `Yes, we're holier than thou. After 13 years we're going to do something about monitoring bank fees but we're going to do it in our 14th year, our 15th year or perhaps our 16th year. We are going to do something about the formal monitoring of bank fees.'

There is a simple choice here: do you want lower interest rates, do you want competition in the provision of financial services or do you want to go the way of the old system, the Labor system—the system where interest rates got up to 17 per cent on home loans? What was that doing to the battlers in Lindsay, the battlers in Townsville, the battlers in Wannon or the battlers in various parts of Australia—in mortgage belt territory?

What were 17 per cent housing loan rates doing to them? They were slowly squeezing the life out of Australians—hardworking average Australians who wanted to own their own home, to believe in the Australian dream. The 17 per cent housing interest rates under the Labor Party were killing that dream. It soon became a nightmare. The average housing loan rate under the Labor Party was 12.78 per cent. Under the coalition, it has been a clear five per cent less.

So we have gone from 17 per cent housing interest rates—they are not overdrafts for business, they are not small business accounts; they are housing interest rates—down to the current 6.7 per cent. The trade-off has been that people are starting to pay for some of the services that they are demanding of the bank, and the trade-off has resulted in the fact that today more than 50 per cent of all transactions occur outside a bank branch. That is a very important statistic.

When the shadow Treasurer was talking particularly about the CBA's fee increases yesterday, he failed to say that the Commonwealth Bank actually decreased the fees on EFTPOS transactions. So the Commonwealth Bank is actually decreasing the fees where people are moving to, where demand is increasing. He did not talk about fee decreases in any way. I was listening very carefully. He simply talked about what he thought everyone around him wanted to hear.

According to the ABA, over the last four years EFTPOS transactions in the Australian financial system have increased from 43,950 to 218,300—nearly a fivefold increase. The number of bank branch visitations has fallen from 6,747 to 5,615. There has been an increase in the number of transactions at ATMs, and there has been an enormous increase because giroPost, access through Australia Post, was not around in 1994—some 2,720 transactions.

Thirty per cent of all Australians over 18 use phone banking today compared to four years ago. It is not that long ago that all Australians were subsidising average banking practices. They were subsidising an old banking system. We want a new banking system. Australians want a new progressive world-class financial system, and they are getting it. In some ways, we all pay a price for a new world-class banking system, and that price is lower interest rates.

It means there is more money there for people to reinvest in business, there is more money there for people to buy homes, there is more money there to create jobs and to create wealth in Australia. And the best way to create wealth in Australia is to invest in Australian wealth. When the cost of money is around 17 per cent, people are not going to buy into Australian wealth creation, and that affects jobs.

We all know the history of the ALP on jobs—high unemployment, driving Australia into recession. Mr Deputy Speaker Nehl, you remember and I remember, we all remember, when Paul Keating drove Australia into recession by high interest rates in order to slow the economy down. We had the recession we had to have. We will never forget it. The Australian people will never forget that because the net effect of that was that he was using monetary policy as a lever to squeeze the Australian dream of owning your own home. The interest rates were at 17 per cent.

There was a huge cost. The cost was that lots of honest, hardworking Australians had to sell their homes because they could not afford the interest rates. They were crippled. They were literally crippled in seats such as Hughes. The member for Hughes knows about it. In parts of the well-known mortgage belts—in western Sydney, southern Sydney, outside of Melbourne, Brisbane, Adelaide, Perth and all of the major regional centres—the Australian dream was compromised by high interest rates. That came about because they were subsidising an old banking system.

It is not often that I seek to quote journalists as an authoritative source, but in this case I will quote Terry McCrann, who has obviously taken a position in relation to this issue that is worthy of mention. It is not entirely consistent certainly with his colleagues, but it is a thoughtful one. In today's Daily Telegraph, Terry McCrann says:

In simple terms, anyone who wants to walk into their local bank and offer to pay nine per cent on their home loan to get totally fee free banking would be welcomed with open arms.

Somehow I think you could fit the queue in a phone box.

He goes on to say:

Ask yourself this simple question: would you sincerely prefer to be paying an extra $2,000 or $3,000 a year on your home mortgage instead of the various bank fees?

For that is the simple and utterly inescapable choice, unless some miracle person is going to invent costless banking. Ben Chifley tried costless banking. He tried to nationalise it. The Soviet Union tried costless banking. It obviously did not work. Communist and pseudo-socialist countries around the world have all tried costless banking. It does not work.

This is further evidence of the fact that the Australian Labor Party do not know where they stand on a particular issue. Their inconsistencies are obvious. The most impressive part about all of their inconsistencies is that we are on to them. In these sorts of situations, we heard their inconsistent approach to taxation reform, their inconsistent analysis of the impact of our new tax system—our fair tax system—on financial services. On 2GB today, we heard the shadow Treasurer say:

Under the government's tax package if it gets through the banking and financial services sector we'll get another windfall of $1.6 billion, Graham.

So this morning the shadow Treasurer was on radio saying that the financial services sector under the new tax system will be ahead $1.6 billion. Earlier this morning—obviously in a room far away—the Leader of the Opposition at a doorstop said:

. . . they must also be looking down the track and seeing the effect of the GST arrangements on their arrangements, on their earnings, where they reckon they stand to lose about $800 million.

On the one hand the shadow Treasurer is talking about the banks being $1.6 billion better off, and on the other hand the Leader of the Opposition is saying they are $800 million worse off. On my calculations, there is a $2.4 billion black hole. The best part about it is that they are improving. They are getting closer to the mark. It was $10.3 billion; now it is $2.4 billion. Hopefully, if they are in opposition for another three years, they will get us into a surplus.

Mr Crean interjecting—

Mr HOCKEY —I welcome that opportunity to discuss the application of bank fees and the application of the taxation regime to financial services because if there is any self-evident statement it is this: with the abolition of financial institutions duty, with the abolition of bank account debits tax, Australian consumers are going to be better off because when they use their bank accounts they are not paying taxes, and that is pretty important.

Most Australians would not be aware of just how iniquitous the financial institutions duty and bank account debits tax are. Most Australians who have a single bank account with a cheque book attached would not be aware that they pay bank account debits tax on every withdrawal from that bank account. So when they use their card for EFTPOS or they go to the ATM, they pay bank account debits tax. When they put money into their account, they pay FID.

Under our new taxation system, under our proposal, those taxes are abolished. It is further evidence of our commitment to give us a cleaner, fairer financial services industry, where money flows are more liquid and where we have the opportunity to get the full benefit of user pays. We are trying to set up a financial system for the 21st century. The Labor Party wants one for the 19th century. We are not prepared to compromise on our goal. We are not prepared to compromise on our ambition. We will not change our commitment. (Time expired)