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Wednesday, 18 June 2008
Page: 5357


Mr BOWEN (Minister for Competition Policy and Consumer Affairs, and Assistant Treasurer) (6:05 PM) —Of course, APRA is an independent body which conducts its affairs at arms-length—


Mr Keenan —Which reports to you.


Mr BOWEN —from the government. That is five seconds I have been going.


The DEPUTY SPEAKER —The member for Stirling will not interject.


Mr BOWEN —I am happy to take the interjection. APRA reports to me in terms of its administration. I do not interfere in the way APRA carries out its prudential regulation process. If the honourable member opposite who seeks my job proposes to interfere, if and when he ever has my job, that is a very interesting revelation. APRA conducts its prudential regulation at arms-length. It, of course, appears before Senate estimates twice a year, at which time the chairman of APRA and the other commissioners take questions. I think I am right in saying from my experience on the committee that they also appear regularly before the Joint Standing Committee on Corporations and Financial Services. I assume that is still the case. I am no longer on that committee, obviously, but I assume it is still the case that honourable members are entitled to ask APRA those questions.

If I could answer the question that the honourable member asked me before: APRA publishes a range of financial statistics about authorised deposit-taking institutions—banks, credit unions et cetera—but it does not publish credit ratings for individual banks as such. I must say I would be somewhat concerned if it did. It is very important that APRA has a full and open relationship with the banks and other financial institutions which they monitor and that they manage any issues which arise in full consultation with that financial institution. APRA is one of the most respected prudential regulation organisations in the world. It does a very good job, and it is one of the reasons that our economy is going so well. We have withstood the financial turbulence of recent months so well because of the work that APRA does. I note that the United States, for example, has indicated they are interested in following the Australian model.

In relation to the details about whether they take into account rating agencies, that is a matter I am happy to explore with APRA and take on advice. As I stress, APRA—appropriately—conducts its prudential regulation at arms-length from the government. It would be improper for me to say to it, ‘I think you should take into account the rating agencies’—if it does or does not—or, ‘I think you should take into account certain elements of a bank’s operations,’ or, ‘I think you should take into account the following.’ That would be highly inappropriate. APRA is a very respected organisation which is made up of some of the most experienced financial regulators in the country, and it should continue to do its work at arm’s length. I am happy to take on notice the individual questions from the honourable member.