Senator MARGETTS(4.26 p.m.) —I rise to make a contribution to today's debate. I do realise that the standing orders limit the time of the debate to 30 minutes, but there has been an informal arrangement, so I seek leave to speak for up to 10 minutes on this issue.

Leave granted.

Senator MARGETTS —One of the first issues that struck me today in relation to the statement on the reform of the Australian financial system was the first paragraph under the heading `Rationale and Goals for Reform'. It says:

The Wallis Inquiry concluded that efficiency, choice and quality in Australia's financial sector has improved since the major de-regulation measures of the 1980s.

I think it is useful to go back to the terms of reference of the Wallis inquiry to see that statement in context. The specifics of the terms of reference state:

The Inquiry will report on the results arising from the financial deregulation flowing from the Inquiry into the Australian Financial System (Campbell report) published in 1981. This will involve examining and reporting the consequences for:

(a)    the choice, quality and cost of financial services available to consumers and other users;

So it is a little different from what is there. It just says `efficiency, choice and quality in Australia's financial sector'. They continue:

(b)    the efficiency of the financial system including its international and domestic competitiveness;

(c)   the economic effects of deregulation on growth, employment and savings;

(d)   the evolution of financial institutions and products offered by them and the impact on the regulatory structure of the industry . . .

And it was to look at other issues that the inquiry would identify.

The statement that `the Wallis Inquiry concluded that efficiency, choice and quality in Australia's financial sector has improved' at the very least needed to be highly qualified by asking whether this is worked out by using averages. It may well be that choice has improved in the Australian financial sector if we look at the fact that more packages are available in specific sectors. We have to look at actually how much of the sector now is involved in international finance transactions—mostly speculative transactions. A greater level of choice may well be involved in those transactions but less choice may well be available for individual savings holders, and that is not mentioned in that particular statement.

In relation to efficiency, is the system efficient if you cannot speak face to face to the person who handles your account? I guess somebody is speaking to you, but they do not know who you are. They are on the end of a line, and they are in a central system. This might be efficient from the bank's point of view, but it is a bit difficult if you want to be able to explain your particular circumstance and do not want to be treated as a number.

In relation to quality and choice in Australia's financial sector, are you a person who is concerned about the use of technology? Do you find it difficult to use flexitellers? Has your bank been closed? Do you have choice about where you can go to conduct your banking services these days? As I say, whilst choice might be greater in the total number of services in relation to the financial sector, it may well be that the choice for individual consumers—and that word `individual' has been left out—has decreased in many instances, especially for those people for whom it is no longer profitable to provide the range of services.

As to quality, I guess that is something that is personal to many people, but there are concerns in relation to that. But it seems that this statement left out almost totally the issues of whether or not the deregulation of the financial sector has had other impacts.

There is a small summary of what are considered to be the disappointments within this report on the deregulation of the financial sector. The first one, on page 595 of the Wallis report, is:

Excessive credit expansion in the mid to late 1980s, coupled with declining lending standards and resultant loan losses—contributed to the severity of the early 1990s recession.

I am glad there is some recognition of that. There does not seem to be much in this statement by the Treasurer. It seems that it is incredible that it has taken us 16 years to look at the impacts of what we did back in the 1980s and how we did it and whether we did it in the right way.

Of course, the reason the financial sector was deregulated was actually pushed by the push towards the deregulation of trade. Australia, like other countries, was required to move towards deregulation of the financial and banking sector as part of the move to the Uruguay Round of GATT. So in fact, in some senses, many people in Australia felt that we had no choice. The way we chose to do that, though, was a matter of choice.

The deregulation of the system basically has had an impact on many people. That can be summarised in some of the issues on page 703 of the Wallis inquiry report:

Many of these ideas associate financial deregulation with other, broader trends—for example:

* the pressure which financial markets are said to have exerted on governments to reduce the size of the public sector and privatise publicly-owned assets, especially major infrastructure;—

Yes—

* deregulation of labour and product markets and resulting changes in wage and income distribution;—

It certainly has contributed—

* changes in the rural economy and rural life, associated with difficulties in obtaining finance on suitable terms or seeing bank branches withdrawn from country towns; and—

Yes—

* acceleration of the adoption of labour-shedding technology, causing unemployment.

It is hard to fault the logic of that last item but those points were not followed up, nor were the concerns about general unemployment issues associated with the total deregulation.

The irony is that the report's conclusions were inferential:

* The freeing of the formerly controlled interest rates should have led to a better allocation of resources, which should have led to a more productive economy.

Ho, hum, we are still waiting—

* The removal of credit rationing in the banking sector should have led to more efficient financing and pricing of production.

Oh, yes—

* Freeing of inward and outward capital flows should have increased the efficiency of investment in Australian industry, by widening the pool of potential investors, and the efficiency of investment of Australian capital, by widening the range of investment opportunities and facilitating diversification.

* As one of a set of changes which helped expose Australian industry to greater international pressure, financial deregulation should have encouraged reforms in the real economy.

Quite frankly, because the Wallis report did not actually look at the connections between financial deregulation and the internationalisation of the economy, they never assessed whether there was anything connecting those. So it seems that we are basing a major change—I call it `a change' rather than a `necessary reform'—to the Australian financial system on a report that largely did not do what it was meant to do. It did not really look at the implications of the way Australia deregulated the economy. It basically assumed that deregulation was good, and let's have more, and it basically is moving towards a particular direction without necessarily the systematic inquiries and referrals that should have occurred along the way. Why is it that we had to wait 16 years for such an inquiry?

A lot of work needs to be done. We should not just assume that all of these changes are inevitable. In the end, the people we do have to ask about are those who have no choice, who are the small fry within the financial and banking systems at the moment—those people who are the customers of the banks, not the big players, not those people who speculate and not those people who perhaps, along with speculators in the United States and Europe, actually end up controlling many of the aspects of the Australian economy now. That is a major impact of Australia and other countries deregulating the financial sector—that Australians are having policies directed by other countries, and this should not be played down; we should actually be looking at the impact of that and how it is that international money speculators can direct Australia's policies on social, economic and even environmental issues and the way the dollar can be used in terms of that direction. So I think it is time for change but I do think it is time for us to change with our eyes open instead of just assuming that we have to do, like lemmings, what everybody else is doing.

Question resolved in the affirmative.