Senator COONAN (3:50 PM) —It is very disappointing to hear from Senator Ludwig today a long diatribe that is almost word for word from the Treasurer’s second reading speech when introducing the Guarantee Scheme for Large Deposits and Wholesale Funding Appropriation Bill 2008 but does not really address what has gone on here in relation to the saga of the retail deposit guarantee and the wholesale term funding guarantee. That has been comprehensively bungled and mismanaged by the Labor government from the time of its introduction until today.

I have a degree of sympathy for Senator Brown’s proposed amendment. This has not been handled properly. The Labor government should have accepted the recommendation of the Leader of the Opposition and the shadow Treasurer, who advised weeks ago that, in order to introduce a wholesale term guarantee, it needed an appropriation in the unlikely event that the contingent loan would be required to be paid out. The circumstances in which this has been handled by the Labor government, I warrant, Senator Brown, does deserve a committee investigation. There is no doubt about that. But it has taken six weeks for the government to concede that legislation should be introduced into the parliament to support the government’s bank guarantee of large deposits and wholesale term funding—six weeks when people, who are reliant upon accessing funding to support their borrowing and to support their lending, have not been able to proceed because of the uncertainty caused by the way in which the Rudd Labor government has handled this. Mr Turnbull has, from time to time, said that.

This is an instance where, despite the position that Australia is in, which is perhaps as good as any country in terms of withstanding the global financial crisis, we are distinguished by Mr Rudd and Mr Swan having actually made it worse by the way in which they have tried to address the problem. They ignored the warning signs and ignored the bipartisan advice offered by the Leader of the Opposition and the shadow Treasurer, which said two things. Firstly, in respect of the retail guarantee, if you were to make it unlimited, it would have unintended consequences. So what are we seeing? We have seen the non-guaranteed institutions with funds frozen and 270,000 Australians who are locked out from accessing their deposits because of bungling of this unlimited guarantee. We have now seen a cap placed on it but still institutions are begging the government to make the cap lower so that this problem might be addressed. It is still not fixed. Secondly, in respect of the wholesale term guarantee, we know that, because of the requirements of the rating agencies, particularly Standard and Poor’s, unless there were legislation underpinning the appropriation, it would not have the desired and called-for effect.

We will be supporting the bill not because we in any way commend the government for the way in which this has been handled but because we accept that all of this delay is causing ongoing uncertainty for financial institutions, for consumers and for the economy more broadly. We accept that this matter should be dealt with urgently and expeditiously. It is why we are responding to the government’s request that we deal with it without reference to a committee. Whilst I have a degree of sympathy for Senator Brown’s natural curiosity as to how this appalling situation could come about, it is important that I place on the record the opposition’s reasons for opposing it being sent to a committee.