Senator FIELDING (Leader of the Family First Party) (2:47 PM) —Thanks, Mr President. It must be Christmas—I have got two questions this week.

The PRESIDENT —It is.

Senator Abetz —Was that part of the deal?

The PRESIDENT —Senator Fielding, start again.

Senator FIELDING —My question is to the Minister representing the Treasurer, Senator Wong. Given that the Treasurer has stated that the banks had no justification in lifting their interest rates above the increase in the official cash rate on 5 October and the fact that banks have seized almost 11,000 Victorian properties in the last five years due to defaulting on mortgages, why is the government allowing the situation to occur unchecked instead of taking real action, other than scrapping fees, against the banks, who are still recording multibillion dollar profits?

Senator WONG (Minister for Finance and Deregulation) —I apologise to the good senator, as I had trouble hearing some of that question.

Senator Ronaldson —Too much noise going on behind you.

Senator WONG —Senator Ronaldson, I do not think you are in a position to lecture anybody about being noisy.

The PRESIDENT —Senator Wong, ignore the interjections.

Senator WONG —I understand the question is about banking competition. This issue has obviously had a lot of focus in the public arena in recent weeks. I think Australians are rightly angry at the major banks for the moves above the official interest rate increase. As we have said a number of times, the approach that we are taking, and have been taking since we came to government, is to try to support competition. There have obviously been calls for re-regulating interest rates and for putting in place different regulatory mechanisms, but we know from history that many of those mechanisms do not do the right thing by Australians. We know that when interest rates are regulated many Australians find it hard to get access to home loans.

We believe the best way of working to ensure that banks offer products at the right prices is to support competition—and the Treasurer has made it clear that we have done that. An example is the investment in residential mortgage backed securities. Other examples include the approach the government has taken on exit fees and so forth. The Treasurer has also said that there is obviously more to be done and that we will work through the issue very closely and carefully with the regulators. This is a sector where we need to take a sensible approach and make sure that the policies put in place deliver the right outcomes for Australian families, the right outcomes for Australian consumers. We need to make sure the banks understand that people can walk down the road and get a better deal.

Senator FIELDING —Mr President, I ask a supplementary question. Has the government sat down with each of the big four banks and specifically asked the banks’ CEOs to provide a detailed, written response to why they have chosen to jack up their interests above the increase in the official cash rate?

Senator WONG (Minister for Finance and Deregulation) —I cannot speak for meetings the Treasurer has, but obviously the Treasurer would meet regularly with businesspeople and people who operate in the financial sector. That is obviously an important part of his job, and he has made that clear. But I think the issue here is not what explanation the banks would offer—I think people are aware of that; that is in the public arena. The issue is whether people think that explanation is justified. The government has made it clear that, given where net interest margins are and given that they have returned to pre-crisis levels, it does not appear—

Senator Fielding —Mr President, my point of order has to do with relevance to the question. The question was: has the government specifically asked the bank CEOs to provide a detailed, written response to why they have chosen to jack up their interest rates above the increase in the official rate? It is either yes or no. Either the government has or it has not.

The PRESIDENT —I cannot tell the minister how to answer the question but I do believe the minister has been answering the question.

Senator WONG —I started by saying that the Treasurer and other members of the government talk to businesspeople, including in the financial sector and in the banks, regularly. What I was trying to explain to you was that the issue is not the explanation the banks offer; it is whether you accept that explanation. (Time expired)

Senator FIELDING —Mr President, I ask a further supplementary question. Given that the representing minister has not been able to clarify whether the government has specifically asked the banks, will the government commit to making it a licence requirement for the big four banks to provide a detailed written explanation if they hike up interest rates above the increase in the official cash rate?

Senator WONG (Minister for Finance and Deregulation) —In relation to the suggestion from Senator Fielding, I am obviously happy to refer that suggestion to the Treasurer. As I said, we do believe that banks should be held to account publicly for their decisions. The comments the Treasurer, I and other ministers have made have made that clear. We do not accept many of the justifications which have been offered, as I have previously said. Their net interest margins are back to where they were pre the crisis. Australian people are understandably angry at the way the banks have responded. But, in terms of the suggestion about more formal disclosure of the reasons why a move above the official interest rate occurs, that is something I would certainly be happy to pass on to the Treasurer.