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Investment funds not excited by Govts offer -

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Investment funds not excited by Govts offer

Broadcast: 29/10/2008

Reporter: Hayden Cooper

Investment funds have reacted cautiously to the Government's offer to join the club and be covered
by the guarantee on bank deposits. For now the freezing of deposits in some funds has caught up
with the Opposition Leader.

Transcript

TONY JONES, PRESENTER: Investment funds have reacted cautiously to the Government's offer to join
the club and be covered by the guarantee on bank deposits.

A number of funds frozen out of the original scheme say converting their businesses to meet the
proposed rules would be hugely complex and could cost billions.

But while a key industry body wants more details on the proposal, the Treasurer says a number of
funds seem ready to sign up.

For now the freezing of deposits in some funds has caught up with the Opposition Leader. Part of
his fortune is now locked away, but he did manage to shift some money out of another fund as the
crisis was developing.

From Canberra, Hayden Cooper reports.

HAYDEN COOPER, REPORTER: The relics of history reveal the handicap of another Labor Prime Minister.

VOX POP: This is a golf card between Fisher and Keith Murdoch.

HAYDEN COOPER: But Andrew Fisher's challenges in 1908 were far different from Kevin Rudd's a
hundred years on.

JOURNALIST: Do you think the funds will take up your offer?

HAYDEN COOPER: The investment funds aren't saying if they'll apply for banking status, in order to
reap the benefits of the Government guarantee.

But the Treasurer expects some will.

WAYNE SWAN, TREASURER: Some of those funds have indicated to us they want to proceed in that
direction, but there are other courses of action that we are working on in conjunction with the
industry.

HAYDEN COOPER: To qualify the investment funds will have to meet a host of tougher rules. Chief
among them, the requirement for vast amounts of capital.

The industry body says it would welcome further details. But it's clear any change won't happen in
a hurry.

FARIBORZ MOSHIRIAN, UNIVERSITY OF NSW: We should not think that it is going to be too slow but
nevertheless it's not going to happen tomorrow.

MALCOLM TURNBULL, OPPOSITION LEADER: This is not something that can be accomplished quickly, and it
would be very difficult, it involves raising a lot of capital and so hence it isn't a silver bullet
by any means.

HAYDEN COOPER: In an all encompassing financial crisis -

SHOP OWNER: The financial situation's making it very difficult of course.

HAYDEN COOPER: The Turnbull empire is affected too.

MALCOLM TURNBULL: Lucy and I act on advice. We are invested in a fund which has had redemptions
frozen.

HAYDEN COOPER: But he did get out of another fund before it was frozen.

MALCOLM TURNBULL: Well, you know, you take advice from your, you know, financial planners, you
invest in things, you dispose of things. I mean that fund had, like all of the real estate
investment funds, had declined significantly in value and we were advised to, you know, to dispose
of it.

HAYDEN COOPER: And although he won't give a date, Mr Turnbull says he left the fund after the
deposit guarantee was announced.

The guarantee he blames for causing the fund freeze.

MALCOLM TURNBULL: The Government made a decision that was not swift and decisive, it was rushed and
bungled.

WAYNE SWAN: Well, Mr Turnbull on the one hand was saying the global financial crisis was overhyped,
and on the other hand he was moving his own funds out of the system. That tells you something about
Mr Turnbull's double standards.

HAYDEN COOPER: Armed with the pen of Andrew Fisher Kevin Rudd is ready to turn once again to the
economics of climate change.

The long-awaited Treasury modelling on carbon emissions trading is finally set for release. And
tomorrow's numbers will reveal the expected impact of the scheme on the national economy.

Though much of the work was done before the worst of the financial crisis, the two issues are now
inextricably linked.

SENATOR PENNY WONG, CLIMATE CHANGE MINISTER: We can continue to maintain our competitiveness in the
world markets and take action on climate change.

HAYDEN COOPER: A balancing act for future generations.

Hayden Cooper, Lateline.