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Thursday, 27 May 2004
Page: 29390

Mr GRIFFIN (2:58 PM) —My question is to the Prime Minister. Is the Prime Minister aware of Reserve Bank of Australia statistics showing personal bank fees soared to more than $3 billion last year and have increased by 161 per cent since 1997? Isn't it the case that the government's hands-off approach to regulating the banks has failed to restrain bank fees? Given that Australian households are under record financial stress, why won't the Prime Minister adopt Labor's plan to direct the ACCC to monitor bank fees and charges, to impose some discipline on the banks and to provide some relief for Australian families?

Mr COSTELLO (Treasurer) —I thank the honourable member for his question. I indicate at the outset that the government's policy in relation to bank fees is the same policy the Labor government had from 1983 until 1996. At no time in those 13 years did the Australian Labor Party ever have control over or monitoring of bank fees.

The SPEAKER —The member for Bruce has asked his question!

Mr COSTELLO —In fact, they had numbers of inquiries on the issues and at no time did they ever impose it.

In fact, from time to time you will hear other members of the Australian Labor Party boasting that the Australian Labor Party deregulated the financial markets. The Labor Party ought to decide which position they want to take: either they had the great achievement of deregulating the financial markets or they believe in re-regulating the financial markets. But they cannot hold both positions at the one time—unless, of course, they go to a meeting of bankers behind closed doors and have one position and then come out and have another one publicly.

The RBA's credit card interchange fee standard is expected to reduce credit card interchange fees by around $400 million a year—a reform which the RBA put in place and which was endorsed by this government. Also, over the period since 1996, margins on loans have come down quite considerably. It may well be that in previous times banks were covering themselves and making profits through margins, and increased competition has actually improved the benefits for consumers by reducing those margins.

I want to conclude by indicating two areas where this government has dramatically improved the situation for fees on bank accounts. The first is that this is the government that abolished the bank account debits tax as part of our GST reforms. I will go further than that and say that, as part of the GST reforms which this government implemented and which the honourable member opposed, on 1 July 2005 the financial institutions duty will be abolished, saving people $1.4 billion in fees on banking.

I got an agreement from all of the Labor treasurers at the last meeting of the ministerial financial council for that abolition to take place on 1 July 2005—let me say, not before time. The abolition of that tax will be paid for by the state GST revenues, now in a record position as all of those states enjoy the growth of revenues. It is the coalition government that is insisting that that revenue be used in part to reduce taxes—not the Labor states and not the Labor opposition; it is the coalition government that is doing it. We look forward to 1 July next year, because tax reform keeps rolling on with the abolition of $1.4 billion in financial institutions duty.