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Monday, 22 September 2008
Page: 8066

Mr CRAIG THOMSON (2:18 PM) —My question is to the Treasurer. What moves have been taken by ASIC over the weekend to ban short selling, and why is this so important?

Mr SWAN (Treasurer) —I thank the member for Dobell for his question. The government certainly welcomes the decision of the independent regulator, ASIC, to ban short selling, because, as the Prime Minister was saying before, we are in a time of great difficulty in global financial markets. We probably have not seen a time of difficulty like this for a very long period of time. We certainly do welcome the announcements by the US government over the weekend and we certainly note the recovery in financial markets this morning. But nobody should imagine that we are out of the woods as yet. We will continue to see global financial market volatility over the period ahead. That is why this decision from ASIC is so important.

It does remain the case that our banks are well capitalised and well regulated, and most certainly they do not face the same problems as the banks in the United States face, because they do not have the exposure to the subprime problem in this country that there is in the United States. So we are not complacent about our economic situation, and that is one of the reasons why the government has moved quickly to strengthen our financial system. We are implementing the Financial Stability Forum recommendations and encouraging their implementation internationally. Encouraging their implementation internationally is very important because what we need here is concerted global action that in the end can produce some surveillance of the international investment banks—which do go to the core of this instability in the United States and around the globe.

That is but one reason why engaging with international leadership, engaging with international policymakers, as the Prime Minister will do, is so important—because the world requires a global solution. No country is an island in these circumstances. That is why we are not immune from the fallout. What is required here is an international agreement, as well as strong domestic action—and the government has been taking strong domestic action by increasing bond issuance, such as that which was referred to before. But one thing this government will not do is take the advice of the Leader of the Opposition to invest in subprime debt. That is effectively the gaffe that the Leader of the Opposition made on Laurie Oakes’s program yesterday; and he is very sensitive about it—very, very sensitive about it. It was a gaffe of epic proportions.

So we have been moving to strengthen the system, to introduce a financial claims scheme. We have also been very supportive of the decision taken by ASIC to put a ban on short selling. That is also very important to protect the integrity of our financial system. But we do need concerted international action. That is where the solution lies, globally and domestically. I just wish the opposition would put aside its petty politics and get behind constructive initiatives, globally and nationally, on this very important issue.