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Wednesday, 13 November 2013
Page: 154

Budget


Dr LEIGH (Fraser) (14:47): My question is to the Treasurer. I refer the Treasurer to his decision to provide an $8.8 billion grant to the Reserve Bank of Australia, which was not requested by them. Can the Treasurer confirm that this grant will increase the debt interest bill over the next four years by over $1 billion?


Mr HOCKEY (North SydneyThe Treasurer) (14:48): Correct me if I am wrong, Madam Speaker; did he say it was not requested by the Reserve Bank?

The SPEAKER: Yes, he did.

Mr HOCKEY: Well, they are wrong. The fact of the matter is—

Opposition members interjecting

Mr HOCKEY: Be calm, okay? I know you are excited on the first day. This is your best day in opposition, trust me. In February of this year, when there was quite obviously a dispute between the member for Lilley and the Governor of the Reserve Bank, I raised concern about the level of funding in the Reserve Bank Reserve Fund. That is the fund available for the Reserve Bank to offset the risk of certain investments that it may have. Of course, the risk may increase according to movement in the Australian dollar and movement in interest rates. Traditionally the Reserve Bank Reserve Fund has never been below 10 per cent of the assets at risk. In periods of volatility, following the GFC, you would not want it below 10 per cent. In fact, the Reserve Bank had been very up-front about it. In 2009-10 the Labor Party took a special dividend out of the Reserve Bank of $5.2 billion. Every year prior to that it had been around $1 billion to $1½ billion, but in 2009-10 they took out a dividend of over $5 billion.

Mr Bowen: Madam Speaker, I rise on a point of order, on relevance. If the Treasurer does not know that it costs more than $1 billion in increased interest payments, he should admit it. If he does know, he should confirm it.

The SPEAKER: There is no point of order. The Treasurer.

Mr HOCKEY: They took out $5 billion. The Reserve Bank Reserve Fund dropped to 2.1 per cent from 9.6 per cent, and when we came into office it was 3.8 per cent. I spoke to the Governor of the Reserve Bank and I said: 'Are you properly prepared for the challenges that may lie ahead?' His answer, which he gave publicly the other day—and I am sure he will appear before the House Standing Committee on Economics—caused us to put $8.8 billion into the Reserve Bank to make sure that the Reserve Bank was at its strongest to deal with any challenges that come before the Australian economy. Labor does not get that.

I call on the member for Lilley to write to the government to ask that all correspondence between him and the Reserve Bank is released to the Australian people, and in return I will release the letter from the Governor of the Reserve Bank about the $8.8 billion. He is pretty quiet up there. You are on your L-plates and he knows what he is doing.

Mr Bowen: Madam Speaker, I ask the Treasurer to table the document he read from.

The SPEAKER: Is it confidential? Yes.