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Monday, 13 October 2008
Page: 5750

Senator STERLE (2:06 PM) —My question is to the Minister representing the Treasurer, Senator Conroy. Can the minister outline for the Senate the recent measures the government has taken to ensure ongoing confidence in Australia’s financial system?

Senator CONROY (Deputy Leader of the Government in the Senate) —I thank Senator Sterle for that question. Ongoing events in global financial markets are affecting countries right across the world, including Australia. More than 25 banks around the world have failed or been bailed out, and share markets around the world have suffered large losses. Confidence has been buffeted around the world, which is contributing to a serious global slowdown. Already, five of the world’s seven largest developed economies have recorded negative or zero growth in the three months to June. The IMF has said that the major advanced economies are either in or close to recession.

As the Prime Minister and the Treasurer have pointed out in recent days, we have entered a new and damaging stage in the global financial crisis. Australia is better placed than almost any other country in the world to deal with this crisis. We have a world-class regulatory framework and regulators, our banks’ balance sheets are strong and Australia, unlike most other countries, has a strong budget surplus.

Part of the reason that Australia is in a better position than most countries is that all year the Rudd government has been anticipating events and taking practical steps to prepare for them. That is why the Rudd government has announced new measures to continue to maintain the stability of the Australian financial system into the future. The package announced by the Prime Minister yesterday includes a guarantee for all bank deposits in Australian banks, credit unions and building societies. The government has been working for the last several months on the details of its Financial Claims Scheme for depositors. This scheme will now cover all deposits, without cap, in all Australian banking institutions for three years. The government has put our banking arrangements on the same footing as those which now apply in many other countries.

Another measure announced yesterday is that the government will guarantee wholesale term funding of our banking institutions. This is so that our banks can secure long-term credit to continue to fund business and mortgage lending in Australia into the future. Other governments in overseas jurisdictions have done this with their banks—in many cases, for banks with poor credit ratings relative to Australia’s banks. We want to ensure that our banks are not put at a disadvantage for the future.

The government is also concerned about the impact of the global financial crisis on growth and jobs for Australia. The government is determined to support the economy into the future by bringing forward our $76 billion nation-building agenda. For the first time, the Commonwealth will fund large-scale investments in our ports, in our roads, in our rail and in our high-speed national broadband infrastructure for the future. (Time expired)