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Wednesday, 8 April 1998
Page: 2766


Mr HARDGRAVE (1:13 PM) —Here we have yet another one of those classic `if only there was a 14th year' kinds of contributions from the member for Holt (Mr Gareth Evans). If only there had been a 14th or 15th year of Labor. Heaven help us as a nation if there had been. This morning we have heard yet again a whole myriad of excuses and reasons from the dab hand of the previous failed Labor government—which had failed the whole process of deregulation of the banking sector in this country—as to why the people should overlook and, in fact, forgive the kinds of failures that have occurred as a result of a number of the aspects the Labor Party failed to actually do anything about during their 13 years in government. They talk deregulation, but what did they really do? All deregulation produced was a great loss of jobs in the banking sector and a decline in the real competition that the kinds of reforms that are contained in the bill before us today are all about fixing.

This morning we heard yet another example of the policy free zone that we have sitting opposite. It is to the great shame of the Australian Labor Party that they constantly fail to come into this place and outline clearly some of the matters that they should be outlining to the people of Australia—alternative proposals setting out what they will do if at some stage down the track they are returned to the government benches. They constantly find excuses for what they failed to do and constantly try to plead the case for a 14th or 15th year, saying it would have been different if only they had still been in government. But they again fail miserably to provide leadership out of people like the member for Holt and the Leader of the Opposition (Mr Beazley) to come up with some real policies and some matters that people can digest.

The member for Werriwa (Mr Latham) has produced a document on which a cartoon in this morning's paper was based. There was a caricature of the Leader of the Opposition and his deputy hiding between a tree poking a stick at this document. There is a suggestion of one person asking, `What is it?' The other one says, `I don't know, I haven't seen one for quite a while,' meaning they haven't seen a policy for quite a while. One would hope that the member for Werriwa's aspirations to at least get policy making debate going in the Labor opposition actually bears some fruit.


Mr Cadman —Don't hold your breath.


Mr HARDGRAVE —We will not hold our breath, as the Parliamentary Secretary to the Minister for Workplace Relations and Small Business suggests. I do not believe that this is a government that for a moment would talk away from any constructive suggestions made by those opposite. We are, after all, a government that listens to Australians and understands a wide range of concerns. You have only to look at the membership of the backbench of the government parties, along with those on the frontbench, to understand that we represent a broad range of people in Australia. We understand their real concerns. That is why I am so pleased today to see this package of bills before us for consideration.

This package of bills has come about as a result of the reforms suggested by the inquiry established by this government, not in the 14th or 15th year of the previous government, to look into the whole financial system of Australia—the range of various financial institutions in Australia. Mr Stan Wallis and his report really do need to be highlighted for offering some very positive ideas to the government, matters which have been taken up by the Treasurer (Mr Costello) and the executive and obviously endorsed by members of the backbench and the government parties.

This legislation is practical and straightforward. It provides long looked for reforms and it really is landmark legislation. It is all about fundamental reforms in the Australian financial sector. It has certainly proved that, unlike those opposite, we do not just convene inquiries and ignore the findings and perhaps convene another inquiry at another stage. We actually do something about it.

The reforms outlined in the package of bills that we are considering today will open up the financial sector to greater competition and greater efficiency. It will all be underpinned by a stronger regulatory regime which has an eye on the ability of the banking and financial sector to respond to developments which will continue to unfold. In an area where there is high technology and ongoing globalisation, there will always be unfolding developments. We have certainly left the door open to make sure not just that Australians fall in line with developments inspired from other countries but that we are active participants in the process of those developments.

These bills will set the pace for Australia's place in the world of finance. It will take Australian banks and financial institutions in general out onto the world stage. It will expose them to world's best practice and in so many cases we will prove that we will be able to establish them. All of these reforms are ones that you can bank on. That is what this package of bills is all about.

This government has had so much to do in the space of a couple of years. We have so much to undo and so much to redo, refine and repair. As a result of that massive agenda packed with so many reforms, it is a valid claim substantiated by fact, performance and record in this place that we have the most reforming government in this nation's history. This is the government that has had to do so much. It is a mantle that we can now claim because the job was so vast. After 13 years of Labor, the repair job was so big that we have had to unpick things, we have had to reform things and we have had to redirect things. We have had to provide that sort of leadership. A lot of it has not necessarily been easy, but it is certainly a fact that we should have not walked away from any of the things that we have to do. Our reforms will pay real dividends in the years to come. These bills will be part of the process that is going to provide those real dividends too.

The previous government really did give the concept of reform a very bad name. They tended to pervert the branding name of reform. They tended to pervert the concept of reform. They talked efficiency, for instance, but it really was simply a code word for less jobs and more tasks done by fewer people. They talked enterprise bargaining but, instead of having wages negotiated between workers and their bosses at an enterprise by enterprise level, where bosses and workers could sit down beside each other and discuss mutual interests, the profitability of the business and the viability of all things concerned, they had the union bosses usurp the workers' rights and negotiate wages on an industry by industry basis. They talked about banking sector competition. While they let a few foreign banks come in, there was no real regulatory reform and regulatory teeth to ensure that the existing cosy cartel would respond by providing better service and better prices for the particular banking products that they offer.

Because of Labor, the banking sector reform job has been left to us. As a result of the Labor Party's attempts at reforms over the years, we have seen job shedding, service shedding, consumer lack of confidence, higher profits for the banks and a failure to pass on low interest rates quickly. We now have a government with a policy which quite simply has provided the lowest interest rates in almost 40 years in this country and a low level of inflation. But the benefits have been sluggish in being passed on to the consumers. In particular, I cite areas such as credit card finance. I know that people in my electorate still have massive credit card debts to repay, all because the banking sector has been slow to respond. Why? Because the Labor regime left a cosy little arrangement for them.

Then we have the area of lower interest rates. In fact, I know of people—some in my electorate and some outside—who had business loans established years ago and they are still paying high business interest rates, all as a result of the Labor Party arrangements which were in place. By comparison, what do we have now under this current government and the process that the Treasurer has used to cajole the banks into some action that will bettered by the legislation before us today? We have Westpac starting to respond, with interest rates on business loans down to seven per cent.


Mr Cadman —A record low.


Mr HARDGRAVE —It is a record low. Exactly. That is tremendous news for the many small businesses in my electorate. As the parliamentary secretary knows, the Southside Chamber of Commerce, the South-West Chamber of Commerce and my Moreton Electorate Small Business Advisory Group have constantly raised matters with regard to the way banks have treated them unfairly in passing on the obviously low interest rate regime this government has been able to achieve through its reforms over the last couple of years.


Mr Cadman —And you represented them strongly to the Treasurer.


Mr HARDGRAVE —Thank you very much, Mr Parliamentary Secretary.


Madam DEPUTY SPEAKER (Hon. J.A. Crosio) —Order! The member for Moreton has the floor. He doesn't need your assistance.


Mr HARDGRAVE —Constituents, private and business alike, have all had the same complaint over the last couple of years when they have spoken to me about the banks. They have simply said that banks did not care. They felt that services were withdrawn, they felt they were charged to have direct contact services, like using a human teller, and the interest rates on credit cards and business loans remain high. Those sorts of things have happened simply because of the legacy the Australian Labor Party government of the 13 years between 1983 and 1996 left us.

Essentially, to sum up, the dab hand of Labor has been left resting on the banking sector until now. The package of bills we have here today are a result of the fact that the government of today—the Howard government—wanted changes, wanted results and wanted to get a proper assessment, which was what the Wallis inquiry was all about, and now we introduce the package of bills to make so much possible. So many things will and can change as a result. Real competition, underpinned by tough legislation, will achieve results, and the dividends are very obvious. Essentially, the four big banks in Australia will have to respond to this. I must give credit to the Bank of Queensland in my own state and Metway and those other smaller banks who have been very determined in the way they have tried to provide human service and an alternative to the four big banks to try to shame them, in the Queensland market anyway, into some better response.

Changes have been slow. When we start to see greater competition, world's best practice and an exposure to the globalisation and technology that is all part of the financial sector become the rule of the day, we will see the four big banks start to fall into line. This will certainly not be the way it has been as a result of Labor's years, where services we always used to take for granted were removed and where we saw people being charged for the privilege of banking their money.

On top of this, in a more broader context, this government is committed to making Australia a leading business centre in the Asia-Pacific region. These reforms will also help this happen. These will bring improvements to our financial system, along with a wide range of reforms to our corporate laws, which will provide some basis of support for this.

The Wallis inquiry into our financial system found there was rapid change as a result of technological innovation, increasing globalisation and changing business and consumer needs. They are all matters which will certainly shape the future as far as the finance sector and, indeed, the entire economy, is concerned.

While we are challenged to keep pace with this ongoing, rapid nature of financial system innovation, we cannot leave our regulatory regimes anchored completely in the past. They must be modernised. This is a sector which will contribute strongly to job growth and growth of our nation's economy. We must not talk just about more jobs but also, as a result of these bills, talk about better jobs for Australians. This can be achieved only by encouraging our financial institutions to achieve world's best practice and to get from the late part of this century into the next century.

We can prove our prowess. The government is providing a lead by these bills before us today to challenge our financial sectors to expose themselves to the international financial services market and the high level of competition it provides. The government firmly believes that this can be achieved while ensuring that some basic goals of systemic safety and stability are made paramount.

There are a number of other important underlying objectives, given that the regulatory focus needs to be clear and given the need to minimise market entry restriction and failure. Competition must be enhanced but not at the expense of stability and safety. This government is providing a regime which will afford Australians the certainty they need before they boldly go beyond the traditional big four bank arrangements they are now quite used to. I am sure that in a lot of ways without such reassurances the competition that we all want could fail, as it did under the Labor government.

Three key objectives for government intervention through regulation of the financial system are worth noting here. The first is the maintenance of financial stability. There are various ways of ensuring a safe and reliable payments system. Of course this marries directly with the price stability that is the main objective of monetary policy. The second goal is the provision of specialised regulation of conduct, disclosure and dispute resolution for financial service providers and financial markets.

In addition, we also recognise that some sectors of the financial system which require more intense regulation for safety and stability reasons should also be beefed up to ensure that this particular aspect of prudential supervision is also locked in place. In order to do this, we are looking at the Australian Prudential Regulation Authority, a new single prudential regulatory authority charged with the provision of a more efficient and competitively neutral regulation across all the prudentially regulated sectors. This is a matter of updating the Labor legacy of several agencies, providing a form of regulation.

APRA, not to be confused with the Australian Performing Rights Association, which has the same acronym, will be keeping an eye on matters. It will be the prudential regulator of banks and other institutions which take deposits, including life and general insurance companies, retirement income accounts and superannuation funds. They will have comprehensive powers as an organisation and they will be responsible for licensing regulation of the institutions authorised to provide these various services.

The bill sets out a number of ways and means in which the powers and functions of APRA will be established. It will provide for the laws and regulations to be administered by APRA in relation to each sector. It will be an independent regulator. Like the Reserve Bank, it will always be subject to the Treasurer's overriding policy determination power.

There is also provision within these bills for the funding of APRA from moneys appropriated from a collection of levies paid by regulated financial institutions and also from charges for certain services. APRA will become fully operational on 1 July this year or as soon as possible thereafter. So here we have a one-stop shop, a single prudential regulator. It will provide flexible, efficient and coordinated regulation which is consistent across the financial sector. It is important that everybody understands there is one set of rules.

It aims for excellence as far as regulation is concerned as well as enriching career opportunities for the staff and developing comprehensive and closer links with the financial system as a whole. This is a very worthwhile step forward as far as the government is concerned. It certainly has done its part. It is providing the lead that we need in this financial sector. Clearly, consumers also have a role to play. It is not necessary for consumers to put up with poor service because they are uncertain about making the big move from the bank that perhaps they have used for a long time, particularly for older Australians.

There is no need for them to put up with poor service, being uncertain of where they might put their foot next. They do not need to put up with high bank charges. They do not need to put up with the failure to pass on interest rate cuts any more—all legacies from the failure of Labor in this particular area of policy. While people may still be reluctant to change banks because of some loyalty to banks in the past, they should realise that by staying with a poor performing bank they are rewarding the contempt that the banks have shown consumers in so many cases over the years, especially in recent years following the Labor Party's failure to address the sorts of concerns that this government is dealing with here today.

We are addressing the failures of the past, of the previous government. We are exposing, as a result, the policy free zone on the other side. We are also exposing the lack of leadership that those opposite have shown on a wide range of issues. We are dealing strongly with an important policy area. We are providing a lead for today and into tomorrow. We are providing a lead which will give Australia's financial sector the opportunity to compete and be part of the world stage, to provide innovation and best practice. It is a terrific set of measures contained within the bills before us today, and I commend them to the House.