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Wednesday, 8 April 1998
Page: 2775

Mr HAWKER (1:52 PM) —I must admit that I was very interested in listening to the honourable member for Cunningham (Mr Martin), who is, as he has pointed out on several occasions, a member of the Standing Committee on Financial Institutions and Public Administration, which I now chair. It is a committee which, under his chairmanship, did do a lot of very valuable work. However, I did think he was a little less than generous in some of his compliments to the government for the work they have done in initiating the Wallis inquiry and then taking up the recommendations and moving forward. These are very significant changes coming about because of this legislation that we are debating here today. It has come about because of an initiative of the current government. So I think he could have been a little more charitable in giving credit where credit is due for what has been put forward.

I also felt, listening to him speak, in comparison to the previous speaker from the opposition, the shadow Treasurer, the member for Holt (Mr Gareth Evans), that it is fairly clear who understands banking and who does not. The Leader of the Opposition (Mr Beazley), in his casting around in desperation to revitalise that front bench, because he seems to have such difficulty with the Jurassic Park element these days, clearly ought to promote the member for Cunningham. I think he certainly could do the job of shadow Treasurer.

Mr Martin —Hear, hear!

Mr HAWKER —I am glad to see that he actually agrees with me too. I also found it rather interesting—and maybe it is slightly confusing—when he started talking about the six pillars policy that the Labor party is adhering to because, certainly in the earlier part of his speech, it was quite clear that he does not agree with it. I thought that was quite contradictory to what the shadow Treasurer was saying. He did try to qualify it later, but you could see that his heart was not in the latter part of his speech when he said that. That shows that there is some dissension in the ranks. No doubt the member for Cunningham really is looking to be lumped with the group over here—the young and restless. I think you can just still make it, Steve. You could join the young and restless and really start to push the oldies off the other end of the bench.

We must also recognise that when it comes to introducing these changes to the way the financial system is to be regulated it is being done in a way where the government can show it is actually yielding results now. If we were to make a simple contrast with what happened when the previous government started some of the moves to deregulate, what did we see happening in Australia? What was one of the results of this? It was that the financial system had some difficulties and interest rates went up. I emphasise that. Under the Labor government, when they started to deregulate, interest rates went up.

What a contrast. This government has made the move with this inquiry. The confidence of that has been engendered in the whole financial system and has seen interest rates come down. That speaks volumes about the approach of the current government compared with the previous government. There is no doubt that the vast majority of Australians would be grateful for the way this government has approached it and for the results it is already achieving. Clearly, there will continue to be results as we move down this path of further change to financial regulation.

I would also like to compliment the member for Cunningham in bringing forward the importance of the Standing Committee on Financial Institutions and Public Administration. He clearly understands all about it. Unfortunately, the shadow Treasurer does not seem to have even heard about it. All he wanted to do was talk about one little aspect of what might be happening in regional Australia. That was only one of over 100 submissions that have come before the committee talking about ways and means of providing alternative banking systems for regional Australia, particularly for smaller centres.

The reference that the committee has today is directly taken from the Wallis report—recommendation 96—that government should examine alternative means of providing low cost transaction services. That is something that we will be following up. I think the committee is doing some extremely good work and will come up with a very good report.

As the Treasurer (Mr Costello) said in his second reading speech, this is landmark legislation. It is a very significant part of the reform of the Australian financial sector. It certainly does follow from an excellent report that was put together by the Wallis committee. I would like to pay tribute to the work that they put in to producing an excellent report in fairly short time—one that is certainly forward looking and one that will put Australia at the forefront of financial services not only in the region but also right throughout the world.

It is designed to improve the efficiency and the competitiveness of the Australian financial system while at the same time preserving its integrity, its security and its fairness. It will mean that Australia will have a stronger regulatory regime and will be better able to respond to developments in the finance sector—including globalisation and technological change and the needs of both businesses and individuals. I will come back to that point a bit later on.

I would also like to follow up on the move the government is now promoting, which I think all members of the parliament would support, that not only should Australia be one of the world leaders in best practice in financial services but also we should look towards Australia becoming one of the great financial centres of the world along with Tokyo, New York and London.

Mr Howard —Hear, hear!

Mr HAWKER —I thank the Prime Minister for his interjection there. It is also very significant to note that, in the approach to changing the financial regulation, there were three fundamental objectives for the government. The first was the maintenance of financial stability, including a safe and reliable payment system. That is something that all of us expect. While there has been some discussion already about the question of what sort of security deposit takers really do expect, the current Deputy Governor of the Reserve Bank, Mr Graeme Thompson, who is to take over as the prudential regulator, has pointed out that if a bank's fund management subsidiary were to be hit by major losses—I am talking about subsidiaries of banks rather than the major banks themselves—it should be realised that the presumption must be that a bank will not necessarily provide support. That is an important point being clarified by this legislation so that that will be understood.

The second goal is the provision of specialised regulation of conduct, of disclosure and dispute resolution for financial service providers and for the financial markets. As the Treasurer pointed out, this is a very significant part. The third objective is the prudential supervision of those parts of the financial system which require more intense regulation for safety and stability reasons.

Mr SPEAKER —Order! It being 2 p.m., the debate is interrupted in accordance with standing order 101A. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.