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Wednesday, 15 October 2008
Page: 9186


Ms JACKSON (2:01 PM) —My question is to the Prime Minister. Will the Prime Minister outline why decisive, strong and early action is required to respond to the global financial crisis?


Mr RUDD (Prime Minister) —I thank the member for Hasluck for her question. Overnight the United States took further action to shore up confidence in financial markets. The plan has several elements. The first is a $250 billion voluntary capital purchase program for US financial institutions. As part of this plan $125 billion will be injected into nine banks in coming days. This is a further and extraordinary measure by the United States government. Second, there will be an exemption allowing the Federal Deposit Insurance Corporation to temporarily guarantee the senior debt of all FDIC insured institutions.

Developments in the United States overnight underline the absolute importance of this government and this country acting responsibly in dealing with the challenges not just to the financial system but to the real economy flying from the global financial crisis. That is why the government took the action that it did over the course of the weekend to guarantee deposits for banks, building societies and credit unions. That is why the government took the action that it did over the weekend to provide a guarantee in relation to the term wholesale funding arrangements of our banks as well in order to ensure that loans could continue to flow into the Australian economy for real businesses generating real jobs for the future.

The second part of the government’s response to the challenges of the global financial crisis is in the economic securities strategy which the government outlined yesterday. The elements of that strategy go to pensions, families and housing as well as to training and nation building. The honourable member asks about the response which the government has made to the crisis and recent developments. I am pleased to inform her about the particular implications in her community in Western Australia of one of the measures announced by the government yesterday, and that is the measure relating to pensions. To boost household consumption and to assist older Australians and carers the government will provide $4.8 billion to fund a one-off payment of $1,400 to single pensioners and $2,100 to couples. To put this into context, in the member for Hasluck’s electorate this means that 13,920 pensioners and carers will benefit.

Secondly, in relation to families, in the measure we announced yesterday was a one-off payment for eligible recipients of family tax benefit A for $1,000 per child—again, a payment to be made in December this year. This measure will benefit around 3.8 million Australian kids and some two million Australian families. These payments will be delivered by December at a cost of around $3.9 billion. Going to the honourable member for Hasluck’s electorate in Perth, in Hasluck there are 17,355 children from some 9,013 families who will benefit from this measure. Again, this is a practical measure.

On housing, the third area of the government’s strategy, the measure we have announced will boost the first home owners grant through what we describe as a first home owners boost, that is, doubling the grant from $7,000 to $14,000 in the case of first home owner purchases in the period ahead and tripling that grant for those who are purchasing not just their first home but a new home as well to $21,000. We understand that this measure is designed to benefit around 150,000 first home buyers in Australia.

The training packages we announced yesterday go to the doubling of the Productivity Places Program already announced by the Deputy Prime Minister and we look further to the government’s announcement in December of its response to the interim project lists which come out of general infrastructure, hospitals and education in unfolding the government’s nation-building agenda for the future. The cost of this package, as the honourable member will be aware, is in excess of $10 billion. That has been made possible because the government has planned ahead, putting aside a sizeable budget surplus in order to deal with the challenges of the future and, in putting that surplus to one side, planning for the future and drawing on it.

Opposition members interjecting—


Mr RUDD —For those honourable members interjecting from opposite, I have one message for them: to assist working families, pensioners and carers, it would help a lot if they unblocked the further $4 billion plus worth of measures that they are currently obstructing in the Senate. We hear many pious political statements about bipartisanship. Bipartisanship begins in the Senate, and that action begins with passing $4.3 billion worth of measures which are fundamental to the budget’s bottom line into the future and also of great help in delivering the support that the government has made available to the community through the Economic Security Strategy announced yesterday.

Finally, the honourable member asks about responses to the global financial crisis. I also announced earlier today that the government is examining measures to address excessive executive compensation in the financial sector. Those who have followed developments in recent times will be familiar with the way in which remuneration packages in certain financial institutions have made this financial crisis worse. What we have indicated today is that the government, in partnership with APRA, will now develop a template not just for this nation for the future but also for examination by the G20 and other international institutions of how excessive executive compensation can be reined in in the future. We believe this is the right course of action. It is not only the right course of action in terms of fairness; it is the right course of action because it is also intrinsic to sorting out the long-term stability of the financial system. The global financial crisis impacts on the real economy; it impacts on the financial system; it also impacts on how we design our regulations for the future. The government’s belief is that we have to act at all these levels. That includes making sure we have regulations in the future to deal with some of the excessive greed we have seen in private financial institutions in recent times in Australia, internationally, and consistently.