The Federal Opposition has offered a three-point plan for strengthening the Australian economy.
As Australian and international stock markets spiralled downwards today, the Leader of the Opposition, Malcolm Turnbull, has called for the Rudd Government to:
- Increase the proposed Government backed deposit guarantee scheme to cover deposits up to a minimum of $100,000;
- Increase the investment into AAA rated Residential Mortgage Backed Securities through the Australian Office of Financial Management to at least $10 billion;
- Announce it will not implement the Emissions Trading Scheme prior to 2011.
This is the text of a media release from the Leader of the Opposition, Malcolm Turnbull.
The Coalition today calls on the Rudd Government to take three immediate decisions to further strengthen the Australian economy in response to the international financial crisis.
Increase the proposed Government backed deposit guarantee scheme to cover deposits up to a minimum of $100,000
In the light of the current global economic crisis, the Coalition considers that the proposed $20,000 cap per person is less than adequate and, moreover, out of line with similar schemes in the rest of the world.
Accordingly, the Coalition proposes that the cap be increased to allow Australians, including small businesses, additional assurance in these difficult times.
The coverage of the enhanced assurance would be the same as that recently announced with bi-partisan support and includes chequing, savings, and term deposits in authorised deposit taking institutions such as banks, credit unions and building societies.
Increase the investment into AAA rated Residential Mortgage Backed Securities (RMBS) through the AOFM
Given the continuing demand for liquidity in the mortgage finance area, and having consulted widely with the industry and other experts our view is that this level of investment should be raised to at least $10 billion.
This compares to an RMBS issuance of around $18 billion per quarter prior to the sub-prime crisis, but nonetheless it will make a more meaningful contribution to supporting competition and do so without compromising in any way the prudent investment standards of the AOFM under its Act.
Announce it will not implement the Emissions Trading Scheme (ETS) prior to 2011
Responding to climate change is urgent but given any ETS would start with a low trajectory and low carbon price, and given we are set to meet our Kyoto Target in 2012, delaying the introduction of a scheme by one or two years will make no difference, on any objective appraisal, to the effectiveness of our ultimate response.
The time has come for the Prime Minister to admit that his promise of a 2010 start date was no more than an election year flourish and return to a timetable that enables Australia to make decisions when we are fully informed of the global response at the Copenhagen Conference in December 2009 and the policies of the new US President.
The Coalition believes these three decisions will help to rebuild confidence among Australian households and businesses at this very necessary time.
The Coalition will work co-operatively with the Government to expedite the passage through Parliament of any legislation to implement the deposit guarantee.
This is the transcript of a press conference held today by the Leader of the Opposition, Malcolm Turnbull, and the Deputy Leader, Julie Bishop.
I’m here with the shadow Treasurer Julie Bishop. We are dealing with great economic challenges and they call for leadership and they call for action. And they call for decisions. And we are proposing today three decisions the Government can take immediately which will strengthen the Australian economy in the face of this economic crisis and add confidence to Australian households and Australian businesses in these very difficult times.
Our first recommendation is that the deposit guarantee proposal that the Government presented recently, which we supported, and which had its origins during our time in government, of $20,000, be increased to $100,000. That would mean Australians with deposits in authorised deposit taking institutions, banks, building societies, credit unions, would know that their deposits up to $100,000 were effectively guaranteed by the Government.
We think this is an important measure, it will add to confidence and it will support competition.
The second matter that we want to raise is confidence and competition in the Australian mortgage market. Now recently you’ll recall we recommended that the Australian Office of Financial Management invest in the investment grade, triple-A rated residential mortgage backed securities market which has been so important in providing funds for Australian mortgages, to enable Australians to buy their homes.
Now that market has all but closed up and the Government responded to this initially in an uncomplimentary fashion but then adopted the proposal and has decided that $4 billion should be invested in this market.
Now Julie Bishop and I have been talking to industry leaders and our conclusion is that an additional sum is required. So we are recommending that not less than $10 billion be invested in the residential mortgage backed securities market.
The third decision that we recommend relates to the emissions trading scheme. In an election flourish last year Mr Rudd said that he would commence an emissions trading scheme in 2010. Which means that the design of the scheme would have to be finalised before we know what the rest of the world is going to do at Copenhagen which is the big climate change conference in December next year, and indeed before we know what the new US president will do.
Both Senators Obama and McCain have very different climate change policies to President Bush but nonetheless we won’t know how they will take shape until they are in office. Now that is why when we were in government our target for a start date was 2011 or 2012. Industry has come back to the Prime Minister and said 2010 is too soon, it’s too rushed, it’s too hasty. We cannot make these big decisions in the dark.
Even Professor Garnaut notes that Australia acting by itself will make no difference to climate change. We have to be part of a global solution and we strongly support an effective global response. So while we support Australia playing a leading role in the battle against climate change we have to play that role with all of the information. We should not design an emissions trading scheme in the dark. We should not put a heavy cost on our industries without knowing the shape of the new global agreement that succeeds Kyoto.
So for that reason our third recommended decision is that the Prime Minister should acknowledge that 2010 as a start date was an election year flourish and particularly in these circumstances, great economic decisions like this should be made with all of the relevant information to hand. And that means that the scheme should not be finalised until after we know what the global reaction will be and consequently the start date should be delayed to 2011 or 2012, when we can make a fully informed decision.
Mr Turnbull on pensions the Government says that there is going to be a guaranteed pension increase in next year’s budget. What sort of pension increase should that be? What would you like to see?
Well as you know we’ve recommended as an immediate measure a $30 a week increase in the single age pension and the corresponding veterans’ entitlement. The Government had the opportunity of taking that up in the Parliament after the Senate had passed the bill. This is a government that is so out of touch its leading members say they cannot live on the pension, a pension that millions of Australians are living on. And yet they are not prepared to lift a finger to do anything about it.
Now as far as the timing of when they will take action we’ve had some very confusing messages from different members of the Government, Julie I think you’ve been monitoring the range of responses from them.
Well we’ve had a response from Wayne Swan who said that there would be a measure in next years’ budget. Then Lindsay Tanner the Finance Minister backed away from that and said he would not be held to any guarantee on any matter which was obviously very bad news for the pensioners. And then the Prime Minister has had several positions on this issue. The point is that the pensioners of Australia have no idea whether the Government will support them in the future. They certainly won’t support them with an increase now. And there’s great uncertainty about whether the Government will commit to an increase in pensions in the next budget.
And having said that leading members of the Government could not live on a pension they are condemning millions of Australians to doing just that.
Can we still afford pension increases in the current financial climate?
We cannot afford not to provide pensioners with some relief at this time. Pensioners are doing it tough and we believe that a $30 a week increase will help them meet their obligations, ensure that they are secure and that they are able to live at at least a decent level. The Ministers of the Government say they couldn’t live on the single age pension, it would be impossible to live on it, yet they condemn people to doing just that.
What should happen to people whose rent or accommodation is linked to the pension base rate?
Well these are all matters of some detail that will come out in the course of the review. And this is what we don’t oppose the Government’s review, we support it. It is a complex area, we recognise that. But unlike the Government we do not believe that government…unlike the Labor Party I should say, we do not believe that government is simply about reviewing. There is an immediate need for support and it can be dealt with immediately with that $30 a week increase. Of course there are great complexities relating to rent and other matters and they are worthy of careful study and consideration. And we welcome that. But there is an immediate need. Never forget, the only thing that stands between the pensioners of Australia and a $30 a week increase to the single age pension is the cold indifference of the Rudd Government.
Just back on the proposals that you putout today involving bank deposits. Is the Australian economy in a position where these increases that you’ve suggested are feasible?
Very much so. Deposit guarantees are very common around the world. In the United States for example there is a $100,000 deposit, or there has been a $100,000 deposit guarantee in place for many years. It has recently been increased to $250,000. Deposit guarantees have been introduced in the UK and many other countries. It’s really a testimony to the strength of our banking system that an explicit guarantee has never in the past been seen as required. Now there are very powerful reasons for having one in this climate and we believe that $20,000 is inadequate in this climate and that’s why we recommend it be increased to not less than $100,000.
In saying that Mr Turnbull, there are reports from Europe today saying that some people are taking their money and their goods out of bank accounts and putting them in their home safes for security. Do you think that’s something that could happen in Australia?
I don’t believe so. I think Australians have great faith in the banking system. The banks are well regulated by APRA, the prudential regulator and well managed. We’ve got a great, very superior banking system in Australia but confidence is everything and I think governments have to take action, strong action, decisive action to build confidence and increasing the guarantee from $20,000 to $100,000, I believe will add to confidence. I think it’ll be seen as providing additional assurance to Australians in these very difficult times and it’s certainly quite in step with what’s happening, what other governments are doing around the world.
You see Australia already has a depositor protection scheme whereby our depositors have first claim on the assets of a deposit taking institution – a bank or a building society or a credit union. What we are proposing is to add confidence to that system so that if people were to make a claim on a bank at least they would have access to $100,000.
Immediately, and so that is the point but we are certainly not suggesting in any way, that Australian banks are anything other than extremely strong, robust and very well regulated.
On the carbon trading emissions scheme, do you expect to come under criticism for your calls now to delay the implementation of it?
Well we have, we’ve argued all year that 2010 was an unrealistic start date. You have to remember, when we were in government in 2007, we proposed an emissions trading scheme. Indeed, we introduced legislation to start putting it into place. And we were told the best advice that we had from the public service was that the earliest you could start it was 2011. And that’s why we set a start date of 2011 or 2012 and there was some considerable significance in those dates because as everybody recognises, including Professor Garnaut, who’s made this point at great length. Whatever we do will have little or no impact without global action. So the absolute objective is global action on climate change, to reduce CO2 emissions.
Now we are living in a very difficult global environment at the moment. There’s a lot of uncertainty around, we recognise that. There is a global conference at the end of 2009 in Copenhagen to agree on, the aim is to agree on the successor to the Kyoto Protocol. We have a new US president who will undoubtedly take a different approach to George Bush but how the new president be it Obama or McCain will approach the issue will obviously be influenced a great deal by the prevailing economic situation.
So all of that says, common sense says that one should make a decision like this, the Government should make a decision like this. When it is fully informed, when we’ve got all of the relevant facts at hand and so that’s why we took that view on timing in 2007 and I say in 2008 doing this in a deliberate, responsible, well-informed fashion is more important than ever.
Just on another issue Mr Turnbull, there’s reports that the coronary report from the body found in Croatia will be released. There’s also a few reports floating around from Croatian police that it resembles the body of Britt Lapthorne. Do you think Australia is still doing its utmost to support the Lapthorne family?
Well look I won’t add to the comments of Senator Coonan, the Shadow Foreign Minister has made other than to say this. I’ve been…I’ve spoken to Elke Lapthorne, to Britt Lapthorne’s mother. We’ve had very close discussions with the Government about that through Senator Coonan speaking to her counterpart, the Foreign Minister, Stephen Smith. We don’t want to make this a partisan or a political issue at all, the only thing that matters is that Britt Lapthorne is found. That is the objective.
Every assistance should be given, we are concerned that there have been witnesses, important witnesses that are being interviewed by the media, before they’re being interviewed by the police. And if additional AFP resources can be made available to work in Croatia to encourage more timely action by the Croatian authorities, working with them, that would obviously be desirable. But the only, our only focus and you will have seen this from Senator Coonan’s comments is focused on the safety of Britt Lapthorne and of course supporting her family through this very difficult time.
Thanks very much.