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House of Assembly - Fifty-First Parliament, Third Session (51-3)
2008-11-11 Daily Xml
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GLOBAL FINANCIAL CRISIS

Mr GRIFFITHS (Goyder) (15:04): My question is to the Treasurer. Are we or are we not seeing the collapse of the global banking systems? On 10 November the Treasurer publicly said, 'We are seeing the collapse of the banking systems.' When questioned further about the statement, the Treasurer said, 'I have not said that.'

The Hon. K.O. FOLEY (Port Adelaide—Deputy Premier, Treasurer, Minister for Industry and Trade, Minister for Federal/State Relations) (15:04): Could you repeat that?

Members interjecting:

The SPEAKER: Order! Could the member for Goyder repeat the question? If members on my right are quiet, the Treasurer might have a better chance of hearing it.

Mr GRIFFITHS: Are we or are we not seeing the collapse of the global banking systems? On 10 November the Treasurer publicly said, 'We are seeing the collapse of the banking systems.' When questioned further about the statement, the Treasurer said, 'I did not say that.'

The Hon. K.O. FOLEY: I do not know what planet the member for Goyder has been living on over the past few months, but we have seen the collapse of the world banking system, and what that has necessitated is the most extraordinary intervention by governments globally the world has ever seen. It started with Bear Stearns. The US government decided not to bail out Lehman—and it will be interesting over history to see whether or not that was a good or bad judgment call—but that bank collapsed. We have seen—

Mrs Redmond interjecting:

The Hon. K.O. FOLEY: We have seen—

Mrs Redmond: No response.

The Hon. K.O. FOLEY: What point are you making?

The SPEAKER: Order! If the member for Heysen has a question, I am more than happy to give her the call.

The Hon. K.O. FOLEY: The mortgage houses of Fanny Mae and Freddy Mac have been saved by government. I think Washington Mutual—did that go through or was that saved, I cannot recall now? Merrill Lynch has gone. In the United Kingdom, you have seen forced mergers between Lloyds and the HBOS, from memory. You have seen—

The Hon. M.D. Rann: The Royal Bank of Scotland.

The Hon. K.O. FOLEY: The Royal Bank of Scotland. I think there have actually been some collapses of banks in Germany. Look at Iceland: I mean, Russia bought Iceland. What is occurring is the collapse of the world banking system that has provided and necessitated national sovereign governments to step in and to prop up these banks. In fact, at one of the meetings I had in London, a very senior finance executive made this observation: in Europe, or certainly in the United Kingdom, banks that were once commercial-for-profit enterprises were now not that, they were simply there providing a social service propped up by government.

We actually need to lend and borrow money for a society and an economy to function. We need to house our people; they need to borrow money. You have to have finance available as a social service. If the government chose not to prop up these banks anywhere around the world, the system would have not only collapsed but it would be beyond recognition. In Australia, we have also had the extraordinary intervention by our national government—and appropriately so—to underwrite and to guarantee our banking system. If that is not the collapse of the banking system, I am not sure what is.

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