Testing the power of prayer. The power of prayer is being tested in Canberra today as Attorneys-General from around the country meet to consider a proposal to update the classification system for computer and video games to include an R18+ rating similar to that for videos and DVDs. The South Australian Attorney General Michael Atkinson is on the record opposing the change and because a unanimous decision is required, that should be enough to keep excessively violent and explicitly s-xual games from being sold in Australia. Christian groups, however, are leaving nothing to chance and the following prayer appears on The Night Watch Worldwide Prayer Network:

Please pray:

  • for the Federal Attorney-General, the Hon. Robert McClelland, to have wisdom as he leads the meeting and that the Attorneys-General would stand against pressure from lobby groups representing the entertainment industry, and show forth moral leadership as a team.
  • that the Attorneys-General would understand the greater potential for harm that games have on young minds due to their interactive and impacting nature. The impact being more invasive and interactive than films, videos and literature.
  • that consideration be given at the meeting to tightening the already existing MA 15+ rating to ensure that violent games are not able to be accessed.

A more difficult prayer to be answered , methinks, will be the one required to seek divine intervention to stop people downloading over the internet from other countries the material that cannot be bought legally within this country.

A final worthy contribution. In one of those rare touches of bipartisan political good sense, the Finance Minister Lindsay Tanner has asked Democrat Senator Andrew Murray to play a role in reviewing budget transparency issues as part of the Labor Government’s “Operation Sunlight reforms.” Senator Murray will end his parliamentary career on 30 June after 12 years in which he took seriously the responsibility of considering government legislation. That great economic reform the goods and services tax would not exist without his courage in resisting the pressures from within his party to do what was best for the Democrats as a party rather than what was best for the country. It is refreshing to see that Minister Tanner appreciates the contribution Senator Murray has made over the years and has asked him “to review options for greater disclosure of Budget and financial information, and provide a report to the Government before 30 June 2008. ”

He would say that wouldn’t he? The Reserve Bank Governor Glenn Stevens was remarkably sanguine about the Australian financial system when he addressed Smart Capital 2008: The Euromoney Australian Financial Markets Innovation Congress in Sydney. “The local financial community,” said the Governor, “has certainly been affected by the global turmoil but, on the whole, as the Reserve Bank’s Financial Stability Review being released later this morning sets out, is weathering the storm well. Profitability remains very strong and capital sound. There is very little direct exposure to the US sub-prime problems, but the main reason for the resilience is many years of robust economic growth, sound regulatory foundations and prudent risk management. The Reserve Bank has been carefully monitoring access to funding, including offshore funding. We judge it to have been more than adequate, even if more expensive, though, of course, we will continue to watch the situation closely.”

With those reassuring words out of the way, the Stevens speech proceeded to analyse developments in financial markets in other parts of the world which was probably the wise course to follow. For in the Financial Stability Review to which he so briefly referred was a good reason for not encouraging people to think too much about the circumstances in which Australian banks now find themselves. “The UK experience,” says the Review, “has also focused attention on the difficulties that can arise when liquidity support outside of the central bank’s normal operations becomes public knowledge. An important catalyst for the run on Northern Rock was rumours that the Bank of England was prepared to provide ’emergency’ liquidity to the bank, with the run only being contained when the Government announced a guarantee of deposits.”

How such a run on an institution should be handled in Australia is now being examined by the Council of Financial Regulators which is made up of representatives from the Reserve Bank, which chairs the Council; the Australian Prudential Regulation Authority (APRA); the Australian Securities and Investments Commission (ASIC); and the Australian Treasury. This Council in fact made a recommendation to the previous Coalition Government for the establishment of a scheme to repay depositors in a failed authorised deposit-taking institution (ADI) in a timely fashion. The subsequent evaluation of the Northern Rock collapse showed the wisdom of the recommendation and it is quite astounding that the then Coalition Treasurer Peter Costello did not act on the recommendation. There was clearly a fear that even mentioning the possibility of needing to do something to help depositors in the event of a run on an Australian bank would tarnish the reputation of the Coalition as sound economic managers.

What happened in Britain is described this way in the Financial Stability Review:

One aspect of the UK arrangements that has featured prominently in the post-crisis evaluations is the design of the deposit insurance scheme. Prior to the run, depositors were guaranteed to receive repayment of the first £2 000 of any deposit in a failed bank, and 90 per cent of the next £33 000. There were, however, no arrangements in place to make these repayments to depositors in a timely fashion. The combination of the 10 per cent ‘haircut’ on repayments above £2 000 and likely delays in repayment are widely thought to have contributed to the scale of the run.

Under the existing legislation in Australia, depositors rank ahead of other creditors in a failed ADI, although they are likely to have to wait some time before they could be repaid. Given this, the Council of Financial Regulators wants an Early Access Facility, which would provide early repayment of up to $20 000 per depositor in a failed institution which it estimates would cover the entire deposits of around 80 per cent of depositors. Such a facility was recommended to the previous Government, and is now before the current Government, while Council members, says the Review, have continued to investigate a number of technical issues relating to making early repayments to depositors in a closed institution.

The quartet of the Reserve Bank, APRA, ASIC and Treasury are also looking at other changes in the light of the Northern Rock experience. While APRA’s powers in dealing with a failed financial institution are more extensive than those available to the Financial Services Authority in the United Kingdom, the Council “has recommended legislative changes that would give a statutory manager appointed by APRA additional powers, and provide APRA with greater flexibility in arranging a takeover by, or a transfer of assets and liabilities to, another ADI in a timely fashion.”

The Daily Reality Check

I thought Crikey had finally made it into The Age this morning when I saw this cuddly little fellow on the home page.

I was shocked too, of course, at the thought that my workplace was a haven for a fiend who would r-pe a wombat. Thus the relief to find my fears were groundless and that it was the wombat that allegedly did the r-ping on the Crikey Man and that Crikey was used in its exclamatory sense anyway. Not a horror story about Stephen Mayne or Eric Beecher at all.

Just another tale of a New Zealander loving animals but it did make the most read list on the internet where it was in good company this morning. To go with the r-pist wombat there was the incredible pregnant man, pictures of the French President’s new wife n-ked, a smoking tortoise found in China and Julia Gillard feeling sorry for Wayne Carey. A rattling good news day on the net.

The Pick of this Morning’s Political Coverage

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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