Saved by lack of size. The big four Australian banks should not be surprised that Labor Treasurer Wayne Swan has resisted their entreaties to allow them to merge with one another in some combination or other for the evidence suggests that it is only their lack of size that prevented them from the financial stupidity that recently cost the big boys in other countries so many hundreds of billions. In announcing Australia’s response to the recommendations of the Financial Stability Forum Report on enhancing the resilience of financial markets and financial institutions yesterday, the Treasurer did not quite put it as bluntly. He was mindful of the need not to frighten the ordinary depositors, but the banks themselves will have got the message from these carefully chosen words: “Quite apart from the need to sustain competition in the banking market, I would not be at all comfortable if the soundness of our banking system depended not on the strength and risk management skills of four banks, but on the strength and risk management skills of a lesser number.” That was a polite way of saying bigger is not necessarily better and certainly not safer.

Turnbull confirms the Howard-Costello Government’s cowardice. Shadow Treasurer Malcolm Turnbull confirmed in his response to the Treasurer’s parliamentary statement on financial stability that the last government gambled considerably on no Australian deposit taking institution — bank, building society or credit union — getting in to trouble like the British Northern Rock bank as a result of the financial instability caused by the sub prime crisis in the United States. The regulatory authorities recommended that the Howard Government introduce the guarantee of swift payments to depositors that Wayne Swan announced yesterday as that Northern Rock experience showed it was the prospect of considerable delays in having access to their money that caused the panic withdrawals. It was a risky business to worry more about the electoral consequences of acting in a way that might suggest all was not completely rosy on the financial front under the Coalition’s economic management than securing the financial system in the way that is now being done.

My goodness, a bipartisan appointment! The fascination of the Labor Government for outside policy advice continues with Agriculture, Fisheries and Forestry Minister Tony Burke getting in on the act with “an expert panel” to examine the social impact of drought on farm families and rural communities, as part of its national review of drought policy. There is one aspect of the appointments worthy of at least a little praise. Minister Burke has abandoned the churlish policy of his Coalition predecessor of keeping all the jobs for his own team by putting the former Liberal Member for the South Australian electorate of Grey, Barry Wakelin, on his panel along with former Labor Senator Sue West.

Little joy in this opinion poll. If the Coalition is kidding itself that there is good news in this morning’s Newspoll then it will clearly catch at any straw. The Rudd Team’s honeymoon clearly continues with the two party preferred vote still at 57% — 14 percentage points higher than that of the Coalition. The graph below compares the two party lead of Labor over the Coalition since the 2007 election with what happened to the Coalition lead after its victory in 2004.

Polling the Young Labor lads and lassies. The really significant poll this morning is the verdict of the Daily Tele’s readers on the wowserism of the Labor Government with its anti binge drinking rhetoric made a mockery of by the behaviour of delegates to a Young Labor Party conference held in Canberra at the weekend. With gusto the Tele has written of “the disgraceful aftermath of a two-day boozefest by a group of Young Labor members that left their Canberra hotel rooms trashed and staff and guests disgusted.” The accompanying picture shows hardly an alco-pop in sight!

You will note my failed attempt to register my disgust by voting twice to join the overwhelming majority in condemning Labor’s hypocritical stance.

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Peter Fray

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