Crisis `could have long-term benefits`

The global financial crisis could ultimately benefit Australians by encouraging them
to save, the head of the government's Future Fund has said.
David Murray said an increase in domestic savings would reduce Australia's reliance
on borrowing from overseas.
"The natural response (to the financial crisis) is that the propensity to save will
rise," he told reporters on Wednesday after addressing a lunch of business leaders
in Melbourne.
"For Australia that is a fantastic thing because we have to reduce dependency on the
savings of people in the rest of the world."
The former Commonwealth Bank chief and current Future Fund chairman said it was too
early to tell whether the federal government's stimulus packages would ease the
effects of the crisis.
Mr Murray said Australian banks were in good shape to withstand the crisis thanks in
part to protective regulations imposed after the $5.3 billion collapse of HIH in
2001.
He said the four pillars policy put in place in 1990 by then treasurer Paul Keating,
preventing mergers between the four big banks, has played a role.
But initiatives such as the Banking Act, which came after the HIH collapse, were
critical.
"I think the four pillars was important for competition and if you work inside a
bank you would know that it is very competitive, and that is evidenced by the fall
in margins," Mr Murray said.
"But I still think that one of the unnoticed improvements that was made didn't have
to do with either of those things, it had to do with the HIH collapse.
"I think there was a benefit from HIH that was probably much larger than the HIH
collapse. For example the statutory management provisions of the Banking Act are
incredible when viewed against other countries' statutes."
Mr Murray said the Future Fund should be looking to invest in infrastructure assets.
"Because we have a CPI-plus absolute return target, then good long-term
infrastructure investments make sense," Mr Murray said.