The Minister for Financial Services and Regulation
21 October 1998 - 26 November 2001
26 March 2001
SUBJECT: Response to ALP Banking Policy
MINISTER: Today we have seen the Australia Labor Party steal from the Australian Bankers Association key policy initiatives, this is a travesty, the Government and the Australian Bankers Association have been discussing key initiatives in relation to consumer banking for a number of weeks now. Last week the Australian Bankers Association confidentially briefed the Labor Party on the policy initiatives which includes key policy support for people who are disadvantaged, for people with a disability and for banking customers generally, including low fee accounts.
Today, after the Labor Party had said on numerous occasions that they would be releasing their policy in April/May, they release their policy which contains large slabs of policy from the Australian Bankers Association. If Kim Beasley were a university student he would be thrown out of university for plagiarism. This policy from the Labor Party today is nothing more than mutton dressed up as mutton.
QUESTION: Minister, does it matter who wrote the policy and the good ideas? And will you pick them up?
MINISTER: Well a number of the initiatives in the policy, are in fact initiatives that the government has been discussing with the Australian Bankers Association, so if this is what the Labor Party is putting down as it's credentials for Government then it says a lot about the Labor Party's policies.
QUESTION: What about the mandatory social obligations and the fact that if the banks don't come on to elements of the charter then it will be legislated and there will be big amounts of money at stake here. Do you endorse that?
MINISTER: Well the voluntary charter is already in tatters because one of Australia's major banks has already rejected being a party to the charter. Therefore, if one of those party's is not, Kim Beasley has today, claimed that he is going to re-regulate banking, he's imposing a $20million fee each year, and that is going to go directly onto bank customers. Unless, you cap bank profits and there is no suggestion of that from the Labor Party then you have to pass that directly onto bank customers.
MINISTER: Our policy will be released closer to the election, but we have been discussing real outcomes with the banks, we wanted to see the bank's initiatives today implemented as soon as possible, including low fee and no fee accounts for people most disadvantaged in the community.
QUESTION: Do you rule out requiring the banks to sign up to an enforceable code of conduct?
MINISTER: There is no social charter from this government because it is unenforceable, it is a phony proposal and it lacks credibility. The Labor Party on their first major policy announcement have today been made a laughing stock, not just by their own words but by the words of everyone involved in the banking community.
QUESTION: So they couldn't make it law? Are you saying there is no way to get the banks to pick up their game?
MINISTER: Of course, there is a way to get the banks to pick up their game, and a lot of the initiatives announced by the banks today have been a direct result of our discussions with the banks. We put forward two submissions to Viney, which the ALP did not respond. The Labor Party has not put in any submissions to the Viney review of banking therefore today, when it comes time for the Labor Party to put down in writing a banking policy of it is stolen from the banks themselves.
QUESTION: But Minister, as you've said already one of the big banks has said it wouldn't participate in a social charter like that if it won't do that what's the point of having a voluntary code [inaudible] it's not going to grow as far as you might want it to?
MINISTER: Well no one knows what the social charter means, I mean if the Labor Party thinks that they can reopen bank branches right around Australia. How much is it going to cost? Who's going to run those bank branches? If the Labor Party is serious about reopening bank branches today they had to tell us who is going to run those branches, because the big banks aren't. So, the Labor Party is now going to get back into banking as Government. The Labor Party has a terrible history in banking and this is confirmed by the fact that today they stole of their policy from the banks themselves.
QUESTION: If the banks are expected to be forced to take prudential obligations why not social obligations as well?
MINISTER: Because there is always a cost to social obligations from banks and the best way to do it is to get the banks to work together with the community to deliver real benefits to those most disadvantaged. Banking is now a globally competitive industry, we have major financial institutions from around the world, now offering products in Australia. If you are going to try and impose this social contract in Australia, who is going to pay? What about those banks that have no branches, what about the mortgage originators that have no branches? Will they be a party to this social contract and if not how are they going to pay the levy, why should they pay the levy for branch services that they don't deliver?
QUESTION: Could not the ACCC monitor to ensure though that the levy is not passed onto consumers?
MINISTER: Well the levy will be passed onto consumers by the ALP and by the banks unless you cap profits, there is only one place the money can come from. It can either come from profits or it can come from the banking members and of course at the end of the day those people that have accounts with the banks are going to be paying the full fee of Labor's policy.
QUESTION: [inaudible] you said that you would get the regulators onto the banks if they sort to recoup the fees that they were forgoing when credit card fees came down. Why can't Labor use the same mechanism that you advocated last week?
MINISTER: Well the policy we are advocating is opening up the interchange to competition, and we've said that, just as we opened the mortgage business in Australia to competition, it's delivered lower home interest rates, so too if you open the interchange access regime to competition, you will deliver lower prices for consumers. Now the banks at the end of the day have to work with the community, over the last few weeks and months, we have been speaking with the banks about working closer with the community. The Australian Bankers Association gave a confidential briefing to Senator Conroy last week and all of a sudden, out of the blue the Labor Party releases its policy on banking today, which has huge slabs of the Australian Bankers Association policy. It's time for Kim Beasley to apologise for stealing the policies of other people and to come up with real policy that a real alternative Government should have.