The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 20/05/2005

Treasurer
Doorstop Interview

Strathcona Junior School Campus
Canterbury, Melbourne

Friday, 20 May 2005
2.00 pm


SUBJECTS: Bank Fees; Drought Assistance.

JOURNALIST:

(inaudible) bit hard because they are actually earning from mortgages?

TREASURER:

I think a lot of people will be surprised by the level of fees that banks are charging and I would urge them to shop around. Some of the banks charge a lot more than others and I would also say to the banks that it is important they look at cutting their fees. The Australian Government has now cut taxes on banks with the abolition of the Financial Institutions Duty. We have also abolished the Bank Account Debits Tax. So the Government is cutting billions of dollars of taxes off bank accounts and it is incumbent on banks to have a look at whether they can cut fees and charges themselves. A lot of Australians think they should be able to.

JOURNALIST:

Kim Beazley says the Federal Government should be doing more to put pressure on the banks over the fees. What is your reaction to that?

TREASURER:

Well, the Australian Government has now cut fees and charges and taxes on banks. There used to be Financial Institutions Duty on banks, there used to be a Bank Account Debits Tax on banks. The Australian Government reformed the taxation system and as part of that Financial Institutions Duty and Bank Account Debits Taxes have been abolished. And we say that at a time when the Government is reducing tax on bank accounts, banks themselves should be trying to reduce their fees. Banks have been very, very profitable in recent years. There are more Australians in work than ever before – interest rates are low, people are borrowing, banks are profitable – and just as the Government is cutting taxes on bank accounts so too the banks ought to be looking at cutting some of their fees.

JOURNALIST:

You don’t see a role for regulation by the Government to seek approval or have their fees (inaudible)?

TREASURER:

Well banks are like other institutions in our society, other institutions set their fees and there are competitive pressures but I think when banks are as profitable as they are these days, at a time when the Australian Government is cutting taxes on bank accounts the banks themselves ought to be looking at cutting some of their fees. I think there has never been a better time for banks to start cutting their fees – they are profitable, more people are in work than ever before, default rates on loans are lower than they have been before – and it would be a good thing if the banks could get really competitive and start cutting fees.

JOURNALIST:

I believe Cabinet is meeting on Monday to discuss drought assistance. Have you some more money to be spent there?

TREASURER:

Well the Australian Government understands the plight of farmers that are doing it tough. We have in place drought assistance to give income support and interest rate subsidies. We have estimated that the level of assistance through the Government, the Commonwealth Government, could be around $1 billion and we will be ensuring that people struck by drought will be assisted and the programmes that are in place will be directed towards assisting farmers. There are very large sums of money that are being set aside for that purpose.

JOURNALIST:

Does that mean more money will be spent though?

TREASURER:

Well the level of money that is spent actually depends on how long the drought lasts. If the drought lasts for a long time then more will be spent. But of course, we hope, as do the farmers, that the drought comes to an end and that the rains break it. The only thing that affects drought long term is rain.

JOURNALIST:

Do you think (inaudible) to GDP are going to be revised (inaudible)?

TREASURER:

No.

JOURNALIST:

It is already factored in to last week’s forecast?

TREASURER:

We have put down forecasts for GDP as a whole and they take into account all of the foreseeable events.

JOURNALIST:

(inaudible) or the Prime Minister has been saying over the past week in relation to drought. Do you think that talk of towns closing down and people leaving the land are accurate? (inaudible)

TREASURER:

Well this is a very serious drought. We have the worst drought in a hundred years. We had some rain that broke it in some places but not many and we have more areas back in drought. In some cases a one in a hundred year event and I really feel for people that are going through this. Gee it is tough. And I want to say, that the Australian Government stands ready to give assistance and we will.

JOURNALIST:

How much foreign (inaudible)

TREASURER:

Last question and then I have got to go. No, no, this lady was first.

JOURNALIST:

How much foreign ownership of Telstra do you think should be allowed?

TREASURER:

Oh well we will not go into that today. Sorry what was your question?

JOURNALIST:

The PM is out visiting the outback today, Steve Bracks is talking about doing it in the foreseeable future do you think, have you got plans to actually see it for yourself, what the situation is out there?

TREASURER:

Oh well, I have just been down through Northern New South Wales, the Central Coast of New South Wales and I have been through a lot of the country areas and if we can get further information, a further grip on this, I can pledge this – we will be doing whatever we can to assist farmers. Thanks.