The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

8 December 2011

Doorstop Interview

Brisbane

8 December 2011

SUBJECTS: ANZ Interest Rate Announcement; Employment Data; National Accounts

TREASURER:

Well the ANZ has clearly done the right thing by their customers. It's certainly a win for ANZ customers who I think can breathe a sigh of relief that this second rate cut has been passed through in full, but the heat is really now on the other big banks. Certainly the Commonwealth Bank, Westpac and the NAB should pass this rate cut on in full. I think customers, small businesses, businesses, only want a fair go at a time when budgets are stretched and of course our banks are extremely profitable.

If you look at where interest rates have been over recent years – the cash rate is 4.25 [per cent] so compared to four years ago, if you've got a $300,000 mortgage, then you would be paying something like $3000 less per year in terms of repayments. Rates are now back down compared to where they were four years ago when the Liberals were in power.

I'd also just like to say just a couple of things about competition in the banking sector because the Government has worked very hard at putting more competition into the banking sector over the past year, in particular measures which have strengthened the position of the smaller banks and also credit unions and building societies and I'm particularly pleased to say the Bank of Queensland, ME Bank, Credit Union Australia and many others have already committed to passing through in full this rate cut. Over to you.

JOURNALIST:

You say people can just walk down the road and find another bank but there are barriers to doing that, aren't there?

TREASURER:

And we have been busy trying to remove as many of those barriers as we possibly can to make it as simple as possible to change your financial institution, because we need to have competition otherwise those with excessive market power can do what they like. So making the system more competitive, giving people the capacity to walk down the road and get a better deal is very important in the environment that we are in, and we have strengthened the competition in the banking system in recent times. For example, the Bank of Queensland and ME bank and Credit Union Australia have all benefited from the measures we have put in place to make sure that the smaller institutions can secure funding.

JOURNALIST:

Has the ANZ just bowed to government pressure?

TREASURER:

Look, the ANZ has taken this decision in the interest of their customers and what we need to see is the other banks take a decision in the interests of their customers as well. I think people out there – families with mortgages, small business in particular – just want a fair go.

JOURNALIST:

On unemployment, it's seems to have gone up a bit but it seems to (inaudible). Why is this happening when the national accounts were (inaudible)?

TREASURER:

Well, we have a very low level of unemployment in Australia, a very low level compared to other countries. We've got a five in front of our level of unemployment; most other countries have double that rate. I think all Australians can be justifiably proud of the employment creation record of this country over the past four years, something like 750,000 additional jobs have been created and it's important here in Queensland where we had big problems earlier here with the floods. They had a very big impact on employment and confidence in this state and you can see that rebounding now which is a great thing. You can see it in some of the data today but you can also see the rebound in Queensland in particular in the national accounts data yesterday which showed a very strong growth pipeline for this state.

JOURNALIST:

Are you concerned about the rise in unemployment?

TREASURER:

Well, it's a very small tick up in unemployment but we've got a very good set of figures when it comes to employment. Our country avoided the global recession. Amongst developed economies we are virtually the only one that didn't go into recession and we've been creating jobs which is just fantastic compared to what is going on elsewhere in the world in the global headwinds that we are facing.

JOURNALIST:

(Inaudible)?

TREASURER:

I'm always concerned when we have Australians that are unemployed but we need to keep this in perspective. We have a relatively low rate of unemployment. We have a very strong investment pipeline to create jobs in the future. We have a good budget position. We have low debt. We have good income growth and we have, I believe, an economy which is not matched by just about any other developed economy elsewhere in the world.

JOURNALIST:

Are you expecting it will come unstuck if Europe comes unstuck?

TREASURER:

Well, we are not immune from the fallout in Europe but the really encouraging thing that we saw in the national accounts earlier in the week was despite the head winds of the European crisis and what's going on in the United States and despite the impact of the floods here earlier in the year, the fundamentals in the Australian economy are very strong.

JOURNALIST:

Why is it that in national accounts the economy is growing and yet the unemployment is…

TREASURER:

Well, the national accounts reflect the position in the September quarter. You will see movement in monthly data but the overall trend in all of our data is for our economy to be strong, but there are impacts which flow through our economy from the events in Europe. They are transmitted by the stock market. They have an impact on financial markets, share prices, that impacts on retirees and their savings but despite all of those things our growth in Australia compared to other countries is relatively strong and having an unemployment rate with a five in front of it is vastly different than what is going on just about everywhere in the developed world where they are 9 per cent,10 per cent,14 per cent, 15 per cent.

This is an exceptional outcome for Australia and it's one that gives me great confidence about the future but there's still a lot riding on what will happen in Europe over the weekend and what we have to do is hope and pray that European decision makers get down and do the job that they're supposed to do, put in place a range of reforms and new policy in which not only their own countries but the world can have faith, so it can settle down global financial markets in particular.

JOURNALIST:

Is the rise in unemployment the reason why the banks need to pass on the rate cut in full?

TREASURER:

The banks should be passing on the rate cut because they are extremely profitable, it's the right thing to do in the current environment. A slight change in the rate of unemployment, you should not read too much into that on a monthly basis. Our overall economic position in this country is strong but struggling small businesses and people with mortgages do deserve to see this rate cut passed through in full, given how profitable our major banks are.

JOURNALIST:

How do you reconcile the (inaudible)?

TREASURER:

Well, we are going to create in Australia over the next couple of years 300,000 additional jobs. So our economy is in good nick and occasionally you'll see a change in the employment which you can see in the data released today. All I'm saying is don't read too much into a slight increase in unemployment in one particular month. There's no doubt that there are very strong headwinds for the Australian economy coming from events in Europe and the United States but despite all of that, as we saw in the national accounts this week, the underlying fundamentals in the Australian economy are strong. Thanks.