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

9 December 2011

Interview with Alexandra Kirk

ABC Radio, AM program

9 December 2011

SUBJECTS: Banks' announcements on interest rates; political speculation

EASTLEY:

The last of the big four banks fell into line last night announcing they'd pass on the Reserve Bank's 0.25 per cent interest rate cut. It followed a concerted campaign by the Federal Treasurer, Wayne Swan. However the ANZ Bank has hit out at the political pressure it and other banks received, saying from now on it will review interest rates once a month and move independently of the Reserve Bank. The Treasurer, Wayne Swan, told Alexandra Kirk he's pleased that all four big banks cut their interest rates coming at an important time on the calendar.

TREASURER:

Well, this is certainly a big win for families and small businesses close to Christmas when budgets are always stretched.

KIRK:

Are you claiming credit for that?

TREASURER:

Well, certainly we've had a pretty vigorous community debate and I think the voice of their customers has been heard and that's been heard because we've got a lot more competitive pressure in the system now and that's a result of many reforms that we've put in place as a Labor Government over the past 12 months. I'm really pleased that the big banks have listened to their customers. They've been put under competitive pressure by some of the smaller banks, credit unions and building societies.

KIRK:

But the ANZ bank has said enough is enough. Chief Executive Mike Smith has now broken the link between the Reserve Bank's cash rate movements and interest rate cuts. From now on he says the ANZ will review its interest rates once a month independently of the Reserve Bank. That in effect has robbed you of your political fire power, hasn't it?

TREASURER:

No I don't believe so because I think the ANZ, like the other big banks, will be under competitive pressure from many of the smaller lenders and that's a really good thing. We need a competitive banking system where there are competitive pressures in the system and the voice of customers can be heard and if they're unhappy with their bank they can go down the road and get a better deal.

KIRK:

You've tinkered around the edges making it that bit easier to switch banks but Mr Smith's thumbing his nose at the political process saying that a strong banking system is needed to avoid the economically damaging credit rationing arising from the European debt crisis and that Australian banks faced tough choices. They'll make the decisions they need to make outside of the political argy bargy about following the Reserve Bank.

TREASURER:

Well, I support a very strong banking system and a profitable banking system but what we must have in a profitable and strong banking system is some competitive pressure.

KIRK:

But aren't you treading a fine line between the Australian banks surviving the debt crisis and your political imperatives of being seen to be on the banks case hammering them to cut interest rates?

TREASURER:

Not at all. It is laughable to claim that this interest rate cut would in any way substantially weaken our big four banks which are among the most profitable in the western world. They have a return on equity which is unequalled almost anywhere else in the word. I support a really strong banking system but I also support a competitive banking system. And this Labor Government has done everything within its power to put in place more competitive arrangements in the banking system and in particular providing some support and access to funding for the smaller lenders such as the Bank of Queensland, ME bank, credit unions and so on and their job in the system, if you like, is to keep the big banks honest.

KIRK:

But taking it out of the political cycle, come the Reserve Bank's next interest rate cut, it will be a whole new board game, wont it?

TREASURER:

Yes but the competitive pressures are there and the fact is that a big bank, if it wants to, may try that again but they will be subject to the same competitive pressures that they were subject to over the last couple of days. You saw the smaller lenders come out early. You saw credit unions, you saw the Bank of Queensland, you saw ME bank. That came out early. That's a great thing for Australia.

KIRK:

On another front, there's a lot of talk about a reshuffle imminent. Will there be a reshuffle?

TREASURER:

Well, those are matters which are entirely for the Prime Minister.

KIRK:

Have you been called in for a chat with the Prime Minister about it?

TREASURER:

I talk to the Prime Minister every day, but matters like that are entirely matters for the Prime Minister.

KIRK:

There's also a report that the ALP has devised a plan to keep backbencher Craig Thomson's vote in the Parliament if he were to be charged by police next year that he be suspended rather than expelled from the Labor Party. Is that correct?

TREASURER:

Alex, in the past few weeks I've been dealing with a mid-year budget update, national conference and a big debate on economic issues, the national accounts, rate cuts, all of those things. That's what concerns me. Look there's been a lot of mudslinging around Mr Thomson. I'm not going to add to any of that mudslinging.