SUBJECTS: Bank penalty fees, Auditor-General's report, political donations
ASHLEIGH GILLON:
Chris Bowen thanks for your time. Obviously, any cutting of fees is welcomed by consumers and the government, but does it go far enough? Are the banks justified at keeping it a $9 overdraft fee?
CHRIS BOWEN:
Well this is welcome; Westpac and St George have taken a slightly different approach to NAB and kept some fees but applied it on a broader basis, so cut more fees but by not as much, and I do think it is appropriate that if banks choose to, there is some price signal to consumers to say this is important to keep enough money in your account to pay for your bills, recognising that often that is not the consumers fault if that does occur.
So this is welcome, we do think there is more to do around penalty fees, the CBA and the ANZ need to respond and there is more to do in exit fees etc, but we are confident that the banks are responding; there is more to do, we have our unfair contacts law coming into force in January, providing it passes the senate. I think in part the banks have been responding to that eventuality, that coming into force, and I expect that they will continue to respond to community concerns, and we will certainly being encouraging them to do so.
GILLON:
So that is addressing exit fees for mortgage packages what about credit cards fees for example, does more need to be done in that area?
BOWEN:
Well Westpac and St George have dealt with credit cards today in their announcement, but certainly we will be looking closely at what the CBA and ANZ do, presumably they will be responding shortly. And of course the broader the package the more it would be welcomed by the government and consumers.
GILLON:
The cynics amongst us might be worried that the banks would ensure that they make up the shortfall by imposing other charges elsewhere, will you be keeping a close eye on that, and what can you really do about if that is the approach the banks take?
BOWEN:
NAB has made it very clear that they won't do that; I would expect that's the same with Westpac and St George, and with the others. And the Australian people will be rightly outraged if that doesn't eventuate, if they go back on their word and we would certainly be likewise outraged and we would certainly be expressing that very strong view. At the end of the day, banks are commercial operations, we don't have government regulation any more on the banks to that degree, and the banks will need to justify their decisions and keep their word, and people will make their views very well known if banks don't keep their word.
GILLON:
Fixed home loan rates are already starting to climb is that disappointing to see or is rising rates just a reality that Australians need to be prepared for?
BOWEN:
Fixed rates tend to reflect what the banks expect to happen to world interest rates over the medium term. I think that is what we are seeing here, as the world edges towards, slowly edges towards recovery, then you are going to see rising costs of capital, rising interest rates and fixed term rates tend to reflect that, so fixed term interest rates will go up and down but they reflect what banks expect to happen over the medium term rather than revenue considerations in the short term.
GILLON:
Well the Reserve Bank is of course meeting tomorrow to make a decision on the official cash rate, most analysts believe that rates will be kept on hold, how worrying though would it be if we do start to see rising rates at the same time as we see unemployment continuing to rise?
BOWEN:
Well of course Ashley, in relation to tomorrows meeting we don't speculate about particular meetings, I am sure you have heard that answer before, before you have asked the question before, which is fair enough, but we don't speculate on particular decisions the Reserve Bank will make.
The Prime Minister and Treasurer have pointed out, being upfront and honest, that as we do edge towards a recovery around the world that interest rates will go up, obviously, everyone would prefer interest rates to stay lower for longer, particularly as unemployment still is an issue, We have said for a long time there is more to happen on unemployment, there are a lot of challenges ahead on unemployment, so obviously it is important that we keep the stimulus in the economy, it is important we keep our stimulus in the economy, in particular the fiscal stimulus through the budget – I notice that Joe Hockey and the Liberals have been saying it is time to withdraw that stimulus, that's far from the case and the Reserve Bank's actions are a matter for them.
GILLON:
Well on the opposition, they have being saying that if rates do go up then the Government should take the blame because of the level of debt you have racked up, they say a rate hike is inevitable.
BOWEN:
Look this is more of Malcolm Turnbull's sophistry, there is not one credible economist in the country that would support that…
GILLON:
So higher debt levels have no impact?
BOWEN:
Well higher debt levels have no impact on day to day decisions by the Reserve Bank, or particular Reserve Bank decisions, that is just more evidence that Malcolm Turnbull will say anything or do anything to make a cheap political point.
GILLON:
Is the government concerned that many Australians have over extended themselves during a period of historical low rates, but they may run into trouble once rates do return to more normal levels?
BOWEN:
Certainly people need to always build into their calculations the fact that over time, the life of a mortgage, interest rates will go up and down and certainly we would encourage everybody to build into their calculations the possibility of interest rate rises over the medium term and particularly over the longer term because interest rates are at historically record lows and they can't stay that way forever. That's a real issue, but at the end of the day, people need to weigh that up for themselves, take financial advice for themselves and also banks, when calculating the ability to repay, need to, and do, take that into account as well.
GILLON:
You don't fear that first home buyers for example may have been encouraged take out bigger loans because of the low interest rates at the moment?
BOWEN:
Look there will always be an element of that, but I am confident that first home buyers, just as others, have made the right decisions based on their own medium and long term interests, and at the end of the day you have to trust people to make those decisions, and I think the vast majority of people will be responsible, have been responsible, and have in mind the fact that these very low interest rates can't continue forever.
GILLON:
On a completely different topic, there's been a lot of debate recently about political donations, are you sceptical about business people paying thousands of dollars to meet with Ministers. They are not just meeting you because you are nice guys, what do you think they're expecting in return, what are they paying for?
BOWEN:
Well Ashley, to take me as an example, over the course of a year, I'd have literally thousands of meetings with business. I don't think there's a boardroom in Sydney or Melbourne that I haven't been in over the last 18 months frankly and there is absolutely no connection to business donations to the party. They are just meetings that I have, whether they are boardroom lunches or meetings with industry about their issues.
Now both parties raised through their conference, through their business observers program, money which is business people paying to come and watch the conference and associated with that, meet with Ministers.
But for example the business people that I met at the Labor Party Conference, I think I could say that almost every one, just one of two exceptions, that basically every one of them I have seen separately over the last two months about their issues…..
GILLON:
So why do they bother paying you?
BOWEN:
Well they like to come and watch the conference and be involved in the process and make a contribution.
GILLON:
For $7500?
BOWEN:
Well both parties do it, and can say this, there needs to be a balance struck here. It's all very well to criticise donations to political parties whether they be through business observers or direct donations but they are actually an important part of free speech in Australia and making a donation to a political party.
And the even more important point is this, we don't want to get to the situation were only self funded candidates can run for election. Were you can only run for election if you can pay for it yourself, because it is expensive and that would rule out the vast majority of us from ever running for office if you couldn't accept donations from people who support your campaign.
So it's all very well to say it sounds easy, 'lets ban political donations from business or others'. Well then unless you take very radical steps in relation to public funding, you're going to have a situation where we see more and more in the United States, that you have to be an independently wealthy person to run for parliament, not something that I think in Australia we can afford to do.
GILLON:
Just finally, we are expecting to see the Auditor-General's report into the utegate scandal released tomorrow, has the Government had access to that report – already you, and some of your colleges seem to be pretty certain that the Treasurer Wayne Swan will be coming out looking pretty clean, that there will be no evidence of wrongdoing on behalf of him or his office.
BOWEN:
I've made the point today that this is an opportunity for Malcolm Turnbull to come clean about what involvement the Liberal party had with Mr Grech, particularly in the lead up to that Senate hearing where Mr Grech made those allegations which are now known to be false about that email.
Mr Turnbull called for the resignation of the Prime Minister and Treasurer and accused them of lying and accused them of using their office to benefit a mate. Now unless the Auditor-General's report, unless he has provided evidence to the Auditor-General, unless the Auditor-General makes an adverse finding; then his position is clearly untenable and he has to deal with that, because the Australian people can no longer take anything he says at face value.
The position of Leader of the Opposition is actually a very important one in holding the Government to account. When the Leader of the Opposition makes an allegation it's important for the polity, it's important for the operation of Australia's political institutions that the leader of the opposition can be taken at face value. That's no longer the case in Australia.
GILLON:
It wasn't Malcolm Turnbull's fault that he wasn't interviewed by the Auditor-General, that he is not included in this report?
BOWEN:
We've been calling on Mr Turnbull since this whole scandal erupted to come clean, to be very frank with the Australian people and to outline what role he, Senator Abetz and other senior Liberals had in relation to this email, had in relation to meetings with Mr Grech in the lead up to the senate inquiry. Mr Turnbull should now take the opportunity of the Auditor General's report which, as you say, we understand is coming out in a couple of days to deal with that and to be upfront with the Australian people about that.
If he doesn't take that opportunity, if he doesn't provide evidence for those outlandish and irresponsible claims that he made about the Prime Minister and Treasurer of this nation, then his position is completely untenable and anything he says can not be taken at face value.
GILLON:
Chris Bowen thanks for your time.
BOWEN:
Great pleasure.