DAVID BRADBURY:
Earlier today the Shadow Finance Minister, Andrew Robb, came forward in an excruciating interview and gave the green light to the banks to jack up interest rates. I think most families and small businesses across this country who are doing it tough would be astonished to see Andrew Robb giving the green light to banks jacking up their interest rates.
This is the same Andrew Robb that is a part of the Liberal Party that, when given the opportunity to support the Government's reforms when it comes to banking competition by banning exit fees, went into the Parliament and voted against those reforms.
On the question of funding costs, we've seen the latest statement from the Reserve Bank that funding cost pressures for banks have eased. It is in this context that the Government takes the view that the banks have to justify the position that they take. On the other hand, while struggling businesses and families are doing it tough, Mr Robb this morning gave the banks the green light to jack up rates. Without any questions, without any ifs or any buts, he's prepared to sign on the dotted line and to wave these increases through.
We think it's important that the banks be held to account and that they have to justify their position. Mr Robb and the Liberal Party on the other hand, they seem content just to wave them through.
JOURNALIST:
Mr Robb [inaudible] that the banks are doing it to prevent any problems in the future, that was his justification. What's your response to that?
BRADBURY:
Mr Robb now finds himself in the position where he is now defending the position of the banks. The Government believes it is up to the banks to come forward and to justify their position. Mr Robb, I guess to the disappointment of many homeowners and many small businesses around the country, has just simply given the banks the green light to jack up rates, without asking any questions, no ifs, no buts, but simply endorsing and signing on the dotted line, waving through the hikes to interest rates that will impact on families and small businesses right around this country.
JOURNALIST:
Have you sought any comment from the bank as to why they did it?
BRADBURY:
The bank has put a statement out, we've reviewed that statement. But I also point to the statement the Reserve Bank put out, when the Reserve Bank put out their recent statement after their last meeting, they indicated that in their view, funding cost pressures for banks had eased somewhat. It's in that context that we think that questions have to be asked about the position that the banks have taken. We think it's important that the banks be held to account, rather than simply waving these increases through. Struggling home owners, struggling small businesses and meanwhile the banks jacking up rates and Mr Robb simply wants to wave these through and give them the green light.
JOURNALIST:
What do you say to other banks that might be thinking about raising their rates?
BRADBURY:
Well, this is a challenging time right across the economy. There are many good things happening in our economy, but there are challenges. And at a time when families are doing it tough and small businesses, in particular, are doing it particularly tough, I would caution the banks against going down this path. In the end, as the Reserve Bank has pointed out in their most recent statement, funding cost pressures for banks have eased somewhat. It is in that context that decisions are to be taken in the future by any banks. And obviously, we would caution them against jacking up interest rates at a time when so many people are doing it tough.
JOURNALIST:
Does the Government Budget deficit increase pressure on rates? Upward pressure?
BRADBURY:
Look, the one thing I can say is that by returning the Budget to surplus, something that this Government is determined to do, we will be giving the Reserve Bank the room it needs to make any future cuts in interest rates that it may be able to accommodate in the future. In the end, our commitment to return the budget to surplus is about tackling inflation, fighting the cost of living, giving the Reserve Bank the ability to cut interest rates and ultimately taking some pressure of the high Aussie dollar.
JOURNALIST:
How much of a gamble is that? When you're relying on the RBA, which you stress is an independent body, to cut rates? What happens if they don't?
BRADBURY:
In the end, the most important thing we can do is return the Budget to surplus. It's not all that different to a household. You go through difficult times sometimes, and you may need to put a few expenses on the credit card, but as you start to get things back on track, with an unemployment rate with a five in front of it, with a strong investment pipeline and growth returning to trend, now is exactly the time that we need to return the Budget to surplus. And in doing that we will make sure we give the Reserve Bank the room it needs to cut interest rates into the future and to ultimately take some of the pressure off the high Australian dollar.
JOURNALIST:
Mr Bradbury, you don't interfere with the Reserve Bank decisions, so why interfere with banks' decisions? I mean, they are private companies.
BRADBURY:
This is not a question of interfering with anyone. This is a case of saying that if a participant in the market place wants to jack up their prices, then there should be some justification for what they're doing. I mean, if they're not able to justify their position, then we encourage consumers to do what is always their right, and that is to walk away from their mortgage, to walk down the street and to get a better deal from one of their competitors. One of the key things we've done to give consumers that ability is we've banned mortgage exit fees. And when we did that, we had to take that into the Parliament at a time when the Liberal and National Parties voted against it. We're in favour of competition, we are in favour of giving consumers the opportunity to walk down the street and get a better deal. The Liberal Party, they oppose giving consumers that choice and now we see Mr Robb giving a green light to jacking up rates.
JOURNALIST:
Just following up from the question before about [inaudible] the banks seem to be acting independently of the Reserve Bank guideline. How confident are you that if there is a cut in the official rate that the banks will follow that and what can the Government do about that?
BRADBURY:
Well there's a couple of points here. The first one to make is that the Reserve Bank will always be very conscious of the extent to which its movements in cash rates flow through to consumers and they've said that repeatedly and certainly we would expect that that would continue to be a factor in their deliberations. But in terms of the price that banks ultimately charge, the cash rate is an important and a significant component of their funding costs. It's not the complete picture of their funding costs, but as the Reserve Bank has said as recently as its last statement, those funding cost pressures that banks are facing have been easing. It's in that context that we think it's disappointing that a bank has come forward and sought to jack up interest rates. But equally, we think it's important that some accountability be held towards those banks who take these decisions so that consumers have some confidence that they are not being taken for a ride.
JOURNALIST:
You say you want to get back to surplus but the Greens, the new Greens leader, is threatening to block some of the measures in the Budget because she doesn't believe we should be chasing a surplus at this stage. How are you going to get around that?
BRADBURY:
It's essential that we return the Budget to surplus. It's essential for working families and for small businesses around this country, because by returning the Budget to surplus, we're able to tackle the rising cost of living, tackle inflation, take pressure of interest rates and take pressure off the high Australian dollar. Now, we're determined to return the Budget to surplus. In doing that, the Prime Minister has already previously said that we will not be taking to frontline services with a razor. We think it's important we protect those frontline services. But there is a big job ahead for the Government in making the cuts that are necessary in order to return the budget to surplus. But we make no apologies for doing that. It's the right thing for working families, it's the right thing for small businesses and it's the right thing for the Australian economy.
JOURNALIST:
Mr Bradbury, is it essential that you return the Budget to surplus for the economy or is it essential that you to return to surplus for your own political needs, because you're Government can't be seen to be breaking another promise?
BRADBURY:
It's essential that we return the Budget to surplus because it's in the best interests of the Australian economy. It's ok to start to borrow money through those difficult times, when you need to do that in order to invest in jobs and support jobs. And that's what we did. But now that we've been through that and we avoid taking the Budget, taking the economy into recession. Having avoided taking the economy into recession, we're now in a position where unemployment continues to be low, growth is returning to trend and we have a record pipeline of investment. In these circumstances, now is the right time, economically, for Australia to return the budget to surplus and that's what we intend to do.
JOURNALIST:
What happens if the Greens play hardball in the Senate when it comes to the budget surplus?
BRADBURY:
We'll cross that bridge when we come to it. But I make this point, in a matter of weeks we'll be handing down a Budget. At the centre of that Budget will be a determination to return the Budget to surplus. We will be taking that Budget, as and when it is handed down, we will be bringing it before the Parliament and seeking to obtain passage of that in the way that we always do.
JOURNALIST:
Mr Bradbury, on another issue, the Insurance Australia Group is offering a generous maternity leave scheme. Shouldn't the Government be doing more to help working mothers, instead of relying on the private sector, to do what the Government should be doing?
BRADBURY:
I think this decision by Insurance Australia Group really does highlight one of the biggest flaws in Tony Abbott's paid parental leave scheme. Out there, some of the larger companies in the economy are actually doing some very innovative things when it comes to attracting women back into the workforce, in supporting women through the period of having their children and indeed his proposal seeks to take away the incentive for companies like IAG to continue to provide the sorts of benefits that they are providing. And when you have a look at those areas of the economy in particular where there are reasonably generous parental leave arrangements, they are often those larger businesses that will be the subject of Mr Abbott's paid parental leave tax attack.
When it comes to providing support for those who are going through that important stage of their life, having children and bringing children up, we are the only Government in Australia's history that has delivered a scheme. Mr Abbott said over his dead body, well it was over the dead political bodies of the Liberal Party that we got into Government and delivered this scheme. We've now delivered it. It is a very effective scheme. Many people in electorates like mine and right around the country are taking advantage of that scheme. We think that the proposal, the Rolls Royce proposal, that Mr Abbott has brought forward, apart from costing a fortune and being a tax on business, on top of that it actually undermines the system that's very effective and is making a real difference.
JOURNALIST:
Veterans say that in the last ten years, their pensions have fallen behind. Pensioners are up 90 percent over ten years, politicians are up 100 per cent, they are up 30 percent. They say in the interest of a fair go, their pensions should be increased as well.
BRADBURY:
There are a range of arrangements in place for various veterans and other public servants of the Commonwealth. Many of these schemes are treated in different ways. But in terms of some of the particular entitlements to which I think you're referring. When we came to office in 2007, we made a commitment that we would review these matters. We had a review and as a consequence of that review considered the matters that were brought forward. The cost of the particular proposals that Government is being lobbied by at the moment is somewhere in the order of about $1.7 billion.
JOURNALIST:
Is that a year or over the forward estimates?
BRADBURY:
Over four years. So it's not an insignificant cost. But we value the contribution, not only of serving members of the Australian Defence Forces, but those that have served in the past. We will continue to work closely with them and their organisations that represent them, in order to try and ensure that not only do we continue to provide a reasonable remuneration package for existing members of the Defence Forces but that we ensure that beyond their service, that people are also looked after.
JOURNALIST:
They say that the Government has inflated the cost, that it's more like $20 million a year rather than $80 million a year.
BRADBURY:
These estimates are based upon the Australian Government Actuary's estimates. If there are better estimates than that, then I'm happy to have a look at them. But in terms of the estimates that we rely upon from the Australian Government Actuary, they are in the order of $1.7 billion across the forward estimates.