JOURNALIST:
Does that report yesterday mean that it’s time to break up the cartel the banks effectively have over debit and credit cards?
TREASURER:
Well, look I welcome the report. It’s a good piece of work. We’re now going to get the banks’ response to that and Minister Hockey, I think, indicated yesterday that he would write to the banks, let them put their views on the table. But from the Government’s point of view we want to increase competition. Increased competition means that you’ll be able to shave margins. And if you can get increased competition in this particular area, like any other area, you’ll get a better deal for consumers. Increased competition in relation to the housing market meant that margins on interest rates were shaved and if you can get increased competition in the consumer market then there’s every chance you’ll also get margins shaved.
JOURNALIST:
So non-bank lenders, supermarkets, might be able to get into the area of credit cards, that sort of idea?
TREASURER:
Well, there are two issues that go on here, one is competition, the other is you’ve got to ensure that you’ve got a stable, well-regulated payment system. So, whatever changes are put in place will be ensuring that those that are issuing credit are well-regulated and that the payment system is secure. So, I don’t want to go further than that at this stage, but I can assure consumers that we’ll be encouraging competition with the hope that that can shave margins.
JOURNALIST:
Should Peter Reith have told the Prime Minister a bit earlier about this Telecard breach?
TREASURER:
Well, as I understand the situation, when he was alerted to the problem he asked for an investigation from the Department of Finance. And it was that investigation, when he became aware of the full facts that he alerted the Prime Minister to. So, he was, he did the right thing by having that investigated and when it was investigated and when he became aware of the results he alerted the Prime Minister.
JOURNALIST:
But did he do the wrong thing in giving those details to his son?
TREASURER:
Look, he said in the Parliament yesterday that he regrets giving the card to his son. He said that himself. What is clear is that somehow it became available to third persons. It is not alleged that his son made all of those calls. Somehow it became available to third persons and they used it and that’s what the police are investigating and it’s just too early to say whether any charges can be laid against those third persons.
JOURNALIST:
Would you support changes to the privacy laws, which would mean you’d get an itemised account for your telephone card?
TREASURER:
Well, can I make this point, it was under guidelines some time ago under the Labor Party that the bills for these Telecards were put onto your office telephone, as I understand it, your office telephone, and they are not separately itemised. So, what was coming in to Mr Reith was a global figure for his office. And that didn’t disclose that there had been this incredibly high use on the Telecard. Now, when he became alerted to the fact that there was a problem he asked for an inquiry, it was because of the inquiry that they became aware that there had been this abnormal use. It’s now in the hands of the police. But, I didn’t put in place those guidelines, this Government didn’t put in place these guidelines. Those guidelines were put in place a long time ago, and so people might think, oh well he was getting a bill which was showing all of these calls. He wasn’t. He was getting a global bill for his office which didn’t disclose the amount on the Telecard at all.
JOURNALIST:
Regardless of who set up those laws though. Would you support a change now?
TREASURER:
To change the system. Well, look frankly it’s not my portfolio, you’d be better to ask the relevant Ministers for their views on that.
JOURNALIST:
The National Australia Bank is saying this morning it believes interest rate rises are now over, that the Reserve Bank has done enough. Would you support that view?
TREASURER:
Well, I never comment on the future movement of interest rates, and you understand why I don’t because if I do that can be interpreted in such a way as to move markets. But, look at the moment we’ve got an economy which is still growing strongly. We have subdued inflation, we have strong productivity and, incidentally, historically low interest rates. Not as low as they were, say, a year ago, but if you leave aside the last year or so of the Coalition Government, you’d have to go back to 1973 to find a home mortgage rate of this order, so, in historical terms low interest rates. Now you probably heard me make some remarks in here, there are a lot of self-funded retirees that don’t like low interest rates, but I think low interest rates are good for home buyers, they’re good for business, they’re good for continued growth and they’re good for jobs and that is the way the Government likes it.
JOURNALIST:
Treasurer, confidence amongst businesses appears to have slipped a little partly due to the weakening Australian dollar, but some economists say we should take this opportunity of a low Australian dollar to halve Australia’s current account deficit. Should businesses just accept that we are now at a, sort of, new lower range for the currency and get on with it, get on with business?
TREASURER:
Well, I make two points. One is, I think that the survey that came out yesterday, the NAB survey on business confidence actually showed strong business confidence. I think that conditions were different, but actually confidence was up, as I recall in the NAB survey yesterday. In relation to the current account, Australia’s current account is improving. That is, the deficit is declining. Now, we forecast it to decline, and the evidence is that in this year 2000/2001 it is likely to be lower than it was in 1999/2000. It’s a result of a number of factors. One of which is that the world economy is strong, that’s giving us better export markets and Asia is recovered. So, I don’t want to get complacent on the current account, we’re never going to get complacent on the current account. But the fact of the matter is that the current account deficit is improving in Australia.
JOURNALIST:
Why is the dollar so low Treasurer?
TREASURER:
Well, there’s been a lot of movement in international markets. And the principal story in international currency markets has been the rise of the US dollar. That is the principal story. The rise of the US dollar against the Euro in particular and other currencies, including our own. There are a number of factors why people are bringing money back into the United States. I think I described it once before as a love affair with all things American. That’s going on at the moment. That is the principal feature of international currency markets.
JOURNALIST:
Treasurer, we’re now in a fairly unique position where we’ve got strong growth and a narrowing current account, probably one of the first times in our history, could that be used as a sort of, does that suggest the dollar is actually trading in a more natural range, that’s suited to (inaudible)?
TREASURER:
I wouldn’t draw any lessons from that onto the exchange rate, because as I said before I think what’s happening on exchange rates is not much to do with Australia. As the exchange rate has been moving, it hasn’t been moving in relation to Australian conditions which are strong, as you pointed out strong growth and a narrowing current account. We measure ourselves principally against the US dollar, and the story has been the rise of the greenback, that has been the story in international markets. So, I wouldn’t draw from Australian conditions, conclusions, but I would note as you have said, that Australian conditions are strong. This is strong growth and a declining current account. A little bit different, as you pointed out, to what we’ve had in the past. Normally with strong growth we have an increase in our current account. This could be one of those good occasions where we’re seeing a pay-off of an improvement. And I’d better leave it there. Thanks very much.