TRIOLI:
But first of all we are joined by the Federal Treasurer, Mr Peter Costello. Good afternoon to you.
TREASURER:
How are you Virginia?
TRIOLI:
Well, thank you. Treasurer, do you believe the Reserve Bank should be able to assert its power in this way?
TREASURER:
It has the power to do that, and that is one the powers that we put in place under our re-design of financial arrangements. What we’ve said is, we want more competition. We have given the Reserve Bank the power to allow new institutions to challenge banks, and it also has the power to step in and make sure that the banks don’t edge up fees on credit card type transactions and interconnect fees. So it has got the power to do that. Professor Fels has been looking at this, he has made recommendation to the Bank and we will support any action which will lower costs for consumers.
TRIOLI:
Do you back the way that Alan Fels has gone about this. I know that, well you know and we all know, that he has been in long and protracted negotiations with the banks, but his call seems to have taken the industry by surprise?
TREASURER:
Well, he has been looking at this for a while and trying to get the banks to have more competitive arrangements. I think, at one point even legal action was taken, so, we probably can’t say too much about that. But that is what he is there for. He is there to promote competition and get lower prices for consumers. He has been on the case, he has now made a recommendation to the Reserve Bank, the Reserve Bank has got power in this area. We have put in place a whole lot of arrangements to encourage competition, we do that so the consumers can get a better deal.
TRIOLI:
But is transaction fees really the issue to be focussing on? I mean we know on this programme, and many others, that it is the interest rates, attached to credit cards and offered by the banks, that really exercises most peoples’ minds. Is dealing with transaction fees really the best way to get to the heart of that issue?
TREASURER:
Well, that is just, that’s another aspect. We will come to interest rates in a moment. But, the transaction fees, these are the fees that the banks charge each other to process transactions. If those fees are higher than is required in an open and competitive market, eventually they get passed back to consumers and to business, so, this is an area to be subjected to consumer benefit. That is what is going on. If you want to come to interest rates, well, again, if you can promote competition you can also bring interest rates down. One of the ways we demonstrated that, is by allowing new institutions into lending. When you have got institutions, like Aussie Home Loans, and Rams and non-banks that were starting to offer mortgages at lower costs, the banks were forced to bring down their interest rates. That is one of the reasons you can get such a low interest rate. Today, interest rates, which we haven’t seen as low as this for 30 years.
TRIOLI:
Treasurer, I know we have to let you go because you have other pressing appointments, but just quickly, on one other issue, an announcement is imminent from the Foreign Investment Review Board on the sale of Woodside Petroleum. Do you believe it is in Australia’s national interest to have Woodside sold to Shell?
TREASURER:
Well, the way this works is, the Foreign Investment Review Board makes a decision, it makes a recommendation to the Treasurer, the Treasurer has to look at the national interest and announce a decision. So, when I get all of the papers I will consider that, and I can assure you that we will be protecting the national interest. I can’t say much more than that because I haven’t got the papers.
TRIOLI:
Are you alarmed about the direction that corporate Australia is taking at the moment with BHP being dwarfed into an off-shore entity, and Woodside potentially being sold, and of course North has already been sold. The back- bone of this country’s economy, the quarry, seems to have been sold off.
TREASURER:
I think the BHP thing is a very different situation. With BHP you have got a situation where an Australian company is merging with an overseas company, making a much bigger company which will have an Australian as its chairman. They will designate the chief executive and a majority of Australians on the Board. This is an example of where an Australian company, whose just got much, much bigger, kept Australian control, and is going to be headquartered in Melbourne…
TRIOLI:
The market doesn’t seem to be impressed by it at the moment, though.
TREASURER:
Well, the market, people buy and sell shares because they think they are going to have a profit opportunity, one way or the other. But, from a Victorian perspective - and I am a Victorian - and from a Melbourne perspective, we currently have BHP headquartered in Melbourne with an Australian Chairman and an Australian board. We are going to keep BHP, except it is going to be a much bigger BHP, headquartered in Melbourne with an Australian chairman. I don’t know why various people, I think the Opposition has been out attacking this, I don’t know why. This is a big company, a big Australian company which has got bigger and staying headquartered in Melbourne. I think that is a good thing .
TRIOLI:
On the Ryan by-election, just quickly, how much responsibility do you accept for the fierce anti-GST feeling out there among voters?
TREASURER:
Look, there has been a very large swing in the Ryan by-election, there is no doubt about that. Not as big as some swings in previous by-elections, but none-the-less a big swing in the Ryan by-election. There has got to be lessons for everybody in that…
TRIOLI:
And for you, what is the lesson?
TREASURER:
Well, I think, one of the lessons is that where people are electing somebody to Parliament, they are very angry if they don’t serve out their full term. That is one big lesson. The second big lesson is that, I think, on the policy level, with rising petrol prices and rising interest rates, people were feeling squeezed, and I think the Government has got to do whatever it can to get petrol prices down. We have cut the excise. Obviously we have got to put as much pressure as we can on the oil producing nations. And in relation to rising interest rates, the news more recently, has been much better for young home buyers. So, we have got to continue to work on making sure that those things that are squeezing peoples’ pockets, we do everything we can to try and give them a bit more to spend.
TRIOLI:
Let’s see if the good news stays with you. Thank you for your time Treasurer.
TREASURER:
Thank you very much Virginia.