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E & OE
CHRIS UHLMANN
Well Laura to you first, everyone agrees now that something has to be done about the banks. It seems there’s a constellation of ideas out there, but is there anything that can be done to reintroduce competition into the sector?
LAURA SMYTH
Well look, as Wayne Swan indicated today, there’s obviously got to be a fairly considered response and a fairly methodical review with regulators and appropriate officials to put in place the kinds of mechanisms that we need to address what is clearly a significant problem in relation to the banking sector. What we ought to be in furious agreement about is that the re-regulation of interest rates should not occur and in so doing see a return to credit rationing of the kind that we’ve seen previously. So there are certain things that most of us know should be ruled out, and a range of other measures which obviously Wayne Swan will be working with regulators to achieve over the next month.
CHRIS UHLMANN
Alright well Joe Hockey already has a 9-point plan out and the first point in that 9-point plan was that the ACCC would be given powers to stop what he says is price signalling in the sector, which is CEOs signalling to each other through the dubious things they say out loud that they’re about to lift interest rates. Scott Ryan, is that going to work? Because we’ve seen it trying to work across the fuel sector, and we never seem to have gotten any case up on that front.
SCOTT RYAN
Well the ACCC asked for this in response to the last inquiry with respect to petrol pricing. The government’s done nothing on it since it tabled its report in March 2008. So Joe Hockey, conscious that the financial markets have changed, conscious that there is much lesser a level of competition that there was – partly this is as a result of government policies such as the unlimited bank deposit guarantee – his 9-point plan leads off with giving the ACCC power to investigate what it calls ‘price signalling’ which is when banks send signals to each other that let the other banks know what they might do. It’s all about reinserting competition into this market.
CHRIS UHLMANN
I’m concerned though, Laura – and the government would also support this – that it’s across all businesses. It’s not just going to be across banks if it’s entered in the Trade Practices Act and in the end, businesses will use it as an excuse to not say things about their business when they’re asked questions.
LAURA SMYTH
Well look Chris, in many ways it will depend on what the nature of the specific package is that’s determined by Wayne in conjunction with the ACCC and other regulatory authorities. I think it’s probably a little bit too preliminary to make a further detailed comment on that.
SCOTT RYAN
Today, just this afternoon, up on the ABC website The Drum, Glenn Milne has got a piece where he apparently has a strategy document from Westpac. It actually outlines how Westpac is in no way concerned about the government’s reform process, because it thinks that the government’s ideas are actually going to increase their competitive position in the market – not actually increase competition from other sectors of the financial market.
CHRIS UHLMANN
When we look at what happened, say from 2007 $95 billion of residential mortgage backed securities (inaudible) in Australia. So that amount of money flowing around in the sector, did that put a lot of competition into the sector? It obviously allowed people to have cheaper interest rates on their homes. That’s completely collapsed now and the government is putting up $16 billion in its place over the last two years. Clearly getting that kind of competition back, Laura, is going to be a very difficult thing.
LAURA SMYTH
Well we’re talking about a fairly short time period between those changes you described and so I think it’s probably early in the piece to be able to analyse the benefits so far of investing the additional $16 billion in the residential mortgage backed securities, so I think perhaps a little more time needs to elapse before we can make a proper assessment of that. Obviously those attempts are geared at trying to increase competition and support smaller lenders.
CHRIS UHLMANN
Finally on this, Scott Ryan, isn’t the truth of this that competition was killed off during the Global Financial Crisis and there’s a trade-off between having a secure financial sector and one that has lots of competition in it and there’s a middle line that has to be drawn?
SCOTT RYAN
I don’t think that it’s a trade-off between secure and competitive. You’re right, a lot of this damage happened then, but the single biggest regulatory impact in a negative sense on competition in the financial market was the unlimited guarantee on bank deposits. There was no need to do that. Other comparable countries in the world didn’t do it. The Opposition proposed a $100,000 cap. To outbid them, Kevin Rudd and Wayne Swan simply proposed it being unlimited. That sucked a lot of funds out of other non-bank financial institutions that were so important for lending to small business. A lot of those funds are still frozen today.
CHRIS UHLMANN
Laura, I’ll let you respond before we move on.
LAURA SMYTH
Well I suppose I should say, in the context of a prompt response to the Global Financial Crisis, steps were taken to try to shore up our banking industry. It’s all perfectly great to say with 20-20 hindsight what might have occurred, but decisions were taken to act swiftly at the time.
SCOTT RYAN
The Reserve Bank governor at the time said that this was a bad idea. He said so in a briefing to Treasury which came out publicly. That is one of the biggest impacts upon the non-bank financial sector that’s happened since 2007. It has frozen a lot of funds, limited access by small and medium-sized business to non-bank finance, and that is where a lot of the competitive pressure came from for the non-mortgage-based financial sector.
LAURA SMYTH
I should ask, just finally, are we still moving back – and I’m not sure at what stage Joe Hockey’s point plan is at this point – is he still, and is the Opposition still proposing to regulate interest rates…
SCOTT RYAN
The Opposition never proposed that. It’s only your coalition partner, The Greens, that are proposing regulating bank fees and interest rates.
LAURA SMYTH
Not as I recall it.
CHRIS UHLMANN
Well moving on – the High Court on Thursday brought down a decision on detention which essentially said that the two Sri Lankan asylum seekers had been denied procedural fairness. Again, it opens up this whole area for the government which seems to be a running sore, Laura. You’ve got problems of boats continuing to arrive, a burgeoning population in detention, and now a whole lot of people whose cases will have to be reviewed.
LAURA SMYTH
Well obviously the regime that the High Court considered relates back to the period of 2001, so what we’re dealing with here is a range of circumstances which might be cause for further scrutiny. Chris Bowen has indicated that he’s taking appropriate advice in relation to the High Court’s decision and I think that it is appropriate for us to wait for that advice to be received and for his response to be developed. I think what is interesting, certainly, is the position that it creates for the Opposition in terms of its much-noted and much-vaunted ‘Nauru solution’. There has been comment in recent days from fairly eminent jurists to the effect that that could also be something which is an issue, so it will be very interesting to see the way that their policy responds.
SCOTT RYAN
Firstly, the laws that the High Court looked at – the procedural fairness issue around ministerial discretion – was a change introduced in 2008 by the Labor Government. That’s what this decision focussed on. Yes, there have been comments by lawyers, refugee advocates, quite eminent lawyers, but this decision focussed upon the changes the government made in 2008. This is another attempt by Labor to obfuscate and try to spread the blame for what’s happened under it’s failed border security policies. If you say that this is going to bring into question the Coalition’s proposal to use offshore processing on Nauru – which was successful in deterring people coming to Australia – then it’s going to have the same impact on the mythical regional processing centre that the government has been talking and not doing so much about.
LAURA SMYTH
No, but the issue there as I understand it, is that, in the case of Nauru, the processing claims would have to be – by virtue of it not being a refugee convention country – would have to be handled by Australian nationals. In the case of other circumstances that may not be so.
SCOTT RYAN
No, well the UNHCR can process on Nauru. Nauru has indicated that it is happy to sign the refugee convention.
LAURA SMYTH
But that wasn’t the case…
SCOTT RYAN
No, but going forward now – you talked about the Opposition’s policy now – the Opposition’s policy now is to use Nauru. Nauru has indicated that they’re happy to sign the Convention and UNHCR officials can do the processing in that country. If it is not going to be OK for Nauru, I don’t see how Labor’s mythical regional processing centre is somehow going to be exempt from the High Court.
LAURA SMYTH
Well it’ll be interesting to see whether, and when, Nauru does, in fact, ratify the refugee convention.
CHRIS UHLMANN
Yeah, I guess though Laura, the question is that the minister said today that all 47,000 cases that have been under scrutiny in the last year that were done by Australian officials overseas would be opened up. Again, if there’s a single Australian official on East Timor, you do wonder if it’ll be captured by the same net if that’s what the minister is saying is going to happen.
LAURA SMYTH
Look, I think analysis of the scope of likely claims and the instances of rejection of claims needs to be undertaken before we rush in to assume that there’ll be a floodgate situation.
CHRIS UHLMANN
Alright, now we can’t let you both go – both being Victorians – without talking about the Victorian election. Fascinatingly, Scott Ryan, the Liberal Party has said that it will not be preferencing The Greens, which means that it’s putting Labor ahead of The Greens in some of these inner-city electorates, which means that your arch-rivals – always and forever for government – may well get to hold seats on the back of Liberal Party preferences.
SCOTT RYAN
First of all I’ll say that it’s a decision taken by the state party – it’s not something that the federal party is involved in. I have a couple of points to consider about this – and this is what the Liberal Party said last night. Firstly, this will crystallise the decision in people’s minds. Federally, a vote for The Greens was a vote for Labor, and at the state level, this just illustrates that. If you want change in Victoria, if you want Ted Baillieu to be Premier, if you want to build Victoria again and fix the problems, then you’ve got to vote for the Coalition – the Liberal and National Parties. I think that is an eminently defensible and reasonable position. The Labor Party has spent three weeks vilifying The Greens and vilifying the Liberal Party yet in all that time they were in secret negotiations with The Greens and it just shows what we’ve seen up here.
CHRIS UHLMANN
Just before we go to Laura though, there’ll be some that will be, no doubt, extremely critical of this decision inside the Liberal Party.
SCOTT RYAN
I think you’ll find the Liberal Party is focussed entirely on Saturday week, in Victoria, and bringing about the change that Victoria needs by making Ted Baillieu Premier.
CHRIS UHLMANN
Now the Liberal Party is certainly dealing with the Green issue, but is the Labor Party dealing with it as yet, Laura? Are you always and forever going to outsource the left-wing to The Greens? It seems that since you’ve made that arrangement with them, it’s constantly being chipped away at by Bob Brown.
LAURA SMYTH
Well I’d hardly accept that premise. I think we …
CHRIS UHLMANN
Many in your party seem to be of the view that that’s a bit of a problem.
LAURA SMYTH
Well I’m certainly not of that view. I think we certainly hold our own on a range of policy issues and have quite a range of policy distinctions with The Greens. I think it’s an interesting tactic in Victoria. I think we’ll probably see a few of these situations happening with the Liberal Party over the next couple of state elections.
CHRIS UHLMANN
Surely you should send them a thank you note.
SCOTT RYAN
The Labor Party vilifies The Greens. John Brumby vilifies The Greens for three weeks, all the while in secret negotiations with them, the terms of which Victorians won’t see – just like we saw in the federal election.
LAURA SMYTH
Chris, I think we’ve demonstrated certainly over the last few weeks of the federal parliament that we’re capable of working maturely and effectively with The Greens and with other interested members of parliament. It’s unfortunate that we have encountered the wrecking ball of the Coalition on so many occasions. I would hope that that won’t be the case in Victoria, but …
SCOTT RYAN
We will hold you to your promises. No carbon tax before the election – carbon tax after the election. In Victoria, I assume that it will be the Labor Party holding the Coalition to its promises, because I am quite confident …
CHRIS UHLMANN
And that’s a strong line the government’s been running for quite some time – that you are nothing but wreckers – it was coming out again in Question Time today.
SCOTT RYAN
If holding the government to the words the Prime Minster uttered in the week before polling day is wrecking, then that is something that I’m actually quite proud of, but it is not. When the Prime Minister said – hours before polls opened – that there would not be a carbon tax, and then with a euphemism of ‘a price on carbon’ backflips on that in some desperate search for a contrived or confected purpose for being in office in the days after the election, then the Liberal Party and the Coalition will hold the Labor Party to account to keep the word that it gave the Australian people.
CHRIS UHLMANN
I’ll let Laura respond and then we’ll have to finish.
LAURA SMYTH
Well I think the tenor of the debate around the election was around community consultation. What could be more consultative than …
SCOTT RYAN
A citizens’ assembly?
LAURA SMYTH
… than the committee that has been established, and unfortunately which your colleagues have declined to participate in?
CHRIS UHLMANN
Alright well, Laura Smyth, Scott Ryan, thank you.