SKY NEWS FIRST EDITION
MONDAY, 14 OCTOBER 2019
Subjects: Josh Frydenberg caving to public pressure over the banks, Deloitte highlighting homegrown concerns for the economy, Morrison failing Australia on the world stage.
LAURA JAYES: Joining me now is Labor frontbencher Dr Andrew Leigh. Andrew Leigh, thanks for your time-
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Pleasure, Laura.
JAYES: Do you support this ACCC inquiry?
LEIGH: It certainly seems like Josh Frydenberg has finally yielded to community pressure to do something about big banks not passing on rate cuts. We know this has a big impact on household budgets and it's important to ensure that those rate cuts are passed on in full. Our banks are very profitable, and that's why Labor was calling last month for an ACCC inquiry into competition in the banking sector. At the time, Liberals were saying we didn't need it, that the big banks were already dealing with too much in the context of the royal commission. So I'm pleased that Josh Frydenberg seems to have finally yielded to community pressure, but let's not think of him as somebody who is always on the side of the customer. He of course is somebody who voted 26 times against the banking royal commission, and voted against Labor's abolition of mortgage exit fees - a pro-competitive measure - when we were last in government.
JAYES: Wayne Swan used similar language back in 2010, so the banks have been ignoring governments of all colors for more than a decade, probably even longer. So why would it be any different under a Coalition?
LEIGH: You’ve got to ask why the government isn't willing to bring all guns blazing on this issue, why last month they were pushing back against the ACCC’s desire to look more carefully at competition in the banking sector. We do need to make sure that Australians are getting the best deal. I worry particularly about these-
JAYES: What would guns blazing look like in your view?
LEIGH: I think we need to ensure that the ACCC is doing the inquiries it wants to do. They should have been getting on with the job last month when they asked the government to engage in a competition inquiry with big banks. But it also means that you need appropriate powers for the regulators - we know of course that the regulators had their budgets cut by the Coalition when they first came into office. That makes it tougher for them to stand on the sides of consumers - and ensure that you don't get this ‘loyalty tax’. We know that some customers who have been on the books for a while end up paying higher mortgage rates than people who just have just come in. Banks are basically taking advantage of the fact that we know from behavioural economics people often don't switch to get the best deal because life is busy and switching your mortgage is hard.
JAYES: What about the government having divestment powers to break up the big banks if they continue to do what they're doing at the moment?
LEIGH: That's not something we're contemplating at the moment. I know the government is waving around their big stick-
JAYES: Wayne Swan is, so what’s your view on his proposal?
LEIGH: Federal Labor's view is that that's not something we're considering at the moment. Some countries do have broad divestment powers in their laws. Generally the way in which they operate is through threat rather than through firms actually being broken up. That happens very rarely.
JAYES: So how should we treat this proposal, the suggestion from Wayne Swan - the ALP president – that it’s merely that?
LEIGH: Wayne frequently raises important issues in the public debate. But as I told you Laura, that's not something that federal Labor is contemplating at the moment.
JAYES: Ok. What would be the concern with that? Because the government is using it on energy companies, or hoping to get that through the Parliament this week, in fact. So what would be wrong with doing it with the banks?
LEIGH: Well, on their energy proposal, you've already got people like the head of Origin Energy saying that that's having a chilling effect on investment and that the prospect of the government’s so-called ‘big stick’ divestment powers is having a damaging impact on the energy sector. So I don’t think you’d look at that one and decide that that's a ringing endorsement for divestment powers elsewhere in the economy.
JAYES: The Australian economy is doing pretty well, according to Deloitte, the latest Deloitte report out today. In their words, greatly improving, but domestic problems do persist and these falling interest rates as we've seen today could actually put more pressure on the housing market. So it's a bit of a be careful what you wish for, isn't it?
LEIGH: Laura, Deloitte’s forecasts are lower than the Government's, and they forecast that the problems we’ve got with wages being stagnant, with unemployment being too high will continue to next year. If you go to Britain or Germany or the United States or New Zealand, you'll find countries with unemployment rates around 4 per cent. But ours has been stubbornly over 5 per cent, which means hundreds of thousands more people on the dole queue and you get that lack of pressure on wages. So one of the reasons wages aren't growing is that unemployment's too high. The Reserve Bank is doing all it can, but it's like someone trying to swim with one arm. You've got monetary policy, but no fiscal policy action in order to support the economy. The Reserve Bank’s getting interest rates now down to historic lows, and the only reason that they're down on that level Laura is the lack of fiscal policy action. The Government’s not willing to raise Newstart-
JAYES: Just finally. We are on the other side of an election, and do you think it would be a little bit hard for people to take this morning in a kind of lecture from Labor after just a couple of months ago you were proposing hundreds of billions of dollars in new taxes?
LEIGH: Laura, the typical Australian would have paid lower tax rates had Labor won the last election. But it's incumbent on us to hold the Government to account. It's absolutely vital that we talk about the challenges the economy faces and the ambitious optimism that ought to characterise a strong Australian government at this time. This is a moment where the global economy is looking for middle powers to step up to leadership, but when Scott Morrison gives lectures about retreating from globalisation, that takes back Australia's ability to really influence the world economy in our national interest.
JAYES: Andrew Leigh, appreciate your time this morning.
LEIGH: Thanks, Laura.
Authorised by Paul Erickson, ALP, Canberra.