PARLIAMENT HOUSE, CANBERRA
WEDNESDAY, 27 NOVEMBER 2019
SUBJECTS: Labor to recall Westpac for questioning; wages growth stalling under the Coalition; interest rates; national security; Angus Taylor.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good morning. My name is Andrew Leigh, the Shadow Assistant Minister for Treasury and the Deputy Chair of the House of Representatives Economics Committee. We’ve seen last week from Australia's oldest bank one of Australia's worst money laundering scandals. Westpac reported 23 million breaches of money laundering laws, an egregious blight on the financial sector.
It was Labor that called for a royal commission into the financial services, and it's Labor that's today calling for Westpac to front the House of Representatives Economics Committee. We can't wait for the next hearings next year when Westpac is scheduled to come before us. Westpac should come before the House Economics Committee at the earliest opportunity. This scandal has already seen Westpac’s CEO and Chair step down, but it's important that we look at this from an institutional standpoint. It's important we get to the bottom of what Westpac did wrong, how the child exploitation financing occurred, how the money moved, and how this was allowed to recur 23 million times - almost one breach for every Australian.
The House of Representatives Economics Committee heard from Westpac just a fortnight ago, but that was before this scandal broke and it was before we had an opportunity to go directly to these issues. These issues matter for Westpac. They matter too for Australia's big banks, and for the integrity of our financial sector. If the Liberals are serious about proper scrutiny of the big banks they’ll agree to Labor's request to bring Westpac back before the House Economics Committee. But I wouldn't be holding my breath. This is after all the Liberal Party that voted 26 times against the banking royal commission, the Liberal Party that delayed a banking royal commission by 18 months, causing untold additional scandals as a result of those delays. So I'm hoping the Liberals to do the right thing today, but frankly I won't be surprised if they don’t. Happy to take questions.
JOURNALIST: Andrew, surely AUSTRAC are the people who actually scrutinise what Westpac had done. Why don’t you call them before the committee?
LEIGH: There will be direct scrutiny of Westpac through AUSTRAC. AUSTRAC also reports to a different economics committee, the Joint Committee on Corporations and Financial Services. The House Economics Committee has a role in oversight for ASIC and APRA. APRA is coming before us next Monday. Certainly there’ll we direct questions for APRA over their handling of this matter. But Westpac is the institution at the core of the scandal. The House Economics Committee has an oversight role over Australia's big banks, and Westpac should be recalled back before us immediately. It’s a Liberal-dominated committee, so it's up to the Liberals to decide whether or not they will do the right thing. But I'd be very surprised if my Liberal colleagues on that committee go back to their electorates this weekend and are besieged by constituents saying ‘please don't give any more scrutiny to Westpac, please don't bring Westpac back before the committee’. I suspect my Liberal colleagues will hear exactly what I've been hearing in my conversations with constituents. People are outraged by these money laundering breaches, and they want to make sure that there is a spotlight placed on wrongdoing that's been uncovered.
JOURNALIST: One of the natures of these inquiries is that people want to demonstrate that they’re being strenuous. Are you worried that the real danger could be that any type of thoughtful analysis could be overtaken by the need to grandstand?
LEIGH: We need thoughtful analysis, we need careful scrutiny of what went wrong. Individuals are clearly to blame, which is why some individuals have stepped down. But institutions and systems also need to be scrutinized. Not just within Westpac - if we get money laundering wrong, that has massive implications for Australia's national security. So we need to learn the lessons of Westpac for Westpac’s sake, but also for the sake of the entire financial system. It goes back to exactly the same principles that led Labour to call for a royal commission into the banking sector, because we need to learn from these scandals for the health of the entire sector.
JOURNALIST: Do you think the banks are too big? Should the banks be broken down into smaller units? Because it's such, they’re such big organisations now, they have- they seem to run on their own systems and no one can really give [inaudible] Even if the CEO probably doesn't know what's going on.
LEIGH: You make a good point. Australia's financial sector, like many other sectors the economy, is dominated by a handful of big firms. I think there is a risk that when market concentration gets too strong, that you don't get the proper oversight mechanisms, that firms aren't as rigorous as they might be in a more competitive market. So competition in the banking sector is important for innovation. It's important for wages. It's important for customer outcomes. And it's also important for appropriate oversight. This is a challenge for the Australian economy more broadly, frankly. We've got a series of reports coming out of Treasury and other institutions showing the Australian economy is too cosseted, to stultified, that there's not enough new business formation, not enough job switching. It's not the agile, nimble, innovative economy that Australians deserve.
JOURNALIST: Philip Lowe has ruled out [inaudible] quantative easing. Do you agree with that call?
LEIGH: Monetary policy is squarely a question for the Reserve Bank. We're certainly in unchartered waters now with the interest rate down to 0.75 per cent. I think most people recognise that probably 0.25 per cent is about as low as you go, which means the pressure really comes onto fiscal policy. There are questions that have been raised by some commentators as to the effectiveness of even two more rate cuts. There's questions about the effectiveness of unconventional monetary policy. So what do you need then? Well, you need fiscal policy. You need a government that’s willing to raise Newstart, that’s willing to bring forward infrastructure projects, that’s willing to put in place an Australian Investment Guarantee - an accelerated depreciation measure that we know would boost corporate expenditure. And yet the Treasurer has done the absolute worst thing in those circumstances. He said he might have accelerated depreciation in the next budget. What’s the signal that sends to businesses? It sends them a signal that if they want to invest, they should put off investment until next year. The Treasurer's ham-fisted approach to fiscal policy is working at odds with what the Reserve Bank is trying to do with monetary policy, although they're really running out of runway.
JOURNALIST: So why does the Reserve Bank keep chasing this, keep dropping interest rates, where clearly it’s not having any effect and maybe having a negative effect on business confidence because getting down to point two five per cent is like nothing, why would bother, and then talk about quantitative easing. That's got to send a really bad signal to business around Australia.
LEIGH: It's an important issue. I pushed each of the big four banks CEOs over the course of our hearings in the last month over what they thought the impact of rate cuts and what had been the impact of past rate cuts. Generally they took the view that rate cuts had a stimulatory effect on the economy, but that that effect diminished as you got closer to the zero bound. Again, this means that we're coming back to fiscal policy. Having a Reserve Bank whose ability to stimulate the economy is limited means that the government needs to be acting with fiscal policy. But we've got a government which is congenitally unable to act to put in place the fiscal policy that the economy needs, despite the fact that international agencies are downgrading our growth forecasts, despite the fact that we had Guy Debelle yesterday saying that low wage growth is the new normal. We don't have a federal government that is willing to restore penalty rates, to ensure the workers get the appropriate powers that they need to get their fair share of growth. In the current environment, we've got a government which is peddling a neoliberal, deregulationist agenda in an environment in which Australian households are hurting, and asking for nothing more than a government that will stand on their side.
JOURNALIST: How much money would you [inaudible] if you were in government? How much money would the Labor Party, if you were in government, what would you feel is the amount of money you’d spent in infrastructure spend, or fiscal policy to raise interest rates?
LEIGH: It's about bringing projects forward. So, we’ve-
JOURNALIST: Have you got a figure though, a figure in mind?
LEIGH: We've pointed out that across the board, it's important to bring projects forward, and that projects starting in the middle of the next decade aren't going to stimulate an economy which is struggling right now. Retail sales figures have been abysmal. New car sales numbers have been down. Business investment is sluggish. Productivity is languishing. Wages are flatlining. We're about to go into the Christmas spending season and many retailers are worried that if the current slump continues that could threaten the health of their business. So we know right now we need a federal government that is willing to act – that’s willing to act on accelerated depreciation and on rising Newstart and bringing forward infrastructure. But we're not getting any of those things.
JOURNALIST: Do you concede that the risk of the inquiry like the one you’re suggesting is that it could stall real action?
LEIGH: Not at all. I don't see any reason why a parliamentary inquiry into Westpac, why bringing Westpac to face the music in front of the House of Representatives Economics Committee would in any way imperil the action that's on foot on the Federal Court. Those legal actions will proceed, but at the same time, there's a proper role for parliamentary scrutiny. I know the Liberals like to duck and weave. The last thing they want to do is to apply a blowtorch to a banker. But Labor is serious about appropriate scrutiny for Westpac over this extraordinary money laundering scandal.
JOURNALIST: Who would be coming down from Westpac to talk to you then?
LEIGH: We would expect to see the acting CEO.
JOURNALIST: Mr King?
LEIGH: Mr King. Mr King takes over from Mr Hartzer next Monday. If we have the hearing before next Monday, we’d expect Mr Hartzer. After that, we’d expect Mr King.
JOURNALIST: Why do you think the Government’s standing by Angus Taylor?
LEIGH: I think when it comes to Angus Taylor, the government thinks that there is one rule for ordinary Australians and one rule for Coalition ministers. It's pretty extraordinary, isn't it, that when Mal Brough and Arthur Sinodinos faced charges they stepped aside from the frontbench. But Angus Taylor, with his born-to-rule mentality, seems to think that despite the fact that there is a named New South Wales Police investigation into him that he doesn't need to step aside. He should just do the right thing. He should look at all other cabinet ministers, when they faced these sorts of instances, they've done the right thing and stepped aside. He should swallow his pride and do the right thing, spend a bit of time on the backbench. No other questions? Thanks everyone.
Authorised by Paul Erickson, ALP, Canberra.