ABC NEWS RADIO
FRIDAY, 4 SEPTEMBER 2020
SUBJECTS: Economics Committee Hearing with the Major Banks; JobKeeper as DividendKeeper; International Day of Charity.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: I think it’s going to important to delve into how the banks have responded to the crisis, to find out why the loan facility provided by the government hasn't been accompanied by a surge in small business lending. We've seen big businesses taking out more loans, but small business lending has contracted 8 per cent. So I'll be keen to explore that some of the big banks.
GLEN BARTHOLOMEW, HOST: It's been estimated that bank loans have been deferred for more than 700,000 mortgages and businesses, adding up to around $260 billion. Now, total equity in banks is estimated at only about $250 billion. The big four budgeted just $3.7 billion for impaired loan write offs in the last financial year. That's been increased a little now. Is there a reckoning coming, given the amnesty for businesses trading while insolvent is about to expire? Are defaults likely?
LEIGH: That's certainly something on which I get very mixed messages speaking to people in the industry. Whether there's likely to be a surge of insolvencies or not at the beginning of October is up in the air, and obviously a crucial issue for the banks. One of the other issues for householders is what's going to happen when repayments recommence, and often at a higher rate. For people who've had their interest capitalised into their payments, they may now find themselves facing higher monthly repayments than they did last year. So that could place a significant strain on households, particularly people where there's been a job lost.
BARTHOLOMEW: So have we only kicked that problem down the road a little?
LEIGH: That's the risk. And certainly that's one of the things that I want to explore with the big banks. They've received significant taxpayer support, so I want to explore how they're ensuring that they're supporting the Australian community in the process.
BARTHOLOMEW: The government has been supporting Australian businesses and employers. The government moved to wind back its JobKeeper program this week. You complained that many companies in receipt of that government welfare seemed to be making good profits and passing it on to their executives in the form of bonuses, while the taxpayers covered their wage cost. Who are you talking about?
LEIGH: Well, let's look at Crown Casino. They’ve received $111 million in JobKeeper, paid out a dividend of some $200 million, and a third of that will go to a billionaire. You can look at Harvey Norman and its franchisees who received $9 million in JobKeeper - they'll pay $75 million in dividends, half of which will go to a billionaire. We've seen Star Casino receiving $64 million in JobKeeper, and giving their CEO an equity bonus worth $800,000. I don't think anyone ever conceived that JobKeeper would be a program that was designed to pad executive bonuses and allow firms to deliver massive dividends. It was about keeping low- and middle-income workers in employment. Overwhelmingly, that's what firms have done. But there's been a handful of firms that I think have done the wrong thing.
BARTHOLOMEW: How do you rate the government's response to that point? Matthias Cormann the Finance Minister saying ‘listen, I had to put support into the economy pretty fast’.
LEIGH: Lacklustre. The Treasurer was out last year talking about firms paying dividends that were too high because he thought they weren't doing enough investment. And yet when firms are paying a huge dividends subsidised by taxpayer money, the Treasurer won’t say a peep. So I think this is a clear issue of double standards. In many cases, we've had job losses - a million people out of work, another 400,000 forecast to lose their job by the end of the year. And the government's not only withdrawing support from workers, but also turning a blind eye to firms that are taking taxpayer support and channelling it to the very well off.
BARTHOLOMEW: In the meantime, that's seen your party - the Labor Party – oppose in the parliament the changes to the JobKeeper and JobSeeker schemes. Is it hypocritical though for the ALP to complain about such changes to those schemes when both the leader and Treasury spokesman have previously conceded the need for them to taper off over time?
LEIGH: We've always acknowledged that JobKeeper wouldn't be a permanent program, but it needs to be tailored to the economic circumstances. Don't forget the Prime Minister was talking about the economy having snapped back by now. Instead, we've gone into recession. The economy is looking in a much darker place than we'd expected back in March, and the JobKeeper assistance needs to be tailored to accommodate that. It’s also about what it does to retail sales. So when you give people money through JobSeeker, that flows straight back into the economy, whereas an alternative such as high-end tax cuts would end up being saved - or a significant portion of it would be saved.
BARTHOLOMEW: You’re also the party's spokesman on charities. Many charities have been ineligible for such government assistance at a time when their services are probably in high demand. How are they faring on the eve of what is International Day of Charity tomorrow?
LEIGH: They’re in a perfect storm. Two-thirds of volunteers were forced to cut back as a result of coronavirus. Donations are down 7 per cent this year, forecast to be down 12 per cent next year. And demand is up for charities that support domestic violence, mental health services, food banks and the like. So charities really need more support from the government, and as much support as they can get from Australians. So if you've got a spare couple of dollars, tomorrow - International Day of Charity– is a great day to donate to your favourite cause.
BARTHOLOMEW: Andrew Leigh, thanks for your time.
LEIGH: Thanks, Glen.
Authorised by Paul Erickson, ALP, Canberra.