SKY NEWS FIRST EDITION
THURSDAY, 24 SEPTEMBER 2020
SUBJECTS: Westpac’s record fine; Insolvency and government inaction on dodgy companies’ phoenixing activities; Paul Keating and the RBA; JobSeeker and the need to support our unemployed.
PETER STEFANOVIC, HOST: Joining me now is the Shadow Assistant Minister for Treasury, Andrew Leigh. Andrew, thanks for joining us this morning. Let's get your take on this breaking news from Westpac. It's agreed to pay $1.3 billion.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Yes, I pushed Peter King the CEO of Westpac in the House Economics hearings a couple of weeks ago as to why Westpac had only put aside $900 million to cover the fine. I was pretty sceptical at the time that that was going to be enough, given that the regulator was asking for $1.5 billion and given that the Commonwealth Bank's breaches - which didn't see them lose their chair or the CEO, didn't involve the sorts of extraordinary misconduct that Westpac was engaged in - cost the Commonwealth Bank $700 million. I see now Westpac hadn't put enough aside and indeed the fine is much closer to what the regulator was calling for than what Westpac had provisioned. That’s appropriate, given the misconduct.
STEFANOVIC: That’s what I was going to ask. So that's a fair penalty?
LEIGH: Absolutely, absolutely. These were extraordinarily serious breaches, and it's marked by the fact that there was massive turnover in the board and the CEO was forced to step down, Westpac itself acknowledging the gravity of the breach.
STEFANOVIC Okay. Josh Frydenberg. He's offering a lifeline for small businesses to basically help them trade their way out of insolvency. What's Labor's position on this announcement?
LEIGH: I'd have more confidence in the government's insolvency announcement if they were doing more to crack down on the small number of dodgy directors that are using our current insolvency laws in order to rip off workers, other businesses and taxpayers. This so-called phoenixing activity is costing the economy billions of dollars a year, and yet the Coalition has failed to act and put in place the sensible reforms we know would work. Things like a director identification number, cascading trusts for large construction projects, would give a great deal of certainty that people aren't abusing insolvency laws in order to rip the money out of those firms and take it off to line their own pockets.
STEFANOVIC: Given the big deficit numbers and the economic recovery, is it your view that Labor should completely jettison its tax measures, like on negative gearing and franking credits?
LEIGH: We'll revisit those policies as we come into the next election. But we certainly know that we need to bring the budget back into surplus over the medium term, and it's not good enough simply to be saying, ‘well, let's hope the growth suddenly comes’. Let's face it, growth over the last seven years has been lacklustre. Business investment has been down, productivity has been down. We were enduring the Morrison stagnation before we went into the Morrison recession. And so the government needs a plan, Pete, as to where productivity growth is coming from, how they'll invest in the key drivers of productivity such as skills, infrastructure, how they’ll improve the quality of our institutions. We didn't see much of that last year, and I'm worried that the government is jumping from crisis response to crisis response rather than really thinking long term about what the economy needs.
STEFANOVIC: Paul Keating has accused the quote ‘high priests of the RBA’ of indolence. They should be doing more to shoulder the load. Do you agree the RBA should be doing more with monetary policy to support fiscal policy and get people in jobs?
LEIGH: I've pushed the Reserve Bank Governor on three fronts. The Reserve Bank hasn't pursued negative interest rates, unlike a variety of its overseas counterparts. Their term finance facility hasn't been taken up in the way in which we hoped, and so we've seen small business lending down 8 per cent while large business lending has grown. And they've been reluctant to cut the rates there. And in terms of their yield curve control policy, they're not looking at longer dated maturities, which I believe would be appropriate. So I've encouraged them to look at those alternatives, because otherwise you do face the prospect of inflation being below the target band for the entirety of the Governor's term from 2016 potentially through to 2023. You can see the relative conservatism of Australia's central bank just by looking at the exchange rate, which is higher than you would expect at the moment. And that reflects the policies the Reserve Bank's pursued. But let's face it, most of the work has to be done on fiscal policy and the government's significant withdrawal of fiscal support from the economy over coming weeks will have an impact on the economy that dwarfs anything the Reserve Bank could do or not to.
STEFANOVIC: Just quickly, just finally on JobSeeker - the money gets wound back from tomorrow. The supplement, I should say, gets wound back tomorrow. It is happening. It can't stay there forever. But what is your hope for when Josh Frydenberg delivers his budget in two weeks’ time?
LEIGH: We have to realise that people are unemployed at the moment, not for any lack of talents of their own, not because they're not trying hard enough, but just because the jobs aren't there. For every available job, there's 13 job seekers - a number that’s even higher in regional Australia. So the government really needs to recognise right now that those who are on JobSeeker are there because of a lack of demand in the economy. They need to get rid of the old Liberal language of leaners and lifters, and adopt a more inclusive approach and raise the JobSeeker payment long term. Snapping it back to $40 a day just isn't going to cut it. We need to ensure that we're providing appropriate support because if unemployment benefits get too low, then it becomes difficult for people to make ends meet and to be in a position where they're ready to take up a job.
STEFANOVIC: Okay. Andrew Leigh, thanks for your time this morning. Good to talk. We'll talk to you again soon.
LEIGH: Real pleasure. Thanks.
Authorised by Paul Erickson, ALP, Canberra.