E&OE TRANSCRIPT
RADIO INTERVIEW
ABC RADIO - AM
THURSDAY, 11 AUGUST 2016
SUBJECT/S: Prime Minister’s failure to take responsibility for Census mess; Royal Commission into banking; Outgoing RBA Governor’s commentary on economic policy
MICHAEL BRISSENDEN: Outgoing Reserve Bank Governor Glenn Stevens has sounded a warning bell to the Government in his final public speech in the role. He says the Government needs to make tough decisions to cut spending and repair the budget before a "moment of crisis". Commonwealth Bank chief executive, Ian Narev, has also weighed into the debate surrounding the economic climate. He says a royal commission into the banking sector would send a signal to the world that Australians have low confidence in government policy, regulators and banking management. For more on this, I'm joined live on the line by the Shadow Minister for Finance, Jim Chalmers. Jim Chalmers, good morning.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Morning Michael.
BRISSENDEN: Firstly, I'll get to the banks and economics in a minute but will just get your response to the census debacle. The reputation has taken a bit of a hit, hasn't it? Has the process been compromised, do you think?
CHALMERS: I thought it was pretty pathetic to hear that clip from the Prime Minister just then, blaming the ABS (Australian Bureau of Statistics) for what is essentially a failure of leadership on his part, a failure to take responsibility, a failure to explain the changes that they've made which have caused some of these problems. And now to pretend that it's nothing to do with him and everything to do with the ABS, I think is a pretty pathetic judgement on his failure of leadership. People would be a bit more forgiving, Michael, if there hadn't been this government stumbling from one stuff-up to another since the election - whether it be the bungling of the Northern Territory royal commission, the response to the banks or the Rudd nomination, this Government has really been stumbling from stuff-up to stuff-up and so people are very reluctant to forgive this pretty serious set of stuff ups.
BRISSENDEN: Wasn't the plan to put the census online, to go digital, wasn't that made under the previous Labor government though?
CHALMERS: Well, the onus is on the government of the day to explain the changes that are happening. There is a lot anxiety, as you know, in the community about the changes and the Government has been missing in action. They've largely vacated the field when it comes to such an important function of government and the fact that they couldn't explain and now they won't take responsibility for it or provide any leadership whatsoever, I think really is a black mark against them.
BRISSENDEN: Okay, but in hindsight do you think it was a bit premature to be going online with the census, to make that decision?
CHALMERS: I don't think that's the root cause of it. I mean, it's a natural progression to go online at some point for something like this, something of this magnitude. The failure is really from the minister and the Prime Minister to ask the necessary questions before people were asked to fill out the survey, to spend the necessary time getting it right and then explaining to people how it works and all of those sorts of things. Instead, they've vacated the field. Now there's this, sort of, unseemly finger pointing that's happening after the event when really what people expect from the Prime Minister is to take a bit of responsibility; to lead on something as important as this.
BRISSENDEN: Okay, back to the economics, which is after all your portfolio speciality. Both Glenn Stevens (outgoing RBA Governor) and Ian Narev from the Commonwealth Bank hit out at political leaders yesterday but a lot of it, it has to be said, was focused on Labor. Ian Narev says Labor's constant bank bashing risks damaging overseas investor confidence and has business concerned. Do you think you should temper your language?
CHALMERS: It's not bank bashing to point out where there's a big gap between the cash rate and the interest rate that banks charge for credit cards. It's not bank bashing to point to injustices in the life insurance system. It's not bank bashing to point to some very serious and very troubling allegations of rate rigging amongst the big four banks. I think that's just Labor doing its job and you know, Ian Narev has got a job to do as the head of one of the big four banks. We've got a job to do as well which to stand up for people in the banking system, to make sure that the financial system works for people and not against them.
We make no apology whatsoever for doing that and the fact that Ian Narev can somehow blame a Royal Commission, or the prospect of a Royal Commission, on people having less confidence in the banks is laughable. What's causing people to have less confidence in the banks is a fairly steady stream of scandals over the last couple of years, including those allegations of rate rigging, the stuff around life insurance and all of these other matters. And what's tripped it off lately, of course, is the fact that when the Reserve Bank makes an interest rate cut, it's supposed to provide a multi-billion dollar boost to the Australian economy, not a multi-billion dollar boost to bank profits.
BRISSENDEN: But it's not just banks, I think he says. He says if a government decides that it wants to have a Royal Commission that suggests that as a nation we don't have confidence in the regulators or the financial system as a whole.
CHALMERS: I think it shows a willingness to get to the bottom of some of these very serious issues and I think in the medium term, people will have more confidence in our financial sector if we do get to the bottom of and iron out some of these issues, some of these very serious issues, so that people can have faith that the banks and the financial system is working in their interests and not against them.
BRISSENDEN: He does have a point though, doesn't he, when he says, essentially what he's saying is the global financial situation is far from steady. I think he said, to paraphrase him, we're not a week away from a major crisis of confidence but if you believe that confidence doesn't matter then you're not in touch with global markets. I mean he does have a point there; we're in a pretty precarious situation at the moment.
CHALMERS: Well, I think if you want to talk about confidence, Michael, one of the contributing factors to a lack of confidence in our financial sector is some of those issues that I've just run through. If we want to have confidence in our banks - and that's a very important thing - we want strong, profitable, well regulated, successful banks in this country, that's certainly what I want to see – that means getting to the bottom of some of these issues which do compromise that confidence.
BRISSENDEN: On the broader economic scene, Glenn Stevens yesterday in his farewell speech essentially made the point that really over the last decade, no government seems to have been able to make hardnosed decisions to repair the Budget. I mean, there's certainly some truth to that, isn't there?
CHALMERS: Oh look, I thought that speech yesterday from Glenn Stevens was a terrific tribute to his time as Governor of the Reserve Bank. I don't think it's a stretch to say that during the Global Financial Crisis we had arguably the best of the central bank governors in Glenn Stevens and I had the opportunity and the privilege to work pretty closely with him for some of those years. I think that was a good speech that he made yesterday. I thought he made some good points. Of course, he's correct to say that governments need to make difficult decisions to repair the budget, we're certainly in the cart for that.
BRISSENDEN: And that they haven't so far, well certainly in recent times.
CHALMERS: Well, he was making the point that more needs to be done and I agree with that. That's why we've got something like $130 billion worth of Labor improvements to the Budget bottom line. We take that task very seriously and that's why we've got improvements on the revenue side and the spending side in our mix. We're not relying on things that will never pass the Parliament which is the Government's approach. We do believe in those big structural changes in the Budget over time so that we can improve the Budget position.
BRISSENDEN: Do you also agree with his point that monetary policy doesn't seem to be working any more, as a way of stimulating growth?
CHALMERS: I think that was probably the strongest point he made yesterday: the argument that monetary policy on its own can't do all the heavy lifting. I think he said you can't rely on interest rate cuts to dial up growth in the economy. I couldn't agree more with that. You need fiscal policy from the Government and monetary policy form the bank working together. That means investing in infrastructure, boosting our human capital and growing the economy in the right way, which is an inclusive way, where people have a stake in our success.
BRISSENDEN: Okay.
CHALMERS: I thought that point was well made.
BRISSENDEN: Alright, Jim Chalmers, we'll leave it there. Thanks for joining us.
CHALMERS: Thanks Michael.
BRISSENDEN: Shadow Finance Minister, Jim Chalmers.
ENDS
