SENATOR THE HON PENNY WONG

MINISTER FOR FINANCE AND DEREGULATION

TRANSCRIPT

4 December 2012

ABC AM WITH SABRA LANE

TOPICS: BUSINESS ADVISORY FORUM, INTEREST RATES

E&OE - PROOF ONLY

LANE: Penny Wong, good morning and welcome to AM.

WONG: Good to be with you, Sabra.

LANE: You’ve just heard the COAG Reform Council chairman say that the COAG process has actually gone backwards under Labor’s watch. That’s a sad indictment, isn’t it?

WONG: I don’t agree if that’s in fact how you’d interpret it. I mean, for example, the Seamless National Economy reforms, which were set up in 2008, there were 27 areas of reform. We’ve completed some 17 of them in conjunction with the States.

But I do very much agree with Paul on this issue, and that is that it requires political leadership and agreement to make sure reforms happen. And as someone who’s had oversight of quite a number of reforms through this process, let me tell you they only work where you get political agreement and political will to carry them through at all levels of government – at State Governments and at the Federal Government. Because one level of government can’t achieve these sorts of reforms alone.

LANE: You’re talking with Business Forum participants on Thursday and two of them have told us that they think it’s just too slow, too glacial, too many bureaucratic power plays behind the scenes.

WONG: I understand the concerns of people in the business community who want reform faster. But as I say to them, make sure you talk not just to me but go and talk to the States as well because all of these things have to be agreed across governments. And in a number of the areas, as I’ve said, we’ve achieved 17 out of the 27, but in some of the areas where we haven’t achieved it, it’s not because the Federal Government’s walked away, it’s because key states have changed their mind.

Victoria on the occupational health and safety laws is one very obvious example. The Premier changed his mind and walked away from the agreement which had been set. That’s obviously a matter for him to explain, but my point is that we need to get political agreement across the political divide and across the state and federal divide.

LANE: What progress will you actually make this Thursday and Friday?

WONG: Can I explain first why we have the Business Advisory Forum?
This was modelled on what’s known as the B20, which meets before the G20, and the idea was to make sure on these issues where business have a real issue, have a strong voice – such as deregulation – that they get to sit at the table with first ministers.

And we’re all held politically accountable to the business community through that process and also there are a whole range of ideas generated.

LANE: The Reserve Bank Board is meeting today amid a raft of economic data that’s showing that the economy is slowing. Will the commercial banks be acting against the national interest if they didn’t pass on in full a rate cut if a rate cut is made today?

WONG: Well, a few hypotheticals there, isn’t there? Well first, it’s true that we live in a global economy that has a fair amount of fragility and risk in it, but I think it is important to remember, unlike the rest of the world we are growing – in fact faster than any other major advanced economy – and unlike the rest of the world, we have low unemployment, and interest rates where they are certainly lower than at any time John Howard was prime minister.

If the Reserve Bank chooses to move, that’s a matter for them, but there’s no doubt the Government’s budget position – and it’s our decision to ensure we are disciplined when it comes to the budget – has contributed to the Reserve Bank having room to move for its previous rate rises.

LANE: Nice dodge on that one, but would the banks be-

WONG: (laughs) Sorry, you wanted me to come back to the banks.

LANE: Yeah.

WONG: I’m on the public record on this, I wasn’t intending to dodge, Sabra. I have said the banks should do the right thing by their customers and I don’t think any customers find the non-passing on of rate cuts a good thing. And what I’ve also said is if your bank’s not giving you the right deal then we do have competition, we do have a number of institutions out there, and people should shop around for the best deal.

LANE: But if they decided to hang on and quarantine some of that cut though, that would lessen the stimulatory effect on the entire economy. It would be stimulating their own bottom lines, wouldn’t it?

WONG: Well there is certainly a focus on the bottom line for any private business and the banks are no different. I think people are aware of that, which is my point about their customers, customers want to feel like they’re actually getting the right service.

The Reserve Bank can speak for itself, but they look at what rates are actually being effected and put in place in the economy so they make the decisions on rates bearing in mind what’s actually happening in the economy and what rates people are paying.

LANE: Minister, thanks for your time this morning.

WONG: Good to speak with you.

ENDS