SENATOR THE HON PENNY WONG

MINISTER FOR FINANCE AND DEREGULATION

TRANSCRIPT

7 December 2011

ABC NEWSRADIO BREAKFAST WITH MARIUS BENSON

TOPICS: INTEREST RATES, RBA

E&OE - PROOF ONLY

BENSON: Senator Wong, good morning.

WONG: Good morning Marius.

BENSON: What do you make of this delay by the banks, do you see it as an ominous sign?

WONG: I think Australians are very keen to know the decision of the major four banks in relation to this interest rate cut. I note that a couple of banks have already passed on the interest rate cut in full, the Bank of Queensland and ME Bank and they should be congratulated for that. But I think all the customers of the banks who have currently to date stayed silent are looking for a welcome decision.

BENSON: And the assumption is they won’t get a welcome decision. The assumption is that the reason the banks do this, the reason they did it two years ago is because they are waiting to see who’ll go first, and so you’re not getting the whole lot.

WONG: What I would say to the banks is this – think about your customers. Because I think that families and small businesses who are customers of these banks will be deeply angry with any bank that tries to hold back some of the rate cut.

Whilst it is a tough time out there in the global economy, the reality is there are many families, many small businesses that are doing it much tougher than the banks are doing it and banks ought to keep this in mind.

BENSON: But at the end of the day the banks are simply going to take a hard business decision. They’ll be sitting in their committees that make these decisions thinking we are going to cop heck from the customers, we are going to cop heck from Penny Wong and the rest of the government and they’re just factoring that in.

WONG: I would make a couple of points about that – the first is you only have a business if you have your customers and you need to think about your customers.

And some banks have done that well, some banks have done that less well in the past and I think all of them would say customers are their priority. I think their customers would want them to demonstrate that in decisions that they make.

In terms of what the Government has done, we’ve always said that competition is the best way to manage this and we’ve put in place a number of things that make it easier for people to change banks and  get a better deal if their bank doesn’t do the right thing. And that is the choice that people do have and that’s something the banks should recall.

BENSON: But there’s not very far to go, or there’s not very many alternatives if all four work in concert. Everybody is not going to rush off to the Bank of Queensland.

WONG: There are always smaller institutions which have been very competitive in terms of their interest rates and what I’d again say is this – banks operate in a community, banks operate for customers as a key part of their business and the banks need to bear in mind the people who are their customers and have a look at the front pages of the media today.

I agree with Greg Evans the head of the Australian Chamber of Commerce and Industry that banks shouldn’t be backsliding. We’ve seen business out there today, we’ve seen community leaders out there today. I think the banks do need to have a look at the response in the community that this delay has engendered.

BENSON: Do you have no sympathy for the banks? They say it is a tough world out there, it just got tougher? It got more expensive, we have to get our sums right or we’re not going to be a  bank.

WONG: Look, we understand that banks do operate in a global environment and it’s a tough time out there but the banks also need to understand the tough environment that their customers, that their families, particularly small businesses face and they need to recognise that too.

BENSON: Is there anything else the Government can do, can you decide that this is a crisis not similar necessarily but three years ago was it, you threw money at people. Is there any prospect of the Government providing direct cash stimulus to help people at Christmas?

WONG: Let’s remember what’s occurring currently in the domestic economy. We’ve got an economy that’s forecast to grow at trend. We’ve got an economy that’s created over 700,000 jobs since Labor came to Government and an economy that’s projected to create 300,000 more jobs in the couple of years ahead.

We’ve got a budget review that’s been handed down, that’s demonstrated the right balance between fiscal discipline and supporting jobs. We’ve got hundreds of billions of dollars in mining investment lined up for investment in Australia. Our prospects are good, the most significant risks do come from Europe and the Government was very clear about that when we put together the mid-year review.

And we will also continue to advocate for Europe to get its house in order. Clearly, that is the primary risk factor having an effect on the global economy and on confidence here.

But what I’d say is we have a lot to be confident about. Our unemployment rate is low, our public debt is low. And we’re projected to grow at trend and we’ve got a lot of investment coming into this country.

BENSON: But any cash for Christmas?

WONG:  We have handed down the budget review, we think we’ve got the budget settings right.

BENSON: Penny Wong, thanks very much.

WONG: Good to speak with you.

ENDS