JOURNALIST: I'm joined in the studio by acting Treasurer Penny Wong. Thank you very much acting Treasurer for coming in and having a chat to us. You picked a good time to step into the role, didnt you?
WONG: Yes, I'm getting a lot of experience in these sorts of interviews.
JOURNALIST: Absolutely. What is the Federal Government planning to do to combat what we are seeing as this price gouging by the banks at a time when they are pulling in record profits?
WONG: Well they certainly are, and I can absolutely understand why Australians are so angry. We see record profits and then we see the Commonwealth Bank moving above the Reserve Bank interest rate rise. And I can understand why Australians and particularly Commonwealth Bank customers are pretty grouchy about that.
What we've done has been to put in place a range of measures to try and encourage competition because we think the best way to make sure banks offer good services is to make sure they understand people can walk out the door and get a different deal down the street. We know there is more to be done. As the Treasurer has said, we are working on further reforms, building on the measures that we have already got in place to encourage competition in the banking sector.
JOURNALIST: We don't seem to have many measures in place to encourage competition. Its just not working. What are we going to see? Wayne Swan said that from next month he would introduce new measures. What will they be?
WONG: Obviously well make sure we get them right. Well make sure that we put in place measures that work. We are not going to just, like Joe Hockey has done...
JOURNALIST: So you havent got the detail though on what measures hes going to introduce?
WONG: No, what Im saying is we'll make sure that we put in place measures that work. We have a range of reforms in place already things like cracking down on unfair exit fees for mortgages so people arent penalised when they change. And the Treasurer has flagged that we will put in place further reforms, as you said, certainly before the end of the year.
JOURNALIST: Im also seeing that there may be a special arrangement made for small businesses, even another institution developed?
WONG: I think there is a whole range of parts of the financial sector which we want to encourage competition in. But the main one that matters to most Australians is competition in the mortgage market. We want to make sure that people can get competitive mortgage rates. We've done, for example, $16 billion worth of investment in the residential mortgage-backed securities. Thats been important for small lenders. That is the sort of approach we want to continue because we recognise how important this is.
JOURNALIST: Thats right. During the GFC, the Government, and therefore taxpayers, backed the banks, prevented them from falling over. Is the move now that we are seeing over and above the Reserve Bank's increases a complete lack of social conscience on behalf of the banks?
WONG: What I think is this: if I were on the board of the banks, I think I would have a look at what the papers are saying because that reflects how angry Australians are. And Id have a think about the fact that as a big business operating in the Australian community, perhaps you ought to listen, not to just what politicians say, but to what ordinary Australians are very clearly saying.
JOURNALIST: Interesting. I was just reading some of the information this morning. Council approvals for homes are down to their lowest levels, down by 31 per cent. And business lending ,for small businesses, particularly is at a five-year low. These are considered primary forward-looking indicators. Is it possible that the Reserve Bank itself got things wrong last Tuesday?
WONG: Obviously thats a matter for the Reserve Bank. They are independent.
JOURNALIST: But whats your view?
WONG: I dont think its good for...
JOURNALIST: Youve spent all this time stimulating the economy and now they are putting the brakes...
WONG: I don't think it is good for even acting Treasurers to comment on the independence of the Reserve Bank. But, look, there are certainly risks on the horizon. There are risks on the horizon. We've come through the GFC in much better shape than most economies.
JOURNALIST: The banks have done very well.
WONG: But you always have to keep looking at how to improve and strengthen your economy.
JOURNALIST: Alright, acting Treasurer Penny Wong, thank you very much indeed for coming in and having a chat with us.
WONG: Good to be with you.
ENDS