JOURNALIST: Senator, good morning.
WONG: Good morning Steve.
JOURNALIST: Do we need more competition in the banking sector?
WONG: We absolutely need to improve competition and thats what the Government has been focused on for some time. Competition, making sure banks understand people can walk out the door, can walk down the road and get a different deal is the best way you make sure they keep offering good products at cost competitive prices to Australian consumers.
JOURNALIST: The ultimate competition would be more players in the banking sector. Now weve seen of course the Commonwealth Bank swallow up Colonial. Weve seen Westpac swallow up the St. George bank. Thats not been healthy. How are you going to create more banks let alone allow people to swap from bank to bank?
WONG: The first issue obviously is we know that the Global Financial Crisis has had an impact in terms of the number of players in the market. Thats why the Government did put in place a $16 billion investment in what are called residential mortgage-backed securities. Thats a funding market which helps many small lenders make home loans. Thats a good and important aspect of competition. But we put in place a range of measures. We know that we want to do more because we want to try and make the market as competitive as possible. And as the Treasurer has flagged weve put in place reforms, but we are looking to do more in the near future.
JOURNALIST: When will those announcements be made?
WONG: The Treasurer has said we will obviously announce those in the near future, certainly before the end of the year. They build on the reforms weve already put in place. Obviously unlike Mr Hockey we are not of the view that we can go back to the old days where Parliament regulated interest rates. We know what happens when you do that. Its harder for many Australians to get mortgages. But what we can do is try and foster competition.
JOURNALIST: I dont think he was actually saying that we should re-regulate banks. Ill play a bit of what he had to say yesterday to you in a moment. Have you thought about allowing Australia Post to set itself up as a bank?
WONG: I have seen some commentary about that. I think you referred to that in the introduction too. But obviously that is a very significant decision to change the structure of banking in Australia. Thats not the focus of the Government. The Government is focused on trying to ensure that we enable competition in existing markets and support existing players and small lenders so that we can keep the banks honest when it comes to their customers.
JOURNALIST: So you have had no discussions about letting Australia Post set up as a bank?
WONG: I think thats not the approach the Government is taking and as you would know, Steve, we are looking to more reform to improve competition. We have already delivered a range of reforms. Obviously Im not going to announce everything that might be or might not be considered.
JOURNALIST: We need that reform quicker, sooner rather than later, dont we? I mean we have had yet again an 84 per cent increase in a banking profit yesterday with Westpac. We had the Commonwealth Bank in what I would describe as a sneaky un-Australian way raise its rate above the Reserve on Melbourne Cup day of all days.
WONG: Yes it was an interesting day to choose, wasnt it?
JOURNALIST: Do you get a sense of, from where you are, the community anger about this?
WONG: Absolutely. I think the community has every right to be angry and I know quite a few Commonwealth Bank customers myself who are extremely upset about this decision. Its a pity that the Bank did not consider how, not only the public would see this decision but its own customers. I hope other banks will take note of the reaction which I think is quite understandable.
JOURNALIST: Here is Mr Hockey talking to us yesterday. Thats Joe Hockey yesterday. I will get your reaction to that. Also the Prime Minister, Julia Gillard, just in the last couple of moments on the Today Show has said you are looking at giving the ACCC more powers. Is that the answer here?
WONG: I think the Treasurer said in the Parliament that we are always looking at ways in which you can improve competition. And obviously making sure the ACCC is armed with the power that it needs to ensure that competition, is always something we are prepared to do. And I think Graeme Samuel, the chairman of the ACCC, has made some public comments about that.
But just in response to the excerpt that you played from Mr Hockey, Id make a few points. First we are winding back spending and Mr Hockey should know that. In fact the winding back of the stimulus is now detracting from GDP growth over the course of this year. We are in fact engaging in the largest, fastest return to surplus since the 1960s and thats why its been backed by the IMF and other commentators. The reality is Mr Hockey, I know he wants to play politics with this, he has floated using the Parliament and what he called levers; he hasnt been clear about what those are. On the other hand, instead of these sorts of thought bubbles, the Government will methodically and carefully go about building on the reforms its already put in place to improve competition.
JOURNALIST: The Treasurer was asked in question time last week about how many people had shifted from bank to bank. I think its almost impossible to tell, but its not any easier is it? The banks do not make that simple.
WONG: We have focused quite a substantial amount on how you try and improve the capacity of Australians to walk out the door.
JOURNALIST: But have you ever tried to do it?
WONG: I havent done it for a few years. I have done it a number of years ago. I did in fact change banks for similar reasons.
JOURNALIST: Its not easy is it?
WONG: No, its not easy and we always can do more. What Wayne has brought in though is a range of laws to crack down on exit fees so if you have got an unfair mortgage exit fee that is a financial penalty for changing banks the ACCC has got the power to do something about that. I think making sure banks remember that people can change, and that people are able to change, is the best way of ensuring that they behave in ways their customers would want.
JOURNALIST: Ill let you go, but just before you do, the US Federal Reserve is going to now, looks like, print or buy $600 billion. Or the US Government will buy $600 billion from the US Federal Reserve. Whats that likely to do to our economy?
WONG: I think its a real example of the relative strength of the Australian economy. The reality is our public finances are in very sound shape. Our net debt levels are very, very much lower than those that the United States and others are dealing with. We have got low unemployment by international standards. And our economy is growing and when you look at what the US Federal Reserve is having to do, I think it reminds us of the recession that we avoided and the importance to Australians of that.
JOURNALIST: Thanks for your time.
WONG: Good to speak with you.
ENDS