JOURNALIST: Senator Wong, thank you very much for your time.
WONG: Yes, good afternoon.
JOURNALIST: : I want to start by asking you about Westpacs enormous profit an increase of 84 per cent in terms of its net profit, $6.3 billion. Now Gail Kelly, the CEO, says the Banks board hasnt made a decision when it comes to rates. What would be your message to Gail Kelly, to Westpac, off the back of that profit when it comes to any deliberations it has on rates?
WONG: I hope the remaining banks think very carefully about not only how the public sees them, but how their customers see them. We know from what the Reserve Bank has said that theres no excuse for the banks lifting their interest rates beyond the official rate increase. It is very unfortunate that the Commonwealth Bank has not heeded that consideration. So I hope the other banks will consider how their customers will feel if they do behave inappropriately or unfairly when it comes to interest rates.
JOURNALIST: At this stage you dont have much more than that, do you? Just a hope that they behave like that. Because really theres nothing stopping Westpac and Gail Kelly and the Westpac Board from deciding to increase rates just as the Commonwealth Bank did yesterday by well beyond the RBA official movement.
WONG: Kieran, unlike Joe Hockey Im not going to sit here and pretend that governments should regulate interest rates. Thats what Hockey was floating some weeks ago. We know that is not a sensible economic policy. We know the history of that in Australia has meant more Australians have found it harder to get home loans.
What we as a Government say is this: we want to encourage competition. Weve already done that. Weve put in a range of reforms such as the residential mortgage-backed securities. We know that competition is the best way to ensure that banks offer the best products and the Treasurer over a month ago flagged that we were working on more measures because we do think competition is the way we keep banks offering products that are good, that are competitive and that are value for money for Australians.
JOURNALIST: Its a beat up though to suggest Joe Hockey was calling for the re-regulation of the banks, isnt it? He was simply raising the point and many believe quite a fair point and suggest hes been vindicated by the events of the last 24 hours. That there needs to be more pressure on the banks and create more competitive pressure on the banks.
WONG: Kieran, can I say I think Joe, like many in the Opposition, theyre happy to say something to get a headline. Theyre not necessarily prepared to do the hard work to make a difference. Joe can say whatever he likes now but I think everybody knows that before his nine-point plan there was a four-point plan. And in that four-point plan was flirtation with re-regulating interest rates and we know thats not the way to go. The way to go is to do what the Governments doing sensibly, carefully building on the reforms to encourage competition that weve already made and enhancing those.
JOURNALIST: Joe Hockey says if the Governments got these reforms, why not release them today before the other banks make any announcements about their moves. Its a fair question, isnt it? Why not today?
WONG: As the Treasurer has said, we will work through this methodically and carefully, making sure that any reforms we bring forward improve competition and dont have negative consequences. Well do it carefully. That stands in stark contrast to the way in which Joe Hockey and their so-called economic team have approached this issue. I mean you have to ask Kieran, Joe has only belatedly got support from his leader and also his other economics spokesperson Andrew Robb for the approach hes taking.
JOURNALIST: Why has this not happened sooner though? The modus operandi of the banks is hardly a new phenomenon. We know that theyve been going beyond the RBA for the last few years, and indeed their profits have been growing. And weve seen the profits over the last couple of weeks and today Westpac, despite the events of the Global Financial Crisis. So weve known the circumstances for some time. Why not the reforms sooner?
WONG: Well Kieran, implied in your question is the suggestion that weve been standing still. Thats not the case. Remember in the period weve been in Government we have ensured particularly after the Global Financial Crisis that weve backed residential mortgage-backed securities. That is a very important policy for particularly the small lenders in the market. Weve cracked down on unfair exit fees. Weve put in place consumer credit laws. These are a range of things which are important for Australian consumers. But what weve said is we recognise that we want to do more and were absolutely open to working our way through policies which improve competition because that is the sensible way to go.
JOURNALIST: But at the end of the day a lot of this is going to rest on the goodwill of the banks because as you conceded earlier in the piece, theres only so much that you can do.
WONG: I dont think it rests on goodwill it rests on competition. Because I think what banks should understand, like any other business, is that people can walk out the door and go somewhere else for the service or the product. Thats what we need to ensure can happen because thats the best way to ensure banks, like any other business, offer products are cost-competitive rates and thats good for Australia.
JOURNALIST: The shadow treasurer another element of his nine-point plan is calling immediately for a broad-ranging of inquiry into the Australian financial services industry. Given the slap in the face from the Commonwealth Bank in the last 24 hours, why not undertake such an inquiry? It seems to make sense.
WONG: Kieran, I have to say I wonder how an inquiry is going to do what Joe Hockey says its going to do. He seems to be suggesting that another inquiry is going to somehow reduce interest rates and we know thats simply not true. What we are saying is that weve been through a very substantial process through the GFC; a lot consideration of whats happening in our financial sector. Currently internationally theres one of the most comprehensive reviews of the financial sector internationally and also in Australia. We want to work through that with other nations and thats what were doing. So this is already occurring, and thats, I think, three of Joes nine-point plan. Parts of Joes nine point plan actually was further investigations, further reviews. But thats not the key policy reform thats going to help Australian consumers.
JOURNALIST: But this inquiry would make sense wouldnt it, given the unfolding and the fluid nature of the negotiations internationally. To bed that down in our own individual context in Australia. Why not have an inquiry as to the current international climate, but also the fall out of the Global Financial Crisis which as you know has really diminished the competition in the lending market particularly.
WONG: It is the case that the Global Financial Crisis had a very significant impact on the financial sector in Australia and globally. You have to say in Australia the impact was far less negative than what weve seen internationally. We came through the Global Financial Crisis in much better financial and economic shape than most of the other advanced economies. But what the Government is saying on this front is that there are already inquiries and reviews in place internationally that we are part of; these will be comprehensive. The key issue here is to build on the reforms that the Government has already put in place to enhance competition.
JOURNALIST: Just finally Senator Wong, are you confident of being included in all of the key budget meetings? Unlike, reportedly, your predecessor Lindsay Tanner who was kept in the dark apparently under the former Prime Minister Kevin Rudd when it came to key budget discussions?
WONG: Those are allegations that have been in the paper and I obviously wasnt part of the previous SPBC, as it was called. What Julia Gillards made clear is that she will run, and she is running, a proper system of cabinet government. So I like any other Minister will be in meetings I should be in, in a system of proper cabinet government. And thats plenty of meetings when youre Finance Minister, Kieran.
JOURNALIST: Youll be kept in the loop?
WONG: When youre Finance Minister you have to keep an eye on spending across Government, so it means a lot of meetings.
JOURNALIST: Finance Minister Penny Wong, appreciate your time. Thanks for that.
WONG: Good to speak with you.
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