TRANSCRIPT
Of
SENATOR MITCH FIFIELD
Sky News AM Agenda
Kieran Gilbert & Senator Mark Arbib
6 October 2008
8:30am
E & OE
SUBJECTS: Interest rates, economy, Bill Henson, Sarah Palin
KIERAN GILBERT:
Good morning and welcome to our Monday morning panel on AM Agenda. Liberal Senator Mitch Fifield in Melbourne and Labor Senator Mark Arbib in Sydney. Gentlemen thank you both for your time.
SENATOR MARK ARBIB:
Great to be here.
SENATOR MITCH FIFIELD:
Good morning Kieran.
GILBERT:
Senator Arbib first to you. The Government is giving the banks some breathing space it seems ahead of tomorrow’s likely cut in official rates. Is it difficult politically to be on the side of the banks?
ARBIB:
Well we’re on the side of the economy. We want to see what’s responsible. We want the banks to pass on the maximum amount that is responsible of any rate increase if there is a rate increase. But at the same time as that, we’re obviously concerned about what’s going on globally. And you’ve seen lending rates, short term lending rates around the world going through the roof. The money that banks are actually paying to lend has now increased six-fold, in some cases ten-fold. So we’re in a very very dangerous situation globally at the moment. We’ve got an economic tsunami off the coast. So really our job is to get the economy through this tough time. And that’s why, for us, we’ve got to be economically responsible. Now I think Julia Gillard said yesterday that we may pay a political cost in the short term. But in the long term what we’re about is ensuring our economy gets through this very very tough time.
GILBERT:
Let’s recap a bit of what Julia Gillard, the Deputy Prime Minister, had to say now. She was on the Nine Network.
JULIA GILLARD:
These are difficult times around the world. We want to make sure that our banking sector stays strong and we are going to listen to the advice of the regulators. So we’re going to act in the national interest. No cheap politics for us, we’ll leave that to Malcolm Turnbull.
GILBERT:
Senator Fifield, to you, Julia Gillard made the point in that excerpt there, but the Government’s been making it over recent days, that they’re listening to the regulators. That’s a fairly good political buffer, isn’t it? A good defence?
FIFIELD:
Well I also heard Julia Gillard say that we are engaged in cheap politics. I don’t think we are. What we’re doing is we’ve been listening to what the Government and the regulators have been saying. They’ve been saying over and again that our banks are profitable, that they’re well capitalised, that they’re robust and that they’re on a very sound footing. If that’s the case, then the banks are in a position to pass through the full rate cut. If the banks are not in a position to do that then you’ve got to ask yourself the question whether the Government and whether the banks are giving us the full financial picture in relation to the banks. If the banks aren’t able to pass on that full cut, then I think both the Government and the banks actually need to explain to us what the real situation is. It’s not cheap politics on our part. I’ve got to tell Mark and Julia Gillard something about banks. Banks never need encouragement to hold back from depositors, to hold back from people with mortgages. Banks always need encouragement to give savings.
GILBERT:
That’s a fair point isn’t it Mark Arbib?
ARBIB:
Yeah but Mitch is ignoring what’s just happened over the last month. I mean the United States a week and a half ago was on the verge of financial collapse. They’re heading into, it seems, a US recession. We’ve got Europe looking like it’s heading towards a recession. Banks around the world are not lending to each other and at the same time as that the cost of lending has skyrocketed. And I mean Mitch just ignores that fact. So what the regulators…
FIFIELD:
No, we’re taking the Government and the banks at their word that the banks are profitable and well capitalised.
ARBIB:
…what the regulators are saying is that costs have gone up six-fold, ten-fold in some cases. So I mean banks are likely to determine on a case-by-case basis depending on their own lending costs. But at the same time as that, what we’re about is ensuring that we get the economy through this tough period. I mean the easiest thing for me, the easiest thing for us to do would be to say “yeah pass it on. Just pass on the full amount if there is a cut.” But by doing that we wouldn’t be doing the right thing in the country’s interest. So we’re doing what’s responsible, we’re doing what’s in the interest of our long-term economy. What the Opposition is doing is just playing politics. What they’re doing is about Malcolm’s interests, about trying to get Malcolm a short-term bump in the polls. That’s what it’s about. It’s not about the country it’s just about Malcolm Turnbull’s short-term popularity.
GILBERT:
Before we look at the specific claim there on Malcolm Turnbull, Mark Arbib, does it look weak for the Government this time around to soften its language on the banks when just a month ago, it was only a month ago, that the Treasurer was so vigorous in pushing the banks to pass on any cut in full?
ARBIB:
Look we would love the banks to pass on the amount in full. And that’s why we’ve been working towards putting more competition into the banking system. That’s why you’ve seen the package coming forward in terms of to add competition in. That’s why Wayne Swan a week and a half ago started the work towards injecting $4 billion into the non-bank lending sector to ensure there is competition. To put downward pressure on interest rates and hopefully force the banks into reducing their rates. But at the same time as that, it is complex. There is no doubt about it. And what’s going on overseas, the financial tsunami just off our coast, we’ve got to be prepared for it. And that is why we’re saying, we’re doing what is economically responsible. We’re not looking at the short term interest in the polls which is what Malcolm Turnbull’s doing. We’re doing what’s right for the country.
GILBERT:
Mitch Fifield, do those claims of populism against Malcolm Turnbull have more resonance when you look at the fact that the Government has been in daily contact with the regulators, with the RBA Governor and others who are advising them to ease off the banks in terms of their pressure?
FIFIELD:
We actually don’t know what the regulators are telling the Government. We saw the quite extraordinary background briefing at the weekend as to the supposed content of a discussion between the Prime Minister and the Governor of the Reserve Bank. That’s something which hasn’t happened before. We don’t actually know what the RBA Governor thinks because as an independent statutory office holder he’s not able to comment publicly on a private discussion with the PM. So we’re seeing I guess this possible verballing of the Reserve Bank Governor in the papers at the weekend. We don’t know what the regulators think on this front. But what we do know is that as an Opposition, we have an obligation to speak up on behalf of the Australian people who are doing it tough. And we’re of the view that if there is a cut in official interest rates then that should be passed on in full to mortgage holders and to small businesspeople. And if it’s not, then the onus is on the banks to explain why that’s the case. And it’s also the job of the Government to be putting the pressure on the banks to explain their position, not to be an apologist for the banks but to ask the banks questions. To ask the banks, “if you say you can’t pass this on in full, tell us why.” But as I said before, banks don’t need encouragement to hold back. Banks need encouragement to pass on savings to consumers. That’s what the Government should be doing and that’s what we should be doing, and that’s what we are doing.
ARBIB:
But Mitch I’m in total agreement with you on one thing. If the banks don’t pass on the full amount of any cut, then they should be out there explaining their position. I mean they’ve got an obligation to do that, to their customers and to their shareholders. So I would expect, I would expect that to happen…
FIFIELD:
They don’t need to do that at the moment because they’ve got Wayne Swan as their chief marketer and chief spokesman.
ARBIB:
But the interesting thing for me is just the way that Malcolm Turnbull and the Liberal Party are approaching their economic management. You know when Malcolm Turnbull came in he said “we need to be bi-partisan in terms of this economic challenge. The challenge is so great that there’s got to be bi-partisanship…”
FIFIELD:
Well, the Government told us to get nicked…
ARBIB:
Well that’s been thrown out…
FIFIELD:
The Government told us to get nicked.
ARBIB:
…that’s been thrown out the window obviously by Malcolm Turnbull…
FIFIELD:
No the Government said they weren’t going to have a bar of it…
ARBIB:
…and you look at their position on the Senate…
FIFIELD:
The only bipartisanship which has ever been shown on the economy…
ARBIB:
…look at your position on the Senate, still blocking our Senate revenue measures, punching a $4 billion hole…
FIFIELD:
…was us in Opposition supporting your reforms.
ARBIB:
Mitch a $4 billion hole you want to punch in our budget. I mean, you guys are showing you are just totally economically irresponsible…
FIFIELD:
Mark, a budget hole is a budget deficit…
GILBERT:
…before we get there, Mark Arbib, Mitch does make a good point that the Government rejected, basically laughed off the suggestion of a bipartisan approach. So it’s a bit rich now to be saying “where’s the bipartisanship?”
ARBIB:
I’m not saying that. I’m saying that is what Malcolm Turnbull actually went out first day he talked about how grave the economic situation was internationally, talked about bipartisanship, and at the same time as that he’s thrown it completely out. Look at what he’s doing in the Senate. Look at what the Liberal Party is doing in the Senate…
FIFIELD:
Hello? It was the Government that said “no” to bipartisanship Mark.
ARBIB:
…in terms of the revenue measures…
FIFIELD:
You’re calling black “white.”
ARBIB:
…Look at what they’re doing to the budget. A $4.1 billion black hole…
FIFIELD:
The Government said “no” to bipartisanship.
ARBIB:
…Mitch, a $4.1 billion black hole. That is what you want to punch into the budget.
FIFIELD:
No, Mark, a black hole is actually a budget deficit and that’s what we inherited…
ARBIB:
Mitch there’s no doubt…
FIFIELD:
You inherited a budget surplus and no government debt. That’s not a black hole.
ARBIB:
…your measures to block our budget will create a $4.1 billion black hole. In fact the budget surplus…
FIFIELD:
No, a black hole is actually a budget debt Mark.
ARBIB:
…the budget surplus is the best buffer we have Mitch. The best buffer we have in these economic times. Maintaining that budget surplus, $22 billion, this was part of the actual budget calculation that we may go into a rough time and we need the buffer. The work that you’re doing Mitch in the Senate…
FIFIELD:
It was a surplus which was inherited from us…
ARBIB:
…oh it wasn’t. That is ridiculous…
FIFIELD:
…and there was no bipartisanship in repaying your debt and creating that surplus.
ARBIB:
…you guys spent like drunken sailors.
GILBERT:
Let’s have a look at one person who was a fairly integral part of that legacy which Mitch Fifield was pointing to. The former Treasurer Peter Costello. He was on the ABC’s Insiders yesterday.
PETER COSTELLO:
They’re already in front. They’re highly profitable. They’re well capitalised. And I think the reason why, by the way, interest rates are cut is to give some kind of impetus to the real economy. If the real economy doesn’t get it then the interest rate cut is not going to be playing the role that it should.
GILBERT:
Mark Arbib, it should be a boost for the real economy, the former Treasurer says. Isn’t that essentially what the RBA would be looking to do?
ARBIB:
Sure, if they reduce rates then you would expect that’s the case. And hopefully if they reduce them the banks will pass on as much that’s responsible. But at the same time as that, what I’ve said previously is we’re about ensuring we have responsible economic management in this time of crisis. But also in terms of the stimulus, Kevin Rudd and the Government has talked about moving forward some of the infrastructure spending that we have planned in terms of the $20 billion. And that would be a huge stimulus to the economy. So I mean at the same time as that, we’re looking at infrastructure as a way forward. Infrastructure provides you, one, with the stimulation of economic activity and at the same time, productivity…
FIFIELD:
Five minutes ago you were telling us inflation was the great challenge, Mark, and that we had to take the edge off growth.
ARBIB:
…productivity which the country needs. Something which the previous government completely forgot about. There was a skills crisis. What was their response? Nothing. So I mean 20 Reserve Bank warnings in terms of capacity constraints, we had the IMF…
FIFIELD:
No those aren’t true.
ARBIB:
…criticising the previous government in terms of their spending. So certainly we’re doing what’s responsible. We’ve got the budget surplus and now we’re looking at infrastructure.
GILBERT:
Okay, Mitch you are, are you…
FIFIELD:
Kieran, one thing we all know for sure is that the banks will hold back more for themselves than they would have if Wayne Swan hadn’t given them the green light.
GILBERT:
Okay, no no, you’ve made that point…
FIFIELD:
Whatever banks hold back, we know that is thanks to Wayne Swan.
GILBERT:
Let me put this to you. That overseas borrowings have dried up for our banks. We’ve seen unprecedented instability in the global financial system. Are you worried that your Leader and your new Shadow Treasurer is simply going to look like populists by trying to run this line at a time of what is, as we’ve mentioned and been reporting on so regularly, is an unprecedented financial crisis. If there is any time at all to be easy on the banks, surely it’s right now.
FIFIELD:
Well, we’re just taking the Government and the banks at their word. That the banks are profitable, that they’re well capitalised, that they’re on a sound footing and that they’re robust. If that’s the case, then the banks are in a position to pass on the full cut. If that’s not the case, then the Government and the banks need to indicate that to us. And we shouldn’t forget that Australia’s domestic banks, they’re independent. We’re not compelling them. The Government can’t compel them to pass on the full cut. But we certainly can encourage them. And I must say I’m getting a little bit tired of these bank executives who act outraged that elected officials would have the audacity to offer a view on these matters. Banks are issued banking licences by the government on behalf of the Australian people. Now banking licences give these institutions a unique and privileged place in the Australian community. And yes they have an obligation to shareholders, yes they have an obligation to depositors and mortgage holders. But they also have a broader obligation to the Australian community and we’re very happy to point out that obligation.
GILBERT:
Okay well we could be discussing this economic debate all week. We’ll leave it there for the moment. After the break on AM Agenda we’re going to look at the latest row over the photographer Bill Henson.
Break
Welcome back to AM Agenda and our Monday panel Liberal Senator Mitch Fifield and Labor Senator Mark Arbib. Senator Arbib the controversy, the latest controversy, surrounding the photographer Bill Henson. What have you made of it? That fact that a school principal in Melbourne allowed the artist to visit the school and look for students that he could photograph potentially.
ARBIB:
Yeah look I found it disturbing, very disturbing. And I think most parents would find that case disturbing. I think Julia Gillard nailed it yesterday when she said the only people on school grounds should be people there for education purposes. I was actually quite happy that the Victorian Premier put in place a review straight away so that was strong action to try and get to the bottom of it. Really I just can’t understand the actions of that principal to allow Mr Henson, or anyone like that in that position, to be on school grounds looking for talent for his artworks. I mean we’ve got agencies that do that sort of work. Child agencies for media and for marketing and for advertising. People shouldn’t be prowling school grounds for that sort of thing. For me though there is a bigger thing going on and it’s the bigger argument concerning Mr Henson’s work and my view from the start has been, I’ve been a strong advocate of this, really what Mr Henson has done has ignored the rights of the child. I mean the girl that was involved in the first place, she was at the age of 12 at the time when she did the modelling, it was way way too young for her to make a decision in terms of whether it was the right thing or the wrong thing to do. The parents shouldn’t have been in that position either to make that decision for that young girl. And that is where I think this debate really, that is at the centre of this debate. What the revelations about Mr Henson’s at the school grounds is about is his own supporters coming out and trying to defend their original position. I make no apology for being, for opposing Mr Henson on this. And at the same…
GILBERT:
Don’t we have to be careful as a nation to still protect artistic freedoms against censorship? I know obviously it’s a difficult issue. But as a nation, we’ve got to be conscious of that line though don’t we?
ARBIB:
Sure but in the end this is not about artistic expression this is about child protection. And if you weight up the two I’ll always come down on the side of child protection. Especially in the current day and age we’re in.
GILBERT:
Okay Mitch, your thoughts on it?
FIFIELD:
School playgrounds shouldn’t be viewed as resources for commercial or artistic purposes. School playgrounds are meant to be a safe place. A place where children can learn, can have fun and can enjoy their innocence and their childhood. I do note that in most states, members of parliament are actually required, or particularly Liberal members of parliament, to seek the permission of the Minister’s office before setting foot on a playground. Yet we have a case where you have an artist who’s able to basically wander on to a school campus at will. I think that we need to ensure whoever sets foot onto our school playgrounds is there for the right reasons, that we have strong protocols in place to determine who can go to a school and under what circumstances. And clearly in Victoria those protocols have broken down very very badly.
GILBERT:
Okay let’s turn our focus now and change tack quite significantly. We’re going to take a look at the United States. At the moment John McCain is trailing badly in the Presidential race. His running mate Sarah Palin has launched an extraordinary attack over the last 24 hours or so against the Democratic candidate Barack Obama. Sky’s correspondent Ian Woods filed this report from Washington on the events.
Report on Palin comments.
Senator Arbib, looking at the story, Sarah Palin and that attack on Barack Obama. Given they’re trailing so badly in the polls is this just desperation now?
ARBIB:
Yeah I think they’ve hit the panic button. In United States politics the Republicans are the masters of the negative wedge campaigning. They’re falling behind in states around the country. Obama is on the march. So they hit the panic button and the first thing they move towards is terrorism. It’s not a surprise. It just shows how badly they’re faring in the campaign. I think what actually happened in the United States is McCain had been doing an outstanding job in his campaign to put enough distance between himself and George Bush. And that’s why he was competitive in the polls. But what the economic crisis has done, it’s firmly hitched McCain’s wagon to President George Bush’s wagon and that is a bad thing for his campaign. And that’s why he’s fallen well behind.
GILBERT:
That’s a fair analysis Mitch Fifield, isn’t it? The fact that the economy is again front and centre and you’ve seen Obama get that bounce.
FIFIELD:
Well I do think Sarah Palin has raised a very legitimate point. “The Weathermen” or “The Weather Underground” as they’re also known…
ARBIB:
Oh you’re kidding Mitch. You are kidding.
FIFIELD:
…were not a free love outfit in the 1960s…
ARBIB:
Are you on the Republican payroll or something? You are kidding Mitch.
FIFIELD:
The Weather Underground actually conducted a campaign of bombings against the US Capitol, the Pentagon and the State Department. They also commissioned assassinations and a San Francisco police officer was killed by The Weather Underground and another was very seriously wounded. So the story here is that we have Barack Obama sitting on a board with a former member of The Weather Underground. They were a terrorist organisation and I do think it’s a very serious matter when you have a presidential candidate who thinks it’s okay to hang around with people who supported and sponsored murder and terrorist bombings. I think it is a very legitimate point.
ARBIB:
Mitch he was eight years old for goodness sake. I mean what are we getting back to, reds under the bed here? This is just a fear campaign. I can’t believe you are buying it. I cannot believe you’re getting involved with it Mitch. Are you on the Republican payroll or something? My goodness!
FIFIELD:
Well it’s easy to say “Hey, this happened a long time ago…”
ARBIB:
He was eight! He was eight!
FIFIELD:
It’s easy to say that this happened a long time ago but The Weather Underground killed Americans. They bombed the Capitol, they bombed the State Department…
ARBIB:
Mitch stop now.
FIFIELD:
…they bombed the Pentagon…
ARBIB:
Please stop now, this is getting embarrassing mate. This is ridiculous.
FIFIELD:
Mark, are you saying that it’s okay to run around with people who sanction those activities?
ARBIB:
No no this is a ridiculous, this is a ridiculous, Mitch this is a ridiculous scare campaign…
FIFIELD:
I don’t. I actually think terrorism is a bad thing…
ARBIB:
Nothing more than a scare campaign. You know it. You should know better than get involved with it
FIFIELD:
…I think murder’s a bad thing. I actually think bombing government buildings is a bad thing. I’m not saying Barack Obama endorses those things…
ARBIB:
Your trying to tie Barack Obama to it is ridiculous.
FIFIELD:
…but it shows a lack of judgement to associate oneself with people who supported those activities.
ARBIB:
Mitch to tie Barack Obama is ridiculous. Ridiculous.
GILBERT:
Gentlemen let’s reconvene next Monday. We’re going go have to wrap it up for now. Thanks for your time
ARBIB:
Good seeing you. Thank you.
FIFIELD:
Thanks Kieran. See you Mark.
ENDS