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Hockey wants banks' rate rises kept in check -

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Opposition treasury spokesman Joe Hockey wants legislation introduced that would see banks punished
for lifting rates above official increases.

Transcript

LEIGH SALES, PRESENTER: The Shadow Treasurer has surprised his colleagues by calling for Parliament
to punish banks for lifting interest rates beyond the official gauge.

Joe Hockey says he wants a social compact with the banks, but he's also suggested Parliament could
intervene.

The Government immediately condemned the comment as a threat to the central bank's independence.

From Canberra, Hayden Cooper reports.

SPEAKER: The Member for North Sydney will withdraw.

HAYDEN COOPER, REPORTER: There were moments of tension.

JOE HOCKEY, SHADOW TREASURER: I withdraw.

SPEAKER: The Member for Canning has the - order.

HAYDEN COOPER: Moments of madness.

WAYNE SWAN, TREASURER (quoting Don Randall): "... just another one of their lunatic fringe-type
ideas," Mr Speaker.

HAYDEN COOPER: And moments of strange surrealism.

JULIE BISHOP, DEPUTY OPPOSITION LEADER: I was going to move that the Foreign Minister have an
extension of time because he answered the question so beautifully.

OPPOSITION BENCHES: Hear, hear! Hear, hear!

JULIE BISHOP: And effectively.

OPPOSITION BENCHES: Bring back Kevin! Bring back Kevin! Bring back Kevin!

HAYDEN COOPER: But the day belonged to the Shadow Treasurer.

JOE HOCKEY: Hello. Wow! Brought out the crowds.

HAYDEN COOPER: He's had enough of the big banks lifting interest rates beyond the movement of the
Reserve. He wants the Government to intervene.

JOE HOCKEY: Now I'm saying, "Well, what are you doing about it? What are you doing about it?" Wayne
Swan is the Treasurer. They've ignored the Treasurer on 30 separate occasions. What is the
Treasurer going to do to pull the banks into line?

HAYDEN COOPER: Joe Hockey has his own suggestion: use Parliament to stop the banks from doing it or
punish them when they do. A brave call for market intervention and extra regulation.

JOE HOCKEY: What levers are available? There are a number of levers. Obviously legislation is part
of it.

JOURNALIST: What are those levers?

JOE HOCKEY: There are a number of levers available. Obviously legislation is part of it.

HAYDEN COOPER: Inside ...

WAYNE SWAN: These people have lost the plot, Mr Speaker.

HAYDEN COOPER: ... the idea was dismissed as crazy talk.

WAYNE SWAN: The action that has been put forward today by the Member for North Sydney is a
challenge to the independence of the Reserve Bank and he's turning his back on 20 years of economic
reform.

HAYDEN COOPER: Bankers, to no-one's surprise, agree.

STEVEN MUNCHENBERG, AUSTRALIAN BANKERS' ASSOCIATION: The notion that banks should somehow be
punished through regulation for repricing their mortgages to reflect their funding costs also
surprises and disappoints us.

HAYDEN COOPER: And the Treasury Secretary, a Reserve Bank board member, sees problems too.

KEN HENRY, TREASURY SECRETARY: It would be rather difficult to have a central bank independently
operating monetary policy through interest rates and at the same time another body, ie the
Government, regulating those interest rates. That doesn't sit too well together.

HAYDEN COOPER: Even Joe Hockey's colleagues appeared bemused. Malcolm Turnbull didn't quite get it.

MALCOLM TURNBULL, OPPOSITION FRONTBENCHER: I'm not aware of any precedent for the Federal
Parliament regulating interest rates, at least in recent years, but, you know, you really - you
should speak to Joe about that.

HAYDEN COOPER: And Don Randall thought it came from the Greens.

DON RANDALL, LIBERAL MP: This is just another one of their, as I said, lunatic fringe-type ideas.

HAYDEN COOPER: It sounds like a Greens policy because it virtually is. Joe Hockey is not totally
friendless in his call for action; some of his political opponents actually agree with him on this.
Unions have long demanded a tougher line, and the Greens are already trying to prune the branches
of the highly profitable banks.

BOB BROWN, GREENS LEADER: Let's have a little bit of fairness brought back into the banking system.
It's very good to hear Joe coming aboard there.

HAYDEN COOPER: It's a unity ticket right out of left field.

Hayden Cooper, Lateline.