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Meet The Press -

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31 OCTOBER 2010



'MEET THE PRESS' PRESENTER HUGH RIMINTON: Hello and welcome to 'Meet the Press'. On Tuesday,
Melbourne Cup day, the Reserve Bank will tell us if we're in for another rate hike. But it's the
profits of the big four banks that have sent politics into a frenzy. With the NAB, ANZ,
Commonwealth and Westpac heading for combined returns of more than $20 billion this year, Shadow
Treasurer Joe Hockey wants intervention. His boss, for a while, didn't know where to look.

ANZ BANK CHIEF MICHAEL SMITH: (Thursday) Our personal satisfaction levels in the bank are 80%,
which I suspect is somewhat higher than Mr Hockey's are right now.

HUGH RIMINTON: But Mr Hockey has the momentum, the Greens and independents are piling on, and a new
Senate Inquiry into banking is on its way. In NSW, Labor has the momentum as well but it is all in
the wrong direction. Premier Keneally's government is now the most unpopular Labor government since
polls began. Even the Prime Minister is having a go.

PRIME MINISTER JULIA GILLARD: (Monday) Premier Keneally has asked to meet with me. Of course I'm
always happy to have discussions with Premiers but it would be a very short meeting.

NSW PREMIER KRISTINA KENEALLY: (Tuesday) I never thought I'd see the day that a Labor Prime
Minister criticised a Labor Premier for standing up for workers' rights and workers' safety.

HUGH RIMINTON: NSW Premier Kristina Keneally is our guest. And later, one of the sponsors of the
coming Senate Inquiry into banking, Nationals Senator John Williams. But first - what's making news
this Sunday, October 31. Officials in Yemen have arrested a woman after two bombs were sent on
aircraft bound for the United States. US and Yemeni officials say it is Al-Qaeda at work again. The
Prime Minister has chaired an Australian-ASEAN meeting in Hanoi, building personal connections with
leaders before heading to Malaysia later today. A snorkeller is being hailed a hero after grabbing
the tail of a great white shark off Garden Island in Western Australia, saving the life of a
teenage diving instructor who'd been mauled in the legs.

Now welcome to the program NSW Premier Kristina Keneally. Let's go with the big federal issue at
the moment, which is banking. Do you think Joe Hockey is on the right track when he says there is a
need for intervention?

KRISTINA KENEALLY: There will be an inquiry into this. What we have always cautioned about the
banks is to be mindful of the impact on NSW households. Our mortgages are higher than any other
state. Rises of interest rates will have a disproportionate impact on the people of NSW.

HUGH RIMINTON: Do you think there is anything improper about the profits that banks generate? I do
question a throwback to the past approach when it comes to banking. It seems like there is a risk
of taking down the independence of the Federal Reserve and doing a great number of economic

KRISTINA KENEALLY: The inquiry will look at these matters. We have always cautioned the banks to be
aware of the impact on households.

HUGH RIMINTON: On to NSW matters specifically, you have said this election will be like climbing
Mount Everest. A couple of thousand people have climbed Mount Everest but I have not seen anyone
win an election where you are at the moment. Do you think that it is winnable?

KRISTINA KENEALLY: Every election is winnable and every election is losable. I do what I have
always done - focus on the needs and services. Let me reflect upon this. I have asked people to
judge me on what I deliver and if you look across NSW where we see the fastest economic growth in
the country, where we have retained a triple A credit rating, where our literacy and numeracy
results lead the nation, our emergency departments and elective surgery performance leads the
nation, my government is focusing on services and infrastructure for the people of NSW. What we
have opposite is an opposition that is following the standard. As someone once said: "Keep in your
bottom drawer, the things you would do in government, and in the top drawer, the popular statements
that you put up before the election."

HUGH RIMINTON: So people should be afraid of a coalition victory in March?

KRISTINA KENEALLY: You only have to look at that quote. This is a politically smart strategy. Do
not tell the people what you are going to do. Let's look at what the Coalition did the last time
they were in government. They cut 8,000 positions out of CityRail, they had parents and teachers
marching in the street, they closed 70 schools, 30 hospitals. If this is what the opposition is
proposing, and by the way, we saw significant reform go through the NSW parliament in the form of
an independent parliamentary budget on this, the question for Barry O'Farrell is whether he will
submit his policies for those costings.

HUGH RIMINTON: If you look at some of the things that you have been doing, on occupational health
and safety, on same-sex adoption, a permanent heroin injecting room in King's Cross - these things
seem to be designed to appeal to a certain spectrum of politics. Are you abandoning the centre to
shore up what you can on the left?

KRISTINA KENEALLY: I would not accept the premise of that question about where the impetus for the
policies comes from. I will add to that list of policy initiatives from my government campaign,
finance reform. Legislation that I introduced to the parliament this week will see NSW be the first
Australian jurisdiction to put in place caps on donations and caps on expenditure. You mention the
injecting centre. It was a service introduced by the state Labor government. We formalised it. We
made it a part of a formal health system. You mention same-sex adoption. This state Labor
government has been the most active when it comes to passing legislation that supports people who
live in same-sex relationships, recognising their rights - recognising their rights in particular,
on the relationships register, and now in terms of adoption.

HUGH RIMINTON: You are standing out from the rest of the nation on occupational health and safety.
You have raised the ire of the Prime Minister for doing that.

KRISTINA KENEALLY: We do not have one confirmed. What I would say to the Commonwealth, as they have
indicated it would be a very short meeting, I would welcome a lengthy response to my letter. The
NSW government has from day one, when these reforms were introduced and moved towards the National
Occupational Health and Safety System, we have said two things: We support a national system...

HUGH RIMINTON: But you are breaking out from a national system.

KRISTINA KENEALLY: Since we started this process, we argued that the unique provisions that are
used in NSW, the union's' right to prosecute, which has existed in the states for decades, should
be able to continue. We accept that it has not been adopted nationally, we want to retain them in

HUGH RIMINTON: So you want a national system but you want to step out from that? When you look at
the Prime Minister's reaction to opposition on this, on two occasions in the past week, she has
personally had a go at you on this issue. What is going on between federal and state Labor which
seems to allow the Prime Minister to be so open towards you personally?

KRISTINA KENEALLY: I do not see it as a personal argument. I see it as the NSW government
maintaining the position that it has always held. Our system has led the nation.

HUGH RIMINTON: WA has exemptions for this very same bit of legislation?

KRISTINA KENEALLY: They have exemptions in place. We see that in Victoria when it comes to
vocational education and training, in the national health reform, which still seems to be
implemented even though WA has not signed up to it.

HUGH RIMINTON: Time for a break. When we return with the panel, the NSW government has pulled back
its household solar power scheme. Is this the state version of pink batts? Labor in NSW might be
fighting for survival. In Canberra, however, according to left heavyweight Doug Cameron, Labor is
already full of the living dead.

LABOR SENATOR DOUG CAMERON: (Monday) You're not allowed to talk about things. We don't want zombie

HUGH RIMINTON: You're on 'Meet the Press' with NSW Premier Kristina Keneally. And welcome to the
panel John Stanley from 2UE and Eleanor Hall from ABC Radio. Good morning, John and Eleanor. The
NSW government last week slashed the money paid back for energy generated from household solar
panels. The move is causing alarm in the clean energy sector.

RUSSELL MARSH, CLEAN ENERGY COUNCIL: Clearly it's not good for the industry as a whole - people
will think twice about renewable energy more generally and the industry will go through yet another
boom-bust cycle.

ABC RADIO'S ELEANOR HALL: Premier, clearly you recognised the rebate price on your solar panels was
too high, but do you have to slash it so far that it is well below the other states so that jobs
are lost and a fledgling industry threatened?

KRISTINA KENEALLY: The government continued its feed-in tariff and continued it at 20 cents so that
we did not see the burn and complete bust. We slowed the scheme to a more sustainable rate. The
cost of panels has dropped since the scheme was introduced so what we did was to bring in a scheme,
a tariff that may be more in line with the cost of panels so the scheme operated as it was designed
to do. Can I reflect that NSW has 100 megawatts of installed capacity in terms of solar panels?
That is well and truly ahead of all other states. We put in place a cap of 300 megawatts on the
scheme. For years to come, NSW will be ahead when it comes to solar energy generation.

ELEANOR HALL: So you did this because you recognised it was pushing up the price of electricity
bills? Can you guarantee that the prices will not rise anyway because of what the Prime Minister
calls "failed investment in the energy sector"?

KRISTINA KENEALLY: Electricity prices are set in two parts. There is a retail price and then the
network charges which are set by the national Australian energy regulator. That regulator
determines the appropriate return on assets for the electricity company. But a regulator approves
investment in infrastructure and that regulator is the one that sets the rules. If the Prime
Minister and the Treasurer have concerns about the level of investment in infrastructure in the
electricity sector, then they should look at that regulator. If I could put on the record, NSW is
spending $9 million a day in electricity infrastructure. In the last 10 years, we have spent $10
billion. As my Energy Minister said earlier this week, to describe that as under-investment strains
the Plain English use of those words.

ELEANOR HALL: But the issue is that investment goes up and down. The Prime Minister also says that
energy prices will inevitably rise if we do not have a price on carbon. Do you agree with that

KRISTINA KENEALLY: I agree that we should have a price on carbon. Providing that certainty is the
best way to ensure that appropriate investment decisions are being made, and two, that we have a
future that is sustainable - so we do not see emissions continue to escalate. The best thing we can
do is to set a price on carbon.

ELEANOR HALL: This week we had an opinion poll showing your primary vote at 23%. It continues a
trend that we have seen in the federal poll. A huge number of Labor voters are intending to vote
Green. Why do think that is happening?

KRISTINA KENEALLY: In Australia, we have had a two-party system for some time but that is not
necessarily how the future will be. For example, in places like Canada, in some areas they have
five major parties.

HUGH RIMINTON: We have seen in the election the rise of independents and minor parties. Are you
talking about the possibility of a three-party system where the Greens will be on the same level?

KRISTINA KENEALLY: We have seen the electorate grow more interested in a robust contest of ideas.
You have seen that in the rise of the Green vote, and the Independent vote, but it is a good thing
for democracy.

HUGH RIMINTON: But are you saying it is a good thing that a lot of Labor voters are voting Green?

KRISTINA KENEALLY: I think it is a good thing that it is becoming a more robust contest of ideas.
We do not have a robust contest of ideas with the opposition at the moment. There are more
independents running in Liberal held seats as well.

HUGH RIMINTON: Are you partly to blame for there being so much dissatisfaction?

KRISTINA KENEALLY: I do not think this is something to be alarmed about. It is something to

HUGH RIMINTON: Do you celebrate unions backing Green candidates rather than Labor candidates?

KRISTINA KENEALLY: Some people have tried to make arguments about this in one way or the other. I
support people who support workers' rights, whether they are from industrial unions or not, whether
they are Labor Party or not. People who support the rights of working men and women in the state to
enjoy the safety protections they have had for decades, that is fantastic.

HUGH RIMINTON: Are you saying that you are pleased to see the rise of the Greens?

KRISTINA KENEALLY: I think it reflects a healthy democracy across the board. Greens, independents,
minor parties are having a more constructive role to play in politics. I do not think it is
something to be feared.

HUGH RIMINTON: To an extent, you do not sound like the leader of the Labor Party when you say that.

KRISTINA KENEALLY: I do not see the contradiction. The democracy that we have is one that is most
vibrant when there is a range of ideas - a true contest of ideas. Democracy must go through periods
of renewal. It must be challenged again and again. Otherwise we end up like the US, where a small
proportion of the population participates in the decision-making, and that is not healthy, it is
not the right outcome.

JOHN STANLEY: But what you have is a lot of people not happy with the Labor Party now deciding to
vote Green.

KRISTINA KENEALLY: First of all, let's not prejudge the election until it has occurred. I will do
what I have done every day in this job which is to focus on services and infrastructure for the
people of NSW. I will say it again, about our literacy and numeracy results, about our health
system, about our transport fares, about our investment in light rail and thousands of new buses
and the Western express line - this is the focus that we bring as a Labor government, and we bring
sound economic management at the same time as we increase spending in disability, increase spending
in public housing - we look after those who are most in need. In the last two weeks, we saw our
opposition put out a document - they did not promise one new bus, one new train, one new teacher.
It did not even mention child protection or social housing. If you are asking me why independents
and minor parties are getting more involved in politics, it is that they have looked at that kind
of policy prescription and they are standing up.

HUGH RIMINTON: Thanks for being with us, Kristina Keneally. Coming up - Nationals Senator John
Williams pushed for an inquiry into our banks. Now he's getting one. What does he hope to achieve?
As for Joe Hockey, cartoonist Kudelka in 'The Australian' suggests he beware of any bankers bearing

HUGH RIMINTON: You're on 'Meet the Press'. The big bankers call it pure populism but the
politicians are coming after them. Whether you like it or not, the banking landscape has changed,
and the four major banks now have more power and more influence in the market than at any other

ANZ BANK CHIEF MICHAEL SMITH: Does there need to be another inquiry into banks? No, I don't think
there does.

HUGH RIMINTON: Well, an inquiry is coming and one of the men behind it is Senator John Williams.
Welcome to the program, Senator John Williams. What do you hope to achieve from your inquiry which
has not come out of the previous six?

NATIONALS SENATOR JOHN WILLIAMS: It is to look back and see what was achieved in those previous
inquiries, but also to look at the competition, to look at whether there are hurdles, to see what
can be done, whether there is any legislation that may prevent other players in the market. One of
the things I will be keen to see is the effect of underwriting of the government on investments.
There are very wide terms of reference and in my job, I have had a lot of complaints about the
banking industry and I look forward to finding some answers. The banks may have to raise their
interest rates above the reserve bank rates and it will be interesting to see the cost of funds
because they are lowering their long-term 3-year interest rates on deposits.

ELEANOR HALL: A lot of commentators reject the argument on the cost of funds. Is it possible this
inquiry will recommend some kind of legislative action to prevent them from raising interest rates?

JOHN WILLIAMS: I cannot pre-empt the inquiry. We see the cost of funds going up, that is what the
banks say. We can have confidential applications and submissions to the inquiry and we can look
through those actual costs up for the funds, whether they be domestic or international. We are
aware that a lot of money is borrowed from overseas by the big banks. We already see them lowering
interest rates and that is in effect lifting their margin. I cannot pre-empt recommendations to the
government but I believe the inquiry is justified.

JOHN STANLEY: Do you personally believe there is the possibility of legislation to cap the interest
rates above the Reserve Bank movements?

JOHN WILLIAMS: I do not think you will see legislation. That is my personal opinion. I do not think
you will see a cap on it and we want competition and the government has reduced competition by some
of their actions. There is demand and supply and that competition is what the nation runs on, it is
what keeps prices down and if we see restriction and a lack of competition, that is a concern to

JOHN STANLEY: How would you facilitate that competition? Some people see the Post Office growing
into a bank. Is that a possibility?

JOHN WILLIAMS: In regional Australia, we still have post offices in most places but we have lost a
lot of banks. Small country towns will support that. I have made it quite public over the last six
months. The problem with competition is that we had exit fees. When you have a home loan, as I have
with St George, if I want to walk away to go to another institution where I can get a better deal,
I have to pay to get out of the home loan. That stifles competition. I'm talking about variable
loans - if you have a fixed loan and you want to get out, you pay. But on variable loans, there
should not be any exit fees. A Senate inquiry has recommended that banks waive exit fees by the end
of the year so the banks cannot have you handcuffed to their door. We must have proper competition.

JOHN STANLEY: Joe Hockey has been copping quite a lot on his approach. He has been likened to Hugo
Chavez from Venezuela. Do you think that he is on the right track?

JOHN WILLIAMS: When he talks about government using the options available to it? Absolutely. I read
his speech. The points he makes are very valid about competition, about the Reserve Bank giving a
clear and constant report on the margins the banks are charging. A bank simply buys and sells money
and Joe Hockey is right on the money. Some of the things that he has said have been taken out of
context, but Joe Hockey has made some very good points in his recommendation. I think we should
have a good close look at them.

JOHN STANLEY: He seemed to have some trouble bringing his leader along with him.

JOHN WILLIAMS: That is the thing in politics. I was not there. I do not know if Tony was just on
the spot.

HUGH RIMINTON: Thank you, Senator John Williams. Thanks also to our panel, John Stanley and Eleanor
Hall. A transcript and a replay of this program will be on our website. Until next week, goodbye.