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Early Agenda -

View in ParlView

AM Agenda (Sky News)

Political Panel with Scott Morrison & Jason Clare

8 October 2008

KIERAN GILBERT: Welcome back to AM Agenda and our panel, the Liberal member for Cook, Scott
Morrison and Labor's member for Blaxland, Jason Clare. Gentleman, thanks for your time.

BOTH: Thanks, Kieran.

KIERAN GILBERT: This cut, this full per cent cut from the Reserve Bank yesterday, Jason, to you
firstly. It's a relief for mortgage holders but gee it's also a relief for the government as well,
finally some good news on the economic front.

JASON CLARE: Well, I tell you what Kieran. No one was more relieved and no one was happier than the
people of my electorate. They've been the canary in the coalmine for too long. I think I've told
you before. More homes are repossessed in my electorate in southwest Sydney than anywhere else in
the country. So, a big rate cut, .8 per cent is going to mean an extra $164 in their wallets and
purses every month and that translates into about an extra $2000 a year. So, it's good news for
them and it's just really good news for the people of my electorate and they've been very happy
about that yesterday.

SCOTT MORRISON: Could be $40 more though. Could be $40 more though ...

JASON CLARE: Yeah, that's right Jason. Jason it could've been more if the government did push
harder for the, I suppose, the full cut to be passed through. Was that viable or is it just

JASON CLARE: Well, difficult economic circumstances that are occurring around the world at the
moment, everyone's seen what's happened in the United States over the course of the last few weeks.
The Reserve Bank said as much in its summary of its decision yesterday and said that because of the
circumstances that are happening all over the world something had to be done. Cost of credits gone
up all around the world and Malcolm Turnbull acknowledged that, I think, as recently as the 17th of
March this year where he said when the cost of credit goes up banks have got an obligation to pass
that on. Well, suddenly he's had a change of mind on that front. I don't know what's happened.

SCOTT MORRISON: Not at all. Look, at the end of the day what Malcolm has said is the banks are in a
position in this country to pass on the full rate cuts and I agree with Malcolm absolutely. I mean,
the Commonwealth Bank in the year just finishing had $4.7 billion in profits. And so, we have this
new protected species called the banks. Greenpeace will soon start a campaign for the banks. And
the banks are in a position, we're told their strong, we're told their sound and that is true and I
think it's time that the government actually started standing up for people, for mortgage holders,
for small businesses and others.

People said that they would stand up for and they should have argued stronger for the rate cut to
be passed on in full. And that's what Malcolm's done. He's totally stood up for those because these
businesses and individuals have to absorb costs, banks aren't the only people absorbing costs out
there in the economy, in the building industry their absorbing increases in steel prices and cement
prices, so why are the banks immune from having to absorb costs like everyone else in the economy
is doing and that's the point ...

JASON CLARE: Well, Kieran, Kieran, it's interesting. That's not what Malcolm Turnbull said on the
17th March. He said that banks should pass on these costs and a lot's changed in the last few
months now ...

SCOTT MORRISON: That's not what he said at all, it's not what he said.

JASON CLARE: ... now he says he doesn't agree with his previous policy on the petrol excise. Now
that's a good idea ...

SCOTT MORRISON: No, look you can flip it and flop it all you like

JASON CLARE: Well, he's been flipping and flopping. He was against an increase in the pension, now
he's in favour ...

SCOTT MORRISON: He's standing up for mortgage holders in your electorate.

JASON CLARE: Well, I tell you what, he sounds a lot more like ...

SCOTT MORRISON: $40 more bucks a week.

JASON CLARE: He sounds a lot more like Brendan Nelson every single day and this is the ...

SCOTT MORRISON: Ah, this is better than the (inaudible).

JASON CLARE: ... at least with John Howard, you knew where he stood.

KIERAN GILBERT: Scott Morrison, let me ask you though. Jason made a fair point. We're talking about
a global crisis. It's the first time that the RBA has cut the official cash rate in, by a full one
per cent, in two decades. You've got unprecedented drops in business confidence in terms of credit
access, it's so tight. Surely the bank bashing can stop, at least for this period?

SCOTT MORRISON: Look, it's not about bank bashing. It's about understanding that across the economy
businesses and individuals and householders and mums and dads are absorbing cost increases right
across the economy. Now these are banks that have made big profits in the past and have put money
away, you would hope for a rainy day, and it is a rainy day and it's our argument is simply this:
that it shouldn't just be mortgage holders or small businesses or others out there in the economy
who should be forced to absorb all costs increases. Instead, the banks are in a very strong
position, and their in a strong position because we have good regulation, we've had a strong
economy, big surpluses were built up over a number of years, debt has been paid down. So, we're in
a position to actually make sure that banks can pass on these increases and that's the point
Malcolm's been making. And it's disappointing that the Prime Minister and the Treasurer, at the end
of the day, basically decided not to push the issues. They ...

KIERAN GILBERT: Let's hear from the Treasurer's own mouth on this issue. He was talking about the
move by the RBA to cut the official cash rate yesterday by a full one per cent and the shift in the
focus from the inflation problem to this global meltdown. This is the Treasurer last night on the

WAYNE SWAN: What the Reserve Bank did today was the responsible course of action given what has
occurred on world financial markets, particularly in the last couple of weeks. I mean, this was a
very significant decision, a very significant action that will deliver substantial relief to
households with mortgages and substantial relief to business. But also, I think, will strengthen
the Australian economy for the long term. So certainly a welcomed decision but no doubt the Reserve
is responding to the financial turmoil on world markets, particularly as it has unfolded over the
last couple of weeks.

KIERAN GILBERT: Jason, the Treasurer there, really trying to reassure people to show some
confidence in the Australian economy. How important is sentiment at the moment, and the sense that
the leadership is confident?

JASON CLARE: Well, responsible economic management is the key here and the point to make is that
the fundamentals of the economy remain strong. We've got a strong surplus; we've got strong
banks-you made that point, mate. I think that's right we do have strong banks-we've got strong
terms of trade and an important point to make here is that a major trading partner, China, its
growth remains strong ...

SCOTT MORRISON: That's true.

JASON CLARE: ... and all of these things mean that Australia is well positioned to ride out this
financial storm.

Now, the point that the Treasure's made, the point the Prime Minister's made and I think the point
that most independent analysts have made is that if you want to be anywhere in the current
financial crisis, it's Australia.

SCOTT MORRISON: I think that is true but one of the things that concerns me is that since the
beginning of this year, the government has been making some of the wrong calls on this issue. If
you go back to late last year and earlier this year, they were talking up inflation, they were
egging the Reserve Bank on to raise rates and clearly that was a bad call. Now, we're in a
situation later in the year where the slowdown which is coming from the US, which is something
Malcolm was warning about back in January and February and March and April, has come about. And so
the Reserve Bank is now correcting decisions made earlier in the year.

So, I think Malcolm has made some very good calls on the economy in the last six months. He's been
called everything from being a heretic to a populist and goodness knows what. But, he's right most
of the time, in fact he's been right on all of these calls throughout the course of this year.

KIERAN GILBERT: He might be right, but last night he was ... seemed to be claiming credit for the
banks passing on .8 of a per cent and he wanted the full per cent, but he says if the pressure
helped well that's great. But is it a bit rich, Scott, for Mr Turnbull to be claiming credit for

SCOTT MORRISON: Well, look, he was the only one who was out there actually making the case of the
leaders who were out there for the rate cut to be passed on in full. Now, we still think it should
be passed on in full. The Treasurer wants to say 'oh look later on, maybe, perhaps and that's my
bottom line, maybe then they can pass it on, but remember these are banks that are performing well,
they're very, very strong, they have great regulation around them and they're in a position to do
this. They're in the position to pass these rate cuts on to people in my electorate and in Jason's
electorate who have been hurting, particularly in Jason's electorate probably even more so than
mine. But mine are looking for it so I'm sure Jason's are.

JASON CLARE: Oh, and absolutely and look, look lets call a spade a spade. This is good news, this
is really good news. People have called my office yesterday telling me that it means that they can
now take the kids to the movies, they can now buy sporting equipment, they can prepare for a
Christmas holiday, it's going to let them do the things that they couldn't do beforehand. It's been
very, very tough out there and it hasn't been tougher in any part of Australia than it has been in
my electorate and people are very happy today.

KIERAN GILBERT: Scott, I want to ask you about the fact that the dollar has copped a battering.
You, a former tourism chief; these numbers don't look too good in terms of exports but there's one
export which does well in these circumstances and the tourism industry's hopeful that they'll be a

SCOTT MORRISON: Well, I mean, in the time when I was involved in tourism we were battling with a
very high dollar which made the fact that we increased tourism spending in Australia by
international visitors by over $4 billion during that time on an annual basis. But with the dollar
dropping, that obviously makes all of our exports but particularly the attractiveness of tourism as
a destination that little more exciting and that little more affordable. But I think you have to
balance that with, I think, what's happening in the markets around the world. I mean, our biggest
spending visitors are coming out of Europe, and their coming out of the United States, we get a lot
of volume out of Asia and Jason's just been up in Japan and that market has been very tough for
Australia now for quite a number of years ...

JASON CLARE: That's true, that's true.

SCOTT MORRISON: ... So, that is tough. So, yes the dollar position for the tourism industry, I think,
will be good but it has to be counter-balanced off against the other things that are happening
globally around the world.

JASON CLARE: Oh, I think that's right. I don't think there's any surprise here that you expect the
dollar to bounce around a lot when you've got the type of economic climate that we're seeing around
the world at the moment.

KIERAN GILBERT: Okay, Jason and Scott, let's just wrap up now by getting a quick sense from both of
you on where you see this all heading. Jason, how difficult is it for the government to ride this
path that it is in defending the banks to a degree and their access to credit because always
politically it is easier isn't it to be bashing the banks?

JASON CLARE: Well, all the advice is that the economy is going to continue to grow. The
fundamentals remain strong. The important thing for a government, a responsible government, is to
make sure those fundamentals remain strong. The Treasurer said that he wants to make sure as much
as possible is passed on and soon as things normalise, as soon as we get over this financial crisis
he expects all of that rate cut to be passed on to consumers and as far as I'm concerned that's
good news because the more that is passed on the better. It means more money in the pockets of the
people that I represent and the people that Scott represents.

SCOTT MORRISON: Well, we certainly agree on that the more that's passed on the better, we just
thing it should be happening now ...

KIERAN GILBERT: Well, how cautious, Scott, do you have to be though? Does Mr Turnbull have to be,
not to be seen be undermining, his and your party's credibility on this front?

SCOTT MORRISON: Well, I don't think he's credit ... I think his credibility has been enhanced because
he the one person who's been out there. He probably knows the banks more intimately at a commercial
level than anyone else and I've made that point before. And what we have to do over the next year,
over the next three months, over the next three weeks is restore confidence, business and consumer
confidence in our economy and that requires strong leadership and the concern I have is that
leadership isn't coming, it's jittery, it's nervy, the people are concerned that these guys don't
know what they're doing ...

JASON CLARE: We know what the cash rate is.

SCOTT MORRISON: But in Malcolm, in Malcolm...

JASON CLARE: We know what the cash rate is.

SCOTT MORRISON: Malcolm, Malcolm knows what he's doing. He's got the calls right all year ...

JASON CLARE: Merchant bankers got us into this problem, Kieran. Merchant bankers in the world got
us into this problem.

KIERAN GILBERT: Alright gents. Unfortunately we're out of time. We'll see you both next week here
in the Canberra studio. Parliament, of course, returns next week. It will be good to see you face
to face, thanks very much.

JASON CLARE: Terrific, looking forward to it.

SCOTT MORRISON: Thanks, Kieran, see you then.