Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Commonwealth Bank announces large job cuts

PETER THOMPSON: The Commonwealth Bank has announced massive job cuts. The partly privatised bank says it will cut at least 7,000 jobs over the next two years as part of its efficiency drive. The cuts come amid Australia's highest unemployment rate for decades. The bank's Managing Director, David Murray, says the cuts won't affect customer service. The Commonwealth Bank Officers' Association, the staff union, is shocked by the announcement.

Joining us this morning is the bank's Managing Director, David Murray, and he is talking to our finance correspondent, Phillip Lasker.

PHILLIP LASKER: Mr Murray, why are these cuts necessary?

DAVID MURRAY: Phillip, we've looked at, over a couple of years now, ways of improving our operations and we've identified a number of means by which we can do that. They require substantial changes to the way we go about our branch banking business, and we believe that our customers would expect that where we can improve our business we should do that.

PHILLIP LASKER: Well, how can you make or how can you cut 7,000 to 8,000 jobs from the bank and not affect customers? We read this morning that although no branches are set to close, the functions at some of the branches will be drastically reduced.

DAVID MURRAY: The reason that there'll be no change to customer service is that this program does not affect the number of tellers and customer service officers in the branches. They're the people that handle the day to day business of our customers and their numbers are not being changed. Most of the changes affect back-up staff, or other staff, and we are just organising them better and, in some respects we anticipate that customer service would improve. For example, certain of our inquiry centres would have better information available for handling customer inquiries and yet those inquiries can be made direct from anywhere in Australia.

The other reason why we can improve service is that in the business banking area we will be allocating our skilled people to specialist groups who can deal with their portfolio of clients much better than people who are more widely dispersed can do so today.

PHILLIP LASKER: Can you give staff and customers of the Commonwealth Bank an assurance this morning that this will be the end of job cuts?

DAVID MURRAY: Phillip we can never do that. The number of employees in the bank is a function of our particular processes which we're about to improve, and it's also a function of the demand for our services. In the banking industry at the present time, we have a very low demand for loans - perhaps apart from the home loan area.

PHILLIP LASKER: How much pressure comes from privatisation? Those against privatisation would be saying I told you so at the moment. They would be saying that privatisation, or partial privatisation, means job losses.

DAVID MURRAY: I don't think privatisation is the issue. The other factor that affects the volume of business, things such as government charges, the financial institutions duty which is a regressive tax, at the lower end costs 30 cents per hundred dollars for a customer transaction, even though people regard it as outrageous if a bank charges for transactions which costs banks a considerable amount of money to process. Now, if government charges like that were imposed upon our transactions, the volume of transactions falls and the number of people we need to process them must fall with it.

PHILLIP LASKER: So you won't be under greater pressure to cut staff if more of the Commonwealth Bank is sold off?

DAVID MURRAY: That pressure does not arise from the ownership; it arises from our determination to organise ourselves efficiently, to provide good service to our customers and to make sufficient profit so we're in here for the long haul so we can continue to service our customers.

PHILLIP LASKER: A few months ago I heard you criticise the sacking mentality in Australian business. How does that square with what you've just announced?

DAVID MURRAY: Well, what I said at the time was that we don't look at the numbers and work from a dollar position back to a number of people that we must cut. We've done this the other way round. We've looked at improvements which we can make in our operations and we've calculated from there the staff that we will require under changed processing arrangements.

PHILLIP LASKER: What does it matter? The effect is the same, isn't it?

DAVID MURRAY: I think that the approach is very, very different. One is a panic, if you like; the other is a constructive approach which gives equal weight to improved processes and marketing skills.

PHILLIP LASKER: And just very briefly, Mr Murray, would you have the support of your board in regard to this measure? One of your board members is a Vice-President of the ACTU.

DAVID MURRAY: Well, we don't discuss our board proceedings outside the board. I mean, you can assume that the way in which we tackle the management of the bank properly includes our board where and when appropriate.

PHILLIP LASKER: Mr Murray, thanks for your time.

DAVID MURRAY: Thank you.

PETER THOMPSON: David Murray, the Managing Director of the Commonwealth Bank, was talking to Phillip Lasker.