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Transcript of doorstop: Adelaide: 1 October 2008: interest rates; emissions trading scheme; Swan short selling announcement; pensions.



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LEADER OF THE OPPOSITION THE HON. MALCOLM TURNBULL MP FEDERAL MEMBER FOR WENTWORTH

1 October 2008

TRANSCRIPT OF THE HON. MALCOLM TURNBULL MP DOORSTOP INTERVIEW, ADELAIDE

Subjects: Interest rates; emissions trading scheme; Swan short selling announcement; pensions.

E&OE…………………………………………………………………………………...

MALCOLM TURNBULL:

I’m here with Andrew Southcott, the Member for Boothby and the Shadow Minister for Employment, Participation, Training and Sport. And I wanted to touch on a couple of issues first.

Firstly, dealing with the banks. Now, Wayne Swan seems to have run up the white flag as far as interest rates are concerned with the banks. My view is that the Australian banks have the capacity, given their profitability, given their size, to pass on in full any official interest rate cut from the Reserve Bank. I’m sorry that Mr Swan seems to be weakening in his resolve on that. Our view is they do have the capacity to pass that on and they should.

The second thing I want to comment on is the paper by, the final report from Ross Garnaut and the emissions trading scheme. Now, it’s a very complex paper and we’ll all be reading it with, you know, in great detail and it will no doubt feed into everybody’s discussions and policy development. But there is one thing that screams out of the pages of Ross Garnaut’s report and it is this; that whatever Australia does will be ineffective unless it is part of a global solution. Ross Garnaut emphasises that reaching a global agreement is of vital importance and Australia should do everything it can to ensure we get a global agreement, and we agree with that. He also says that a poorly designed emissions trading scheme would be very damaging, very costly, and we agree with that. And that is why we disagree with Kevin Rudd in rushing to start an emissions trading scheme by 2010.

Kevin Rudd’s agenda means the design of his emissions trading scheme will have to be finalised by the middle of next year. That means you’ll be finalising the design

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without knowing what the global community will agree to or not at the Copenhagen Summit at the end of 2009 and without knowing what the new US President will do. We know both Senators McCain and Obama have got very different views on climate change to George Bush but we won’t know what they’ll actually be proposing until, of course, they’re in office. Now that is why when we were in government and we proposed an emissions trading scheme and, indeed, legislated for it, we said the start date should be 2011. It wasn’t because we were half-hearted or slow or unwilling to take it on. We were totally committed to an effective emissions trading scheme but we wanted to design it right, get the design right and make sure we did so with all of the information. So finalising the design is vital but it should be finalised with all of the vital information about what is happening globally and, in particular, in the US.

Now, any questions?

QUESTION:

Should Wayne Swan be making the case for instructing banks as to what they do and the decisions they make about interest?

MALCOLM TURNBULL:

Well, look, Wayne Swan can’t instruct the banks what to do with interest rates. They’re free to set rates at the levels they choose. But the question is should they pass on in full any cuts in official interest rates? We believe they can, that they should and they have the capacity to do so given their profitability and their size. Now, they have the ability to do so.

If the banks argue that they should not do that - and I haven’t heard any banks say that yet - then they have to make the case for it. And I think it’s a pity that the Treasurer seems to be making the case for the banks, opening the door ajar for them to not cut rates in line with whatever reductions we see from the Reserve Bank.

QUESTION:

[Inaudible] the short-term money markets in recent times and the cost of [inaudible] and what’s happening with banks around the world, are not banks entitled to make sure their balance sheets are as sound as possible at this time?

MALCOLM TURNBULL:

Well, [inaudible] banks have got to make the case. You’ve got to remember the banks have reported record profits. They’re doing very well. The big banks have an enormous share - they’ve always had a big share - they now have a larger than ever share of the mortgage market because of the reduction in competition, precisely because of the factors you just mentioned. So I believe the banks have the capacity to pass on, in full, an official rate cut and I believe they should do so.

QUESTION:

[Inaudible]

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MALCOLM TURNBULL:

Look, I’m not going to advise the Reserve Bank on that. There’s speculation as to whether it would be, you know, a quarter of a per cent or half a per cent but we’ll find out soon enough and it’s really up to the Reserve Bank as to whether it makes that cut in rates and how large it is.

QUESTION:

Do you agree with Peter Costello that the Howard Government never encouraged people to put extra money into their super?

MALCOLM TURNBULL:

Look, there is no doubt that the Howard Government provided great incentives for people to save and made superannuation more attractive. I think what might have been the point that Mr Costello may have been intending to make was that the government, the previous government - and no more than this Government - was not telling people how to allocate their savings as between shares or bank deposits or property or fixed interest and so forth. So the allocation of savings is obviously up to individuals and in the light of the advice they receive. But certainly we provided considerable incentives for people to save more.

QUESTION:

Are you still committed to a 2011 date for the emissions trading scheme then?

MALCOLM TURNBULL:

Well, we believe that’s feasible. That was the advice we had in government. You know, we’ll wait to see what the new, what the Rudd Government proposes. You’ve got to remember they are the ones that have to present a policy on an emissions trading scheme. They have not done so yet. All they have published is an options paper, a green paper, and they haven’t yet produced the Treasury modelling. There was a report that Senator Wong was saying that far from it being ready next month, it wouldn’t be ready until December. Well, it’s about time we actually saw what the Treasury thinks all this will cost. And the Government then, in the light of that and in the light of Professor Garnaut, will produce a white paper - which is its sort of final option - and some draft legislation. So we will respond to that. But I can tell you, when we were in government the best advice we had was that the right time to start an emissions trading scheme was 2011 or not later than 2012. 2010 is hasty, it’s rash, it’s rushed and it was a date that was set by Mr Rudd simply so that he could say, during the election, you know, he was more committed to dealing with climate change than the previous government.

QUESTION:

Wayne Swan last time during the Reserve Bank’s last cut insisted and put pressure on the banks to pass it on in full. Isn’t he right just to react with the times now?

MALCOLM TURNBULL:

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Well, look, it’s up to Wayne Swan as to what advice he gives the banks. He could choose to give them nothing, choose to give them no advice. Earlier he said they should pass on rate cuts in full, now he seems to be saying that they shouldn’t. My view is that the banks, the large banks in particular are big and profitable enough to be able to pass on in full any rate cut from the Reserve Bank. If they choose not to do so then they should, then they must I would say, as I have argued all year, justify that in considerable detail. If the banks want to be believed then they have got to put the facts on the table and they have got to be fully transparent. They have got to be fully accountable and if their borrowing costs are such that they cannot, they believe, they cannot pass on an increase in rates and if they believe what I’m saying is mistaken then they should make the case for it. But based on what I have seen, their large profits, they’re well capitalised, I believe they’re in a position to pass on a rate cut in full.

QUESTION:

Give the uncertainty do you think this may be the one time Australians might cut banks a little bit of slack?

MALCOLM TURNBULL:

Oh look Australian will respond to what the banks say if the banks pay them the respect of fully setting out the facts and being completely transparent. The banks have got to lay all the facts on the table if they want to break with tradition and what we’ve all become used to. And if they don’t want to follow precisely what the reserve Bank is doing in terms of cutting interest rates then really the ball is in their court, and it’s a big ball in their court to justify any deviation from that. But my belief is that they should pass on any rate cut in full.

QUESTION:

How serious is the threat of global recession at this stage?

MALCOLM TURNBULL:

Look I think the risks to the global economy are very serious and very real. This is a rapidly developing situation, there are already a number of developed economies in the world which are in recession. Many people believe the US cannot avoid a recession now but a lot of these events that have occurred in the last week or two could not or would not have been predicted only a few weeks back. This is a very unpredictable environment.

Speaking for Australia my very strong belief is that while we are in the middle of a big, global economic storm and we will get a bit wet, we will get wet from this - we are not immune - we will not sink. We have a strong economy, we’ve had in the previous government 11 and a half years of good management which has meant all of our federal government debt was paid off, all of that Labor debt was paid off. Our federal government is in a stronger economic position, financial position than almost any other comparable country in the world. So we’re well situated but we are not immune. So this is a time for us to be cautious, confident, but not complacent.

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QUESTION:

Just a question of detail, I acknowledge this is a complicated question but the shadow Treasurer [inaudible] for not being certain of the cash rate yet Wayne Swan was making an announcement about buying mortgage securities at 4 pm last Friday when there is still a window of trade for 10 minutes I understand. Is that a particularly bad oversight on his part given there was a slight movement as a result?

MALCOLM TURNBULL:

Well look I don’t want to jump on Wayne Swan without knowing all the facts but I’d just say this you, if you’re going to make announcements of that kind you should make them after the close of trading and you should make them after trading has completely closed. Now if there was still trading at the time Wayne Swan made that announcement then that’s very unfortunate. But I have heard this alleged, I’ve heard it on the news but I’ll just wait to see all the facts before I make any further comment.

But can I just say this to you about Wayne Swan. Wayne Swan has got a very big responsibility as Treasurer. I, despite our political differences, I have reached out to him and to the Prime Minister as we all have and said we should work together as Australians and deal with some of these issues, these immediate issues in a bipartisan way. I made a very, I think a very constructive suggestion with respect to providing support to the residential mortgage market ten days or so ago and you’ll remember Wayne Swan jumped on me and said it was a monumental gaffe and attacked me. And then four or five days later it was monumental government policy, this is the announcement you’re talking about.

Australians when they looked at question time last week saw the Government attacking, sledging, cheap shots, name calling. And if I had been sitting at home or at work listening to that and watching that I would have said my savings are at risk, my job may be at risk, my home may be at risk. We’re in dangerous times and the best that Wayne Swan can do, and Julia Gillard and Kevin Rudd, is engage in name calling. Australians deserve better leadership than that, they deserve real leadership and that means leaders who are prepared to reach across the political divide to work together and who are prepared to talk about these issues soberly and objectively. And that’s why I don’t want to be drawn into a slanging match against Wayne Swan. I’ll see what the facts are, confirmed, and make a comment.

But I just say to everybody, these are tough times. You know the good ship Australia is in stormy seas. As I said we will get wet but we won’t sink. But we need steady hands at the wheel and that’s what we haven’t seen enough of. We’re reaching out to the Government to assist them on a bipartisan basis; they reject it. You know Kevin Rudd says bipartisanship is good in Washington, he urges it in Washington apparently, but he rejects it scornfully in Australia.

QUESTION:

You say that these are tough times, you met a lot of pensioners in there today. Is it still correct to be promising them your bill of an extra $30 a week?

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MALCOLM TURNBULL:

Oh look there’s absolutely no question. I mean everyone you talk to, every pensioner you talk to will tell you about process going up and everyone can see them but of course the pensioners are doing it the toughest. The price of everything has been going up, it’s harder and harder to live on the pension. But let’s talk about the simple question of who is in touch? We have a Government whose leaders have said it is impossible to live on the pension. This is a Government that is sitting on a 20 billion plus, more than $20 billion surplus. They say it’s impossible to live on the pension but will not lift a finger to do anything about it. And that is callousness and an indifference, a cold indifference to the plight of pensioners which Australians I believe are shocked by, they are appalled by the indifference, the cold indifference of this Government.

Thank you very much.

[ends]