Interest Rates, Costello's Attack On Allan Fels, Cheryl Kernot

Bob McMullan - Shadow Treasurer

Doorstop Interview

Transcript Parliament House Canberra - 3 July 2002

E & OE - PROOF ONLY

MCMULLAN: I want to comment on two things, interest rates first and then the Treasurer's comments on Professor Fels. Firstly, on interest rates, any pause in the inexorable upward pressure on interest rates is welcome and I am pleased that there will be a breathing space for families in dealing with the consequences of the upward pressure on interest rates in Australia. The high level of household debt in Australia makes families very vulnerable to increases in interest rates, and we need to focus more and more on economic policies and strategies that will minimise that upward pressure. I welcome today's decision because it gives people one month's pause but I think we should all be cognisant of the fact that pressure is still upward; all the commentary suggests that the Reserve Bank Governor's previously stated intention to increase rates by a further 1 to 1 ½ per cent is probably still current and all the reports suggest that will make a lot of families, a lot of households, under pressure as they try to meet the payments on their increasing debt burden. The statistics show that if the Governor puts the rate up by another 1 ¼ per cent, which is about the mid-range of people's expectations, that will mean Australian families are paying more in interest on their debt than at any stage in Australian history. Those are my initial remarks about interest rates.

I was very surprised to see the Treasurer join with big business in the attack on Professor Fels and the Competition and Consumer Commission today. I think it is a very unfortunate development. Professor Fels has been doing a strong and good job on behalf of consumers and small business. It is very clear to me and it is clear in the surveys by people such as Australian Business Limited that small business want Professor Fels doing more, not less, and I make it very clear today that the Opposition will not be supporting measures to restrict the powers and capacity of Professor Fels and the Competition and Consumer Commission to act on behalf of consumers and small business. And the fact that the Treasurer chose to align himself today with those attacking Professor Fels instead of those defending him is, I think, a great pity and a very worrying sign about why the Government initiated this review, and where the Government is likely to go as a consequence of the review of the Trade Practices Act and the ACCC and I make it very clear: the Opposition will be standing in defence of consumers and small business and therefore in defence of the role of Professor Fels and the ACCC.

JOURNALIST: Should the Reserve Bank explain itself when it makes a decision to hold, just as it does when it makes a decision to move?

MCMULLAN: Absolutely. I think today's uncertainty reinforces the argument which I have made in the past that the Reserve Bank should release a statement of reasons when they decide not to change interest rates, as they do when they decide to change them. I think it would be an increase in the transparency and information available to people in Australia about what is going on in our economy and about the thinking of our agency, and I strongly support the view that the Reserve Bank should adopt that policy which is adopted in other countries.

JOURNALIST: Would they have to do that every month in perpetuity would they?

MCMULLAN: Yes, each month when they meet they make a decision, and it would be a very useful contribution to Australian public debate if they released a statement of reasons when their decision became known. That happens in other countries, it would be very welcome if it happened here.

JOURNALIST: Are you saying they shouldn't raise interest rates?

MCMULLAN: Well, I would always like to see low interest rates but there is great pressure on interest rates in Australia at the moment, and one of the reasons, of course, is that the Government blew the Budget. And when fiscal policy is loose, it puts upward pressure on interest rates and, sadly, that is the situation which we find ourselves today.

JOURNALIST: Doesn't low interest rates just encourage further people to get into more debt though?

MCMULLAN: Well, I think the question about encouraging people to get into more debt is very important. The Reserve Bank Governor has been putting out, regularly, statements indicating that he is concerned and that households should be concerned about the escalation of debt. Peter Costello has been saying it is not a problem, and I think that is irresponsible of him. I think he should be supporting the Governor, he should be supporting the Reserve Bank, in warning people that the level of debt is getting worrying in Australia and it is a matter to which families should be paying attention. The Governor has been doing the responsible thing, and Peter Costello has not been supporting him and he should be.

JOURNALIST: Looking at Costello's comments about … Fels. [Does that] really amount to an attack on the ACCC?

MCMULLAN: Well, I of course have only seen what has been reported. But those things that have been reported I feel are a serious indication that the Government is in support of those wishing to rein in the ACCC, rather than in support of those who see their interests defended by the ACCC. I make it very clear: we are going to be on the side of those who feel and see Alan Fels as the advocate and defender because, while I have had my disagreements with him in the past, and I think everybody has, he speaks up for consumers and for small business. They welcome it, and he should continue to have the capacity and freedom to do so.

JOURNALIST: So you have no problem with the way Alan Fels uses the media to bash companies over the head?

MCMULLAN: I would be much more worried if investigations in Australia were being conducted in secret. The problem that people think they are too public is a very strange problem to have in a democracy. I think we should worry if it is too secret. If the public doesn't know who the ACCC is investigating, if the public doesn't know what concerns the Chairman of the ACCC has, then I think we should worry. At the moment, I think the concerns that people are expressing essentially reflect the fact that he has been a robust and effective regulator, and the people who he is regulating don't like it.

JOURNALIST: What about ACCC officers mugging for photos carrying fake cardboard boxes as happened outside with Caltex? What do you think of that?

MCMULLAN: That's not my understanding of the facts. I think the Treasurer chose not to comment on that and I think he was probably correct because there is a lot of public argument going on about it, but that is not my understanding of the facts.

JOURNALIST: But you can see that some companies can be unfairly damaged when allegations haven't been tested and they're splashed across the front pages?

MCMULLAN: Well, in a democracy, information comes out about people, that is tested in the court. It is not always found to be true and sometimes those people are adversely effected, it happens to people every day when they go into court and defend their rights. It is a problem for everybody. The alternative to being open is to be secret, and secrecy is a much bigger problem. And I think that nobody likes comments being made about them, and those of us in public life are used to it every day. And when you come back and explain later that the comments weren't correct, nobody reports the subsequent clarification, and that is annoying to us all. But secrecy is much worse.

JOURNALIST: Is it hypocritical though to say of a politician that accused someone of using the media when that is what politicians do every day?

MCMULLAN: Well, I don't want to get into saying who has been hypocritical or whatever, but I think it is good that the processes of the ACCC are public and transparent. Now, whether there ought to be a slight modification here or there in the behaviour of individuals - you make those choices when you appoint people. Nobody who appointed Allan Fels to chair the ACCC did it with any doubt about his enthusiasm for the public presentation of his position. The Government appointed him, they knew what he was like, they wanted him to do that job, because he was an outspoken advocate for their position in the years after the GST. There is no good having second thoughts now. It is his openness, his transparency that is one of the reasons he is regarded as such an effective regulator, and I think Australians want an effective regulator. I think they deserve an effective regulator, and we will support him in his capacity to be an effective regulator.

JOURNALIST: What is your reaction to the article in the Bulletin this morning about Cheryl Kernot's alleged secret?

MCMULLAN: I don't know anything about that.

JOURNALIST: What was your reaction to when Cheryl defected to the Labor Party in 1997?

MCMULLAN: I was delighted. Cheryl was and is a friend of mine. I have a very high regard for her. I think she has made a very substantial contribution to public debate and politics in Australia and I welcomed it when she came over; I supported her when she was here; I still regard her as a good friend.

JOURNALIST: Has she left a critical element out of the story that she released yesterday?

MCMULLAN: I don't know. I just heard someone talk about a big secret, I don't know anything about that. I haven't read the book but it doesn't look to have left out any of the things of which I am aware. But I haven't read the book and I don't know the secret people are supposedly referring to, I don't know what that is about, I haven't read the Bulletin. Wash my mouth out for saying that.

END