Jim Bacon, Banking Policy, Centenary House

Doorstop Interview

Transcript - NSW Country Conference, Bathurst - 20 June 2004

LATHAM:          Let me start with a tribute to Jim Bacon. Today, we’ve lost a great Labor man, a great Australian. Jim was very committed trade unionist, a very successful Premier of Tasmania. He not only transformed that State, giving it new economic and social opportunities, Jim was also a great Australian character. He had great sense of humour, great sense of fun and also an optimist – someone always optimistic about the future, even through his courageous battle against cancer all those traits came to the fore. It’s a very sad day for the Labor movement, a very sad day for all Australians, particularly in Tasmania. I convey my condolences to [inaudible] Honey Bacon and other members of the Bacon family and we’re all thinking of them at this tragic time, given the loss of Jim Bacon today.

At the Country Conference here today, I’ve outlined Labor’s banking policy for the coming campaign. It’s a policy that says we want banking services to work for the community instead of the other way around. The banks have enjoyed record profits in recent times. We want them to discharge social responsibility to work with a Labor Government to ensure that we’ve got a basic spread of services across the community, particularly in country areas, and to ensure that Australians have got access, basic access, for the banking services they need to conduct their business, to get about their daily lives. We want the banks to work with us but, if they are not prepared to do that, then we are willing to legislate and regulate to get the job done and that is inherent in our policy.

I will just mention two aspects of the policy before handing over to Stephen Conroy, who has been developing this policy for quite sometime. The first is the basic bank accounts: we’ll amend the Banking Act to require all banks to offer a basic banking account. This will benefit up to five million Australians. The features of the accounts will include no account keeping fees, no minimum account balance, an unlimited number of free deposits and a reasonable number of withdrawals without fees. To have that basic banking product in place throughout Australia is very important for the effectiveness of banking services in Australia, and it is something that is desperately needed in this county.

The second important aspect is minimum banking services. We have a policy of requiring the banks to issue six months notice if they plan to close a branch, consult with the community and produce community impact statements to justify the decision. Labor, in Government, will ask APRA and the Federal Department of Transport and Regional Services to conduct an audit of basic services in the community, particularly in areas where services have been removed. The banks will be given 12 months to address these shortcomings in access to banking services and if at the end of this period they haven’t done the right thing Labor will establish a community obligation fund not exceeding $30 million per annum.

Its size will depend on the needs identified in the stock take and will be recovered from the four major banks and the St George Bank. We see this as a very important commitment; it’s a safety net approach. If services are lost, without justification, and the audit shows they need to be restored and the banks haven’t done the right thing, we will have our community obligation fund to get on with the job of service restoration. We’ll make funds available from the bank community obligation fund to restore and expand banking services in communities. Where they’ve been removed, in the first instance – the first 12 months – we want to work with the banks, effectively, in partnership, but, if they don’t do the right thing, we are willing to legislate and regulate to get the services restored for the benefit of the Australian people in areas of need.

So that’s two aspects of this very comprehensive policy. It’s the most comprehensive banking policy that has been launched in this nation. It’s something that’s very important for the future, not only of our economy but for basic services in the community, particularly in non-metropolitan areas. I will just ask Stephen Conroy to add some other details about the nature of the banking policy.

CONROY: Thanks very much, Mark. Today you’ve got a clear choice between John Howard’s shop around, and let the banks self-regulate and Labor saying that’s failed consumers in this country. We want to see banking services being restored. We want to see that attitude that most Australians have where they say well there’s no real advantage in shopping around because they all treat you the same. We’ve all heard it and we all know it. What we are seeing today is a Labor Party committed to delivering better services, delivering cheaper fees and cheaper bank accounts for up to five million Australians, and that’s what it does for [inaudible] this policy – it goes to branch closures, restoring and expanding services, the basic bank accounts that Mark has mentioned, and we want to talk about ATM fees. That’s a proposal this Government appears to be supporting which says that country Australians will need to pay more to use an ATM than Australians in the city. We want a universal fee for ATMs – doesn’t matter where you live, you pay the same. We want to promote the ability to switch banks. At the moment, you sometimes have to fill up to five forms if you want to change your bank.

What we want to do is make it easy, make that information have to be passed on between banks so they don’t make it as hard as possible for you. We want to see some changes in the way credit cards and credit limits are used. We don’t want people going home opening up their mail box and finding ‘Here, congratulations, first prize, your credit limit has been increased. We think you can have $10,000 rather than $5,000 or $2,000 that you’ve had previously.’ We need to make it illegal to send out pre-approved limits for credit cards. They’ve got to go through the process of applying and making sure that credit amounts are relative to what they can afford. We want to see interest rate movements receptive in your home loans and your credit cards. All the evidence says that when banks put their interest rates up it takes about 24 hours for them to quickly pass on those interest rates on credit cards and on home loans and then when interest rates come down from the Reserve Bank it can take up to 40 days in some cases for them to pass on.

We want to see the ACCC examine this area and, if we find that the banks have been mistreating consumers like that, we want to see a balance – if takes five or ten days to lower an interest rate; then we want five or ten days to increase an interest rate. The same set of boundaries. There is no fairness when banks [inaudible] people like that. We want to see more financial literacy. We want to see a greater drive to give customers the information they needed. The banks will tell you, ‘We offer basic bank accounts now.’ It’s just you can’t find them. You’ve got to go and ask about them; they’re under the table. They push them [inaudible] to get, but they’re under the table if you want to know about the cheapest of these bank accounts. The Australian Bankers Association put forward a proposal about 12 or 18 months, through the ACCC, about a basic bank account and the ACCC rejected it because it wasn’t good enough. What we are saying is we’ve got to sit down with banks, as Mark said, negotiate these things with the banks but that after 12 months, if we haven’t got more and better services, some decent basic bank account conditions, we will legislate and regulate to introduce them.

JOURNALIST:     [inaudible]

LATHAM:         Our concern is to have a decent spread of services throughout the community; that’s the nature of our policy. The banks are making record profits, they’ve got corporate, social responsibilities that should be discharged and we’ve got a fair approach. They’ve got 12 months to get it right and, if haven’t done it, then we will legislate and regulate to ensure that services are restored in areas of need and the basic banking product is available throughout the country. So this is a fair approach of putting the banks on notice, calling on branches to discharge their social responsibility, and make sure that we’ve got decent banking services for the benefit of the Australian people.

JOURNALIST:     [inaudible]

LATHAM:         Yes, absolutely, we’ve had the monitoring of fees through the ACCC, and you’ll see in our policy there a whole series of checks and balances to make sure the banks will be doing the right thing. The laissez faire approach of the Howard Government hasn’t worked. You need active policy to get it right in the future, and preparedness to legislate and regulate to establish a community obligation fund to raise money to restore services, basic services, particularly in non-metropolitan Australia, and that’s what we are willing to do, absolutely.

CONROY: That’s dead right. When the [inaudible] bank introduced the credit card reforms in the last couple of years, they said it was a good thing and should lead to lower costs to consumers but you need the ACCC, as the second [inaudible] level [inaudible] to make sure those benefits are passed on. What we are seeing now, because of that [inaudible] ACCC on the job those benefits have been frittered away and the banks are just slogging people in other areas. You’ve got to have the ACCC on that job.

JOURNALIST:     [inaudible]

LATHAM:         Banks are not only businesses; we’ve got to regard them as social citizens. The Federal Government regulates the banks and the Federal Government has the responsibility to the Australian people and this is a policy that puts in place safeguards against bad treatment of the people. The requirement of banks to give six months notice for branch closures, to undertake a community impact statement and then, after 12 months, following an audit of all their services that have been lost, if they haven’t done the right thing, we’ll establish our community obligation fund to restore basic services in areas where they’ve been lost. I think that is a fair balance between the legitimate interests of banks as businesses but also the legitimate interests of the Australian people to ensure that banks meet their social responsibility, and they’ve got a federal Government that’s on their side in making that happen.

CONROY: Let’s be fair: banks are the most profitable sector in the Australian economy and most bank branches aren’t closed because they’ve stopped making money, they are just closed because they are not making enough money as far as the bank is concerned. So this [inaudible] that they are losing money, this is not about bank branch closures.

JOURNALIST:     [inaudible]

LATHAM:         This is very much a political witch hunt launched by Tony Abbott prior to a federal election. The Federal Government is spending over $100 million of taxpayer’s money on the political style advertising that we see on our TV every night and find in our letterboxes. This inquiry is another waste of money by the Federal Government for political purposes. There was a Royal Commission into this matter 10 years ago that cleared it. The Government has produced no evidence since to say that there is anything wrong with the arrangement. We’ve just got a political exercise again funded by the Australian taxpayer, not for any public purpose, but for the political purposes of the Liberal Party and Mr Abbott and Mr Howard.

JOURNALIST:     [inaudible]

LATHAM:         We haven’t got a proposal of that nature in mind, and I haven’t seen the detail of that particular issue that you’ve raised. Our stance on tobacco companies is very clear – that there is no such thing as safe and healthy smoking and if political parties in election campaigns are going to distribute material that’s anti-smoking and running healthy campaigns for public health then they shouldn’t be taking the donations at the same time. We’ve set that standard and we call on the Liberal Party and the National Party to do the same thing.

JOURNALIST:     [inaudible]

LATHAM:         It’s an indication that the Howard Government is willing to abuse public money for political purposes. We’ve already got over $100 million of political advertising funded by the Australian taxpayer on our TV screens, in our letterboxes and our newspapers and now they’re going to use more taxpayer money for a political purpose related to Centenary House. It is an ongoing abuse of public money and public processes by the Howard Government.

JOURNALIST:     [inaudible]

LATHAM:         Mr Howard doesn’t give me any tips or clues about his thinking on [inaudible] what I do know is we’ll have a federal election in the second half of this year and the Labor Party is ready to fight it. We just wish it was a fight where the Government wasn’t using so much taxpayer’s money for a blatantly political purpose as advertising and now an expensive inquiry into the Government’s political opponents.

JOURNALIST:             [inaudible]

LATHAM:                 I’d like a lot of things but I know what I’ve got control of and what I haven’t got control of and the election date is totally under the control of the Prime Minister. I’m the Opposition Leader announcing policy, as I’ve done today, and advocating good things for the Australian people and that’s how I get about my work but I’m afraid I haven’t got the power to determine the election date. Hopefully, the election after this one it will be a different scenario.

JOURNALIST:     But you want it though?

LATHAM:         I want a Federal Labor Government for the benefit of the Australian people in all areas I have outlined today – restoration of Medicare services, banking services, fairness in the education system, environmental policies that are needed. The Australian people can’t wait any longer. They can’t wait any longer for these basic services and that’s what I want. I want to play a role in giving them a better society.

JOURNALIST:     [inaudible]

LATHAM:         We’ll have a candidate very shortly, I understand, and that candidate will be backed by the party organisation and running as hard as they can in the Calare electorate, to be our policy stalwart and advocate. It’s a tough task against Peter Andren, that’s recognised I think by both sides of politics, but we will be in there advancing Labor policy and putting forward our views for the people of Calare.

JOURNALIST:     [inaudible]

LATHAM:         I leave that sort of analysis to the commentators and people who [inaudible] and write up their commentary pieces. I’m an advocate for public policy and I know one thing – in country Australia people need the restoration of basic services; the free fall of bulk-billing rates is unacceptable; the loss of affordability and access in the education system; the loss of basic services such as banking; the fear that people have at the full sale of Telstra, the run-down of their telecommunications and just turn the services into profit making ventures instead of things that truly serve the people. These are all very strong concerns in country Australia and we’re going to continue to campaign and advocate good policy, to restore services, and give people a fairer go for the future.

JOURNALIST:     [inaudible]

LATHAM:         We’re ready for an election in the second half of this year, which is what I’m expecting.

JOURNALIST:     [inaudible]

LATHAM:         I’m concerned about any loss of basic services in country Australia, but my focus is on the federal issues where I can do something about it – restoration of bulk-billing is one of the basic services, one of the essential aspects of Medicare. Better support for regional universities and TAFE colleges, fairness in the school funding system, needs based funding system, early childhood development and other services that really matter in country Australia. I’m working hard on those federal policies that make a good difference for the future. I’m running to lead a Federal Labor Government and that’s the focus of our policy approach.

JOURNALIST:     [inaudible]

LATHAM:         All seats are vital, but certainly regional Australia has suffered the most under this Government; the loss of basic services, the fear of the full sale of Telstra – these are things that worry people in non-metropolitan Australia particularly and we’ve got a very strong policy focus in all of those areas to give them a fairer deal on the future. We can only advocate our policy, get our principles and stance out there very clearly and try to win the trust and confidence of people in regional Australia and, in Government, give them the very services we can provide.

JOURNALIST:     [inaudible]

LATHAM:         The Government is in control of its own legislative program. We are waiting for the Senate committee that Senator Conroy is part of to deliver its information.

CONROY: We’re not going to be rushed by the Government. This is a very important trade agreement. This is about the national interest. If the Government want to play politics [inaudible]. It’s a Senate inquiry which has agreed on its reporting date as August 12. We are about two thirds of our way through the inquiry now. We’ve got more hearings tomorrow – we’ve got crucial [inaudible] tomorrow on the Pharmaceutical Benefits Scheme where we’re hoping to get a lot of extra testimony and evidence and the impacts of the Free Trade Agreement on the PBS and we’re very concerned to have a thorough approach and thorough examination. If the Government is trying to play games with the timing and play politics with it that would be disappointing.

JOURNALIST:     [inaudible]

CONROY: If when the legislation comes before the House of Representatives and we haven’t made a final decision because [inaudible] process, it is not unusual for us to [inaudible] and we’ll make our final decision around the time that the Senate inquiry report on August 12. So its not unusual for legislation to pass the House of Representatives. There are whole range of issues we are concerned about. We’ll be raising it in the chamber and [inaudible] when asked [inaudible] information in the PBS [inaudible]

JOURNALIST:     [inaudible]

CONROY: It does make it harder. We’ve said that they [inaudible] it doesn’t have to be a PBS [inaudible] we will vote down the other legislation. It doesn’t have to be [inaudible] we are opposed to this because we don’t believe in Australia’s national interest. We will vote down any [inaudible] of the legislation that is needed to enable [inaudible] that’s Labor’s very strong position from day one on this.

JOURNALIST:     [inaudible]

LATHAM:         No, not at all – there is no prospect of that whatsoever. [inaudible] the banks are making multimillion dollar profits and we’ll have very strict monitoring of what they do and put policies in place to ensure that the basic accounts and the basic services are available to the Australian people.

JOURNALIST:     [inaudible] jack up rates?

CONROY:         They jack up rates which is to match the profiteering that they are already engaged in. It is would just be a little bit [inaudible] that is the justification –

LATHAM:         We’ll have tighter control to prevent that sort of thing from happening – tighter control, and very obviously the capacity for the banks to comply with our requirements within the scope of their multibillion dollar profits.

JOURNALIST:     [inaudible]

LATHAM:         The policy is to have APRA and Department of Transport and Regional Services to conduct and audit of the banking services that have been lost, and the audit will identify the areas where you need a restoration of services. The banks will have the opportunity to comply with the audit. If they don’t, we’ll establish our community obligation fund to raise the money to ensure that the services are in fact restored. That's a very fair approach. It is going to be an independent process and audit. There are 12 months in which the bank can comply but, if they don’t, we’re willing to legislate and regulate and raise the money to make sure that the basic services are available.

Ends. E & OE