24-November-2010
Portfolio Media Releases, The Economy
Topics: OECD report on Australian economy, banking reform
E&OE
CHRIS UHLMANN:
To talk about the Coalition’s view of this OECD report, I’m joined by the Opposition finance spokesman – Andrew Robb, good morning.
ANDREW ROBB:
Yeah, hi Chris.
CHRIS UHLMANN:
First things first though, it does give the Government a big tick for the way it handled the Global Financial Crisis, because it’s not just the strength of China and India it says, or the fact the economic fundamentals are good, but that the Government responded quickly.
ANDREW ROBB:
Well they did say that the Government did respond quickly. And they said also that it’s many years of surpluses and good policy, which you don’t hear from the Government, but many years of good policy, left a situation where the Government could embark on a sensible balance of monetary and fiscal policy.
And they then go on the criticise the fact that the monetary policy is doing most of the heavy lifting and that the fiscal policy, the Government has really been very shy about doing what it has to do – the hard decisions…
CHRIS UHLMANN:
Well it does say that it’s got a good exit strategy. That in fact the way that the stimulus is drawn down is done well.
ANDREW ROBB:
Look, I think the big thing about this OECD report is we all know how it comes about. There’s a Treasury official full time in the OECD, the office has come out here, it has always reflected the view of Treasury. That is, that’s what we all know in this town.
CHRIS UHLMANN:
So you’re saying the points of criticism are actually Treasury criticising the Government.
ANDREW ROBB:
Well the thing is, this is a stinging rebuke. It makes a couple of concessions about the timing and nature of fiscal stimulus, but of course Treasury recommended those.
Almost the rest of the document or the report is a stinging rebuke of the Government on all of its pet policies, all of its pet policies. So to me, reading it, first thing this morning, I thought this is a situation where the Government has virtually lost the confidence of the Treasury.
It’s quite an extraordinary situation. I’ve never seen a report which is so stinging in its rebuttal of so much of what a Government is doing.
CHRIS UHLMANN:
That rebuts many of the things that you were talking about as well. It talks about the resource rent tax and says that the base should be broader than it is now, that it should be applied to all commodities and all companies – and you don’t want it to apply to any.
ANDREW ROBB:
Well it’s a Treasury view. You look, even the Treasury language about a carbon tax, sooner rather than later, it’s almost taken extracts from Treasury reports and put it out there.
It is always reflecting very largely the Treasury view and we don’t tug the forelock to do everything that the Treasury says.
I suppose my point is though, that this is most unusual report in the sense that it does take issue, very strong issue, with so many things like you mentioned, the NBN, like the mining tax – it said this is a tax that will now not go anywhere near the revenue that it was meant to, etc. etc.
So, the Government in many ways, and you saw it in the red book itself, has lost the confidence of the Treasury. It’s a very dangerous situation and it does reinforce the view that the Government has lost its direction.
CHRIS UHLMANN:
Alright, even leaving that to one side, that was the point of view and the point of view is that you have an even more divergent view with Treasury than the Government does…
ANDREW ROBB:
On some issues.
CHRIS UHLMANN:
… like the GST, do you believe that you should broaden the base and raise the tax?
ANDREW ROBB:
No we don’t. No we don’t. But on some issues we strongly agree with the Treasury and that is it reeked this whole report of a Government wasting a mining boom, that it’s frittering away the proceeds of a mining boom on current expenditure. It sort of made those sorts of points.
You can see the frustration in Treasury that the opportunity for real reform, now, and the opportunity for strong fiscal policy – cutting expenditure, making sure that we get back in the black as quickly as possible so that the mining boom can then be put to long term good use.
CHRIS UHLMANN:
While it’s critical of some things, it says that the NBN hold potentially large promise.
ANDREW ROBB:
Yes but then goes on to say most of the ways in which it is being introduced will guarantee or likely lead to significant loss of competition – that’s what we’ve been saying – replacing one monopoly with another big Government monopoly.
And we’ve spent the last thirty years on both sides of politics trying to get rid of Government monopolies or essentially private sector activities, things the private sector can do far more efficiently. And that’s again what Treasury and OECD is saying about the Government.
It’s quite an extraordinary thing that Ken Henry is really laying out his dissatisfaction with all the key arms of Government policy.
CHRIS UHLMANN:
Well I’m sure he’d say that that’s an interpretation. Can I take you to one last thing before we leave, and that’s the idea that you’re going to legislate now, the ACCC are going to have more powers over banks. In this instance, that you would stop the practice of price signalling, how on earth is that going to work without limiting the way banks discuss things in public? Won’t that be the outcome of it? It won’t just be banks, will it, it’ll be all businesses.
ANDREW ROBB:
It’ll be all businesses and it will require the exercise of judgement by the ACCC, that’ll be a key element of it. But it is one way of us demonstrating that, something that the ACCC has been looking for, for a long time, particularly in relation to petrol, but in relation to other industries, that things can be done.
The Government’s still talking about a month away - they’ve been caught on the hop. Ultimately though Chris, what we need to see in this whole area is a son of Wallace. We need another major area of financial reform. The competition build up over twenty five years has been decimated in the last eighteen months/two years. And all of these issues need to be addressed on a wide canvass.
CHRIS UHLMANN:
Andrew Robb, thank you.
ANDREW ROBB:
My pleasure.