Treasurer
Doorstop Interview

Strathcona Junior School Campus
Canterbury, Melbourne

Friday, 20 May 2005
2.00 pm

SUBJECTS: Bank Fees; Drought Assistance.

JOURNALIST:

(inaudible) bit hard because they are actually earning from mortgages?

TREASURER:

I think a lot of people will be surprised by the level of fees that banks are

charging and I would urge them to shop around. Some of the banks charge a lot

more than others and I would also say to the banks that it is important they

look at cutting their fees. The Australian Government has now cut taxes on banks

with the abolition of the Financial Institutions Duty. We have also abolished

the Bank Account Debits Tax. So the Government is cutting billions of dollars

of taxes off bank accounts and it is incumbent on banks to have a look at whether

they can cut fees and charges themselves. A lot of Australians think they should

be able to.

JOURNALIST:

Kim Beazley says the Federal Government should be doing more to put pressure

on the banks over the fees. What is your reaction to that?

TREASURER:

Well, the Australian Government has now cut fees and charges and taxes on banks.

There used to be Financial Institutions Duty on banks, there used to be a Bank

Account Debits Tax on banks. The Australian Government reformed the taxation

system and as part of that Financial Institutions Duty and Bank Account Debits

Taxes have been abolished. And we say that at a time when the Government is

reducing tax on bank accounts, banks themselves should be trying to reduce their

fees. Banks have been very, very profitable in recent years. There are more

Australians in work than ever before – interest rates are low, people

are borrowing, banks are profitable – and just as the Government is cutting

taxes on bank accounts so too the banks ought to be looking at cutting some

of their fees.

JOURNALIST:

You don’t see a role for regulation by the Government to seek approval

or have their fees (inaudible)?

TREASURER:

Well banks are like other institutions in our society, other institutions set

their fees and there are competitive pressures but I think when banks are as

profitable as they are these days, at a time when the Australian Government

is cutting taxes on bank accounts the banks themselves ought to be looking at

cutting some of their fees. I think there has never been a better time for banks

to start cutting their fees – they are profitable, more people are in

work than ever before, default rates on loans are lower than they have been

before – and it would be a good thing if the banks could get really competitive

and start cutting fees.

JOURNALIST:

I believe Cabinet is meeting on Monday to discuss drought assistance. Have

you some more money to be spent there?

TREASURER:

Well the Australian Government understands the plight of farmers that are doing

it tough. We have in place drought assistance to give income support and interest

rate subsidies. We have estimated that the level of assistance through the Government,

the Commonwealth Government, could be around $1 billion and we will be ensuring

that people struck by drought will be assisted and the programmes that are in

place will be directed towards assisting farmers. There are very large sums

of money that are being set aside for that purpose.

JOURNALIST:

Does that mean more money will be spent though?

TREASURER:

Well the level of money that is spent actually depends on how long the drought

lasts. If the drought lasts for a long time then more will be spent. But of

course, we hope, as do the farmers, that the drought comes to an end and that

the rains break it. The only thing that affects drought long term is rain.

JOURNALIST:

Do you think (inaudible) to GDP are going to be revised (inaudible)?

TREASURER:

No.

JOURNALIST:

It is already factored in to last week’s forecast?

TREASURER:

We have put down forecasts for GDP as a whole and they take into account all

of the foreseeable events.

JOURNALIST:

(inaudible) or the Prime Minister has been saying over the past week in relation

to drought. Do you think that talk of towns closing down and people leaving

the land are accurate? (inaudible)

TREASURER:

Well this is a very serious drought. We have the worst drought in a hundred

years. We had some rain that broke it in some places but not many and we have

more areas back in drought. In some cases a one in a hundred year event and

I really feel for people that are going through this. Gee it is tough. And I

want to say, that the Australian Government stands ready to give assistance

and we will.

JOURNALIST:

How much foreign (inaudible)

TREASURER:

Last question and then I have got to go. No, no, this lady was first.

JOURNALIST:

How much foreign ownership of Telstra do you think should be allowed?

TREASURER:

Oh well we will not go into that today. Sorry what was your question?

JOURNALIST:

The PM is out visiting the outback today, Steve Bracks is talking about doing

it in the foreseeable future do you think, have you got plans to actually see

it for yourself, what the situation is out there?

TREASURER:

Oh well, I have just been down through Northern New South Wales, the Central

Coast of New South Wales and I have been through a lot of the country areas

and if we can get further information, a further grip on this, I can pledge

this – we will be doing whatever we can to assist farmers. Thanks.