Interview with Alan Jones

2GB

Monday, 9 October 2006

7.15 am

SUBJECTS: Credit Approvals, Petrol Prices, Privacy of Bank Accounts, Labor Tax Policy

JONES:

Treasurer good morning. 

TREASURER:

Good morning Alan, great to be with you. 

JONES:

Thank you for your time.  Why is this allowed to happen, I mean, when you were 18 and I were 18, this didn’t happen, they didn’t send you a credit card in the mail independently of your credit worthiness, that was tested first. 

TREASURER:

Well that is right.  Back in the days when we were growing up the banks would make sure that you had a record that could show you would be able to service the loan before they would offer you one.  Now they have decided to lower their credit standards, I think, in respect of credit cards and nearly everyone can get one.  And they push it to people in my view, including people who really don’t have the capacity to (inaudible). 

JONES:

So how do we allow that to happen?  What the public are saying is, well these are the things that governments should be making sure don’t happen to unsuspecting consumers, whoever they might be. 

TREASURER:

Well that is right and this is one of the reasons why I have made this point to the banks.  I have asked them to reassess their credit standards and to make sure that they are satisfied with people that are being offered credit actually have the capacity to pay it.  And of course if they offer credit to people who don’t have the capacity to pay it and then they don’t pay it back, the banks will be the losers. 

JONES:

Yes but I mean you send people to wall, don’t you, I mean the banks aren’t the losers, they can’t back it back so then the banks then claim something over you, wind you up on your car or your house or whatever.  I mean the public, you see it is like petrol, the public don’t understand how this can happen.  I have written to Graeme Samuel for example – I will come back to credit cards in a minute – but on October 3, well I have written a million letters about fuel prices, but just at one at Northmead service station.  112.9 cents a litre Monday night, 108.9 on Tuesday night and Wednesday morning and then 122.9 on Wednesday evening.  Now, you are the Treasurer, you are sort of running the economic wellbeing of the country.  Are people ripping us off?  How can these things be unexplained about people being, receiving a credit card in their mail when they have no credit and you go to the bowser and you can be charged anything at all for petrol?

TREASURER:

Well we do monitor fuel prices.  The ACCC does monitor fuel prices.  It gets electronic data on a daily basis and if there is any evidence of collusion it takes action.  It has taken action against some petrol service stations and been successful, some are still in the courts, where it has evidence that they have colluded with other petrol stations on price.  But a lot of these fluctuations are just people in the market trying to get the best price for their product. 

JONES:

But see, Graeme Samuel told that Senate petrol inquiry that, and I quote, ‘price gouging and profiteering are not defined in the law and do not constitute illegal conduct under the Trade Practice Act.’  Why don’t you modify the Trade Practices Act to make price gouging and profiteering illegal?

TREASURER:

Well because the Trade Practices Act stops any anti-competitive behaviour and whatever you call it, if it is anti-competitive, if gauging is anti-competitive, if profiteering is anti-competitive, the Trade Practices Act does outlaw it and we do take action against it and there have been cases where millions of dollars of fines have been imposed on petrol stations for doing it.  But you have got to be very careful that you don’t…

JONES:

How could profiteering be anti-competitive?  I mean anti-competitiveness is about (inaudible) which undermines the competitive capacity of the other bloke.  Profiteering is about charging as much as you can possible get away with and getting away with it independently of the worth of the products you are selling.

TREASURER:

Well, look these are very complicated issues, let’s take bananas.  A cyclone hits a banana crop and those people that have got bananas left sell them for a much higher price.  Is that profiteering? 

JONES:

No, no it is not.

TREASURER:

(inaudible) they were selling them for $3 a kilo…

JONES:

I mean, we are, we always know that the scarcity affects price.  But this is a circumstance where the resource isn’t scarce, it is in the bowser and what was 112 in the morning is 122 in the afternoon. 

TREASURER:

And what happens, you will find, if it is daily monitored, is they put their price up to 122 and nobody buys it and they are forced to bring their prices down again.  That is what invariably happens in these cases…

JONES:

But in the meantime some bloke has been ripped off.  You see, you get petrol price dropping, the oil price dropping by $10 a barrel and then one bloke writes to me and he says, I am sitting here and he wrote, he texted me while he was there, 104.9 it was this morning, he said, tonight it is 123.9 and you are telling me on the programme this morning that oil prices have gone, dropped $10 a barrel in the week.

TREASURER:

There is always the delay Alan, between the oil price and the price at the pump.  The petrol that you are buying at the pump most probably was bought out of the ground (inaudible) ago…

JONES:

When the oil price goes up there is never a delay at the pump.  When the oil price goes at Singapore, the petrol price goes up immediately. 

TREASURER:

Well let me just go through it.  The oil was bought out mostly in the Middle East, sometimes in Malaysia.  It is generally shipped to Singapore, it is refined in Singapore, it is generally shipped to Australia, it is then transported from the bulk terminals to petrol (inaudible) and the petrol at the pump is generally (inaudible) could have been brought out of the ground and sold months before.  So, the fuel price is on a particular day is not going to be what the (inaudible) pump has actually paid for it because there is a lag there. 

JONES:

It doesn’t explain a bloke charging 104 cents a litre on Thursday morning and 123 on Thursday night and getting away with it.  But look, time is against us, there is a couple of things I want to raise with you here.  Today we are told there is a briefing note from the Australian Banking Association to banks advising management on how to avoid telling customers where their personal details are sent overseas.  And it is called ‘Exploiting a legal loophole to avoid telling customers.’  Now, it is a seven page document, it tells banks how to spin their way out of questions, use holding statements, blame customers for sending the jobs offshore.  Now, I don’t know whether you are aware of the story on Britain’s channel 4, where the reporter there was offered the opportunity to buy credit card numbers, bank account numbers, security codes, names and addresses of thousands of customers of major companies because business would be transferred to call centres in India.  Now, does the Government give the consumer the right to know before this information is sent overseas about them?

TREASURER:

Yes and if there is any exploitation of a loophole, if they are genuinely exploiting a loophole we will investigate that and we will close the loophole.  I wouldn’t for a moment try and justify banks exploiting loopholes and misleading their customers.  I am not going to come on your programme and vouch for the banks.  You know who the Chief Executives of the banks are, they ought to be on your programme, get them to explain it. 

JONES:

I am just wondering, no, no, no, forget about them, I am worried about you, are the laws adequate to protect the customer, that is the point?

TREASURER:

Well we have privacy laws in this country and we have the fiduciary duty of banks and what that means is that banks are not entitled to disclose any information, any personal information that you haven’t given them permission to disclose.  Now, if there is a bank that is exploiting some loophole or is breaking that law then I will refer it for a prosecution but it is not my job to justify banks, get some of the Chief Executives on your programme. 

JONES:

But that is not my point, that is not my point, hang on, hang on, hang on, don’t crawl out of this Peter, my point is, the banks are virtually saying that there are legal loopholes that enable the banks to send the details overseas without informing a customer.  That is exactly what the briefing document is from the Banking Association.  Now, you should surely, within 24 hours I don’t want that legal loophole in and immediately close it. 

TREASURER:

Well I have just said to you that the law is the banks can’t disclose any of your private information without your permission.  So if you haven’t given permission for the bank to do that, then it shouldn’t be doing it.  And as I also said, I will get the law enforcement authorities to have a look at it.  But what about getting the ABA or whoever wrote it on the programme to explain why he is doing this. 

JONES:

Well I do appreciate your initiative in relation to being on the programme (inaudible) and those initiatives are much appreciated and I shall, I just wanted to come back to that…

TREASURER:

The thing that always gets me about this though Alan, if I may so, these banks have huge PR departments.  They are all paid to defend and explain and spin for the banks, they ought to be on your programme, they ought to be explaining, it is not my job to spin for the banks. 

JONES:

I am not asking you that.  I’m simply saying if there is a legal loophole, you have to close it.  And it shouldn’t be there.

TREASURER:

I doubt that there is a legal loophole because, as I said, the banks can’t disclose any information unless they’ve been authorised to do so and I think I’ll have to investigate it.

JONES:

Are you absolutely certain about that?  That banks can’t disclose, say that again Peter.

TREASURER:

Banks can’t disclose personal information about their clients without the client’s permission.

JONES:

Answer this question, Peter Costello banks, say, with the National Australia Bank and the National Australian Bank are now looking to shift 160 data processing jobs to India.  Can any aspect of Peter Costello’s banking record, any aspect of it, be sent to India without Peter Costello’s permission?

TREASURER:

No.  It can’t be given to any person other than the person I’ve authorised them to give it to.

JONES:

And who did you authorise them to give it to?  Someone in Melbourne?

TREASURER:

Well, that’s the question then isn’t it.  We’ll have to go back and we’ll have to have a look at their authorisation forms.  But that is the point.  It cannot be done without authorisation.

JONES:

But you know, people listening to you will say, hell, I don’t know who I have authorised to see my credit card details because there are a million people working in the bank and then in Australia there’s a whole heap of people seeing my records.  And you say, oh, well, because they’re Australians I don’t object.  But I don’t want all that stuff being shipped to India, to Bangalore or to Hyderabad or Delhi or Calcutta. 

TREASURER:

I couldn’t agree more.  And why not get one of the Chief Executives on to your programme to ask him what his form is.

JONES:

You’re very keen.

TREASURER:

I’ll tell you their names if you like.

JONES:

Perfectly okay.

TREASURER:

Don’t ask me how they do it.  Alan, get them on the programme.

JONES:

It’s a good way to start Monday.  I just want to be sure in what you say.  Therefore if they’re talking about, for example, ANZ, hundreds of workers in India, NAB are going to shift 160 data processing jobs to India, Bangalore is where Westpac say (inaudible) hundred jobs that are based in Sydney are going to go there.  You’re saying that the law today is such that no information about anyone of my listeners and their bank details can be sent to India without the personal approval of the person who is the owner of the account.

TREASURER:

No information about your bank accounts or about your records can be given by the bank to anybody without your authorisation.

JONES:

Okay.

TREASURER:

Right. Now, if you authorised the bank, the bank can use it but they can’t give to other people.

JONES:

All right.  Well I’m just interested to hear you say that because I will ask the banks but I just say I want to be sure that you…

TREASURER:

I would like to know who the banks are.  Look, I’ll tell you what.  You give me the banks that have done it and …

JONES:

Westpac to Bangalore.  ANZ, NAB, got them all.

TREASURER:

I’ll ring David Morgan today.  I’ll ring John Stewart.  And you ring them after me Alan.

JONES:

I will.

TREASURER:

We’ll ask them to send us their forms and we’ll ask them why they are doing it.

JONES:

OK, I will, and I’ll get that detail to you.  Just one other thing on that, that people are saying to me.  If this is all designed therefore, you are sending 160 data processing jobs to India or Westpac are going to, have got earmarked 500 jobs to go to Bangalore and if this places people out of work in Australia as a result, why should the taxpayer pick up the tab simply to improve the bottom line of a big banking entity in welfare payments.

TREASURER:

Well, Alan, you have to look at each particular case.  I don’t think that this is putting people out of work in Australia.  I think any bank that has got its wits about it would know that Australian staff would be much better doing these jobs.  Nobody with their wits about them…

JONES:

Just interrupting you Treasurer, just interrupting you Treasurer, it’s 7.30 but I will just stay with the Treasurer on this issue.  You understand what they are saying though don’t you that they are going to move 500 jobs, Westpac, to Bangalore because it’s cheaper.  It improves the bottom line.  It makes us more competitive.  ANZ’s going to do the same thing, NAB to India.  Now, people run into me and say well hey, if this puts Australians out of work, why are Australian taxpayers then picking up the welfare and the social security bill just because banks want to get richer by moving jobs offshore.

TREASURER:

Well as I was saying I don’t think any bank in its right mind will be putting Australians out of work because it may well be they have trouble staffing some of these call centres and that is a separate matter.  But I haven’t got any evidence that they are actually coming in and putting people out of work with this.  Some of these big businesses as you know are finding it hard to get labour because unemployment is so low in Australia.

JONES:

Just go to these polls today.  Do you have a concern?  Labor Party creeping up an 8 point lead on a two-party preferred basis.  Not an insignificant poll – 1400 people.

TREASURER:

Well look Alan in the political situation is tight in Australia.  There is no doubt about that.  The Federal elections swing on about 1 per cent or 2 per cent and if there were a 2 per cent swing you would get a change of Government in Australia.  What those polls are recording is that things are tight, they always have been, there is no room for complacency.  There’s a lot of people who say, oh well, the Government’s been in office, it’s doing a good job, it will stay in office forever.  Things don’t work that way in Australia.

JONES:

You’ve got Labor talking about removing one of the four marginal tax rates.  They are saying it would cost less than $2 billion a year to scrap the top rate of 45 cents in the dollar because fewer than 2 per cent of taxpayers are on the top rate, which for the benefits of punters, the Treasurer knows this, applies for every dollar earned over $150,000 or they would abolish the 15 per cent rate which covers people from $6,001 to $25,000 a year, more expensive, but to achieve that over a number of years.  Now, the argument often would be, oh well that is too dear and you can’t afford it, but then there is another story today which says that if you release those budget estimates in 2003 for the year 2006-2007 where you estimated a spending of $200 billion and a revenue of $205 billion, you have actually collected $42 billion more than you budgeted for in 2003.  So many of these things are affordable. 

TREASURER:

Well I want Kim Beazley to name today the date on which he is going to abolish this rate because I am sick and tired of Mr Swan, he comes out with a different tax policy every day and when you actually have a look at it and pull it apart he says, ‘oh well, that was just me musing.’  Now we have a definite policy from Mr Beazley that he will abolish the 15 per cent tax rate.  Okay, how many people on that 15 per cent tax rate will then move on to 30 per cent?

JONES:

No, I think what he is saying is that he will abolish, I don’t think it is a definite proposal by the way, but I think what he is saying is there would be no tax, because as you know it is tax free to $6,001, I think what they are saying is it would be tax free up to $25,000. 

TREASURER:

Well you see, it is not good enough for Mr Beazley to say this is not a definite proposal, this is on the front page of the newspaper.  He put that out there in order to try and get votes.  So this is his policy, he can defend this now.  Now we need to know the number of people that will be paying more tax, the date on which these changes will take place and the other areas of the Budget which will be cut to pay for it.  You can’t go out there Alan and say, here is my tax policy and the moment a little bit of heat comes on you, you say, ‘oh, it wasn’t really a policy, it was just a (inaudible) proposal.’

JONES:

In 2003, can I come back to Peter Costello, in 2003 you said the revenue by 2006-2007 would be $205 billion, now you have exceeded that by $42 billion, it is actually $247 billion, the revenue for this financial year (inaudible) $247 billion – that is $42 billion more than was projected in 2003 – there is a lot of money going around. 

TREASURER:

Well, without going through those figures, in 2003, we don’t actually do budget forecasts, we do projections as to what would occur on current policy.  But, and we will be doing the same in 2007 to 2011.  But Alan, until you actually get within the Budget year, these are just projections.  And until you actually know key variables such as the price of oil, the exchange rate, whether or not there is going to be a drought, what minerals prices are, these are just projections.

JONES:

But you did out of the $42 billion, give $18 billion to the electorate in increased spending and $16 billion in tax cuts and you kept $8 billion for surpluses.  I mean, it gave you a tremendous capacity to change the tax scales.  Couldn’t Labor argue the same thing, the China boom allows the money to be there?

TREASURER:

Well let me ask you a question, will the China boom be increasing in four year’s time or will it be stable or will it be decreasing?

JONES:

But if it decreases for you and you have got $18 billion in increased spending you are stuck with that and if the China boom goes down you have bumped up spending by $18 billion, we do have a problem. 

TREASURER:

Absolutely.  Now this is the whole point, you have got to make your assumption as to what is going to happen and this is why I wouldn’t make that assumption to do something in four years time because I think the variables are not yet fixed.  So, what we will be doing is we will be looking at our forecasts for next year but to say just because prices between 2003 and 2007 went up, is not to say that between 2007 and 2011 they will go up, we actually think they will probably stabilise and they could well be coming off…

JONES:

Well will have to go, not because I don’t want to hear you, but the lines, I don’t know what is wrong here this morning because everyone here is on landlines but the lines are crook.  Treasurer, look, I will leave it there, at this end it is very difficult to make out what you are saying…

TREASURER:

I am sorry.

JONES:

…no, no, no, that is okay, but I really thank you for your time anyway and we will take again soon.

TREASURER:

Okay, thanks very much Alan.