Commonwealth Bank, Superannuation, University Fees, AMP, War Veterans, Election – Interview with Paul Murray, 6PR

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Commonwealth Bank, Superannuation, University Fees, AMP, War Veterans, Election – Interview with Paul Murray, 6PR



Interview with Paul Murray


Tuesday, 20 May 2003

8.35 am


SUBJECTS: Commonwealth Bank, Superannuation, University Fees, AMP, War Veterans,



Good day, Peter.


Good morning, Paul.


Fan club waiting for you.


Yes. Good to be with you. I am sorry I was a little bit late. We were talking

at a breakfast this morning.


Okay. Look, I will get to the nub of the Budget, some Budget issues that are

still coming up, shortly. But as has just been announced on our news, the Commonwealth

Bank this morning is saying that it’s going to axe 1600 positions. There has

already been debate around the place that Telstra’s looking at 10,000 jobs to

go, 4,000 probably in the short term. In the Budget, you projected the same

unemployment as last year, 6 per cent. So you weren’t going to make any inroads

into unemployment. Would these put a hole in those figures? Would these losses

put a hole in those figures? That’s the first point. The other is, is this a

sign of a good economy?


Well, these figures would not cause us to change our estimates. Last year,

230,000 new jobs were created in the Australian economy. So, you need a couple

of hundred thousand new jobs each year just to take new entrants to the workforce

and to keep the unemployment rate steady. Now, obviously, the Commonwealth Bank

employees and Telstra employees, those that are affected, I have a great deal

of feeling for them. And it is up to the Commonwealth Bank, and it is up to

Telstra, to announce what is motivating it, and what it is going to put in place

for those employees, in the way of entitlements on so on. But the important

thing is to keep an economy growing so that we get new job opportunities. And,

as I said, we need a couple of hundred thousand each year in Australia just

to keep those new entrants with job opportunities coming into the workforce.

Let me put it in context, since the Government was elected in 1996, there have

been about 1.2 million new jobs created in Australia. So that is the order of

the dimension of net new jobs in the country. Some people put off labour, but

if you can encourage business to create new jobs, overall you can create better



What we are seeing in the banking sector is increased profitability and declining

jobs. I mean, is there a responsibility on companies that are doing well to

employee Australians?


Oh, I think that Australian companies should always employ Australians. Yes,

of course I do. And that is part of the reason why I think it is important that

we have head offices here in Australia. And I have been very strong on that.

That is part of the reason why we want to reform taxation, so that Australian

companies can remain headquartered in Australia, notwithstanding the fact that

they are seeking investment opportunities offshore. But what you are seeing

in relation to the banking sector, is new technologies coming through, which

are changing the nature of banking. One of the biggest changes, of course, was

automatic tellers. That was one of the big changes that we saw in relation to

banking. Obviously, banks try and make use of those new technologies. But at

the end of the day, it is up to the Commonwealth Bank to explain its decisions.

David Murray can announce and explain his decision. It is not my duty to announce

or explain decisions of the Commonwealth Bank. It is a privatised bank. It is

not owned by the Commonwealth. People know that.


Yes, sure. But you have a banking policy which limits competition in the banking

sector to some extent and, you know, it’s a matter very much under your control.


We do not want to limit competition in the banking sector. Let me be entirely

clear about this. We want to promote competition in the banking sector. Some

of the things that we have done, for example, is, we gave credit unions the

right to issue cheques. We are giving credit unions access to the payment system.

We are encouraging organisations like the Bendigo Bank, which is now starting

community branches. We want more competition in the banking sector, certainly

not less. Let me give you another example, which is going on right at this moment.

The Government has announced reforms which will cut the major international

credit card providers, Visa and Mastercard, from setting interchange fees which

we think are too high. The Government is being sued, or the Reserve Bank is

being sued, I should say, in the courts at this moment because we are cutting

those fees and trying to promote competition. So our policy is actually to promote

competition in the banking sector.


I just want to raise with you an issue which didn’t get much coverage, hardly

any at all, out of the Federal Budget, and that’s the issue of superannuation.

Over the past year or so, you’ve outlined the problems faced by our ageing population

in your Intergenerational Report. You’ve told us we need to look after ourselves

more in our retirement. Many people feel that they’ve been herded into superannuation

and that now super is failing them. Why didn’t you address broad superannuation

reform in the Budget?


Well, we have got a number of measures in the Parliament, as we speak…


From the last Budget, yes.


Not only from the last Budget, Paul, but from 1997. In 1997, we adopted a policy

of allowing freedom of choice so that employees, if they did not like their

superannuation fund, could take their money out and put it in a different one.

That has been in the Parliament since 1997. The Labor Party, because it is beholden

to the unions and industry superannuation funds, is opposing it. We have legislation

in the Parliament, as we speak, to cut the superannuation surcharge. Labor is

opposing. We have legislation in the Parliament to increase the ability for

husbands to make payments into superannuation on behalf of their wives, as we

speak. We have a very broad agenda.


But Labor says those changes advantage the rich. They’re offering tax cuts

on super for everybody, from 15 per cent to 13 per cent. You didn’t seek to

do that.


Labor would not know what they’re saying. Ask Labor this question: Why can’t

people choose their superannuation fund? They will give you a complicated reason.

But one of the things that is worrying people at the moment, Paul, is, they

are getting negative returns. The equity markets are down and they are getting

negative returns. Now, part of that, of course, is that the worldwide economy

is down and equity of returns are down around the world, worse outside of Australia

than inside Australia.


But also because they’ve got limited flexibility and most super funds are tied

to the stock market.


Absolutely right. And if they do not like the performance of their fund, they

can’t even change it. This is the thing that amazes me. Imagine if you went

to the bank and the bank said, you know that $100 that you deposited, well there

is only $90 left. The first thing you would say, is, I am taking my money out.

If you try and do that in superannuation, you are not even allowed to take your

money out and put it in a new fund because there is no competition between these

funds. Unions have set up these industry funds. If they make a negative return,

bad luck. You cannot take your money out and put it in another fund. We have

been trying since 1997 to give people freedom of choice. It is all blocked in

the Senate. Part of the obstructionist Labor tactic.


Well I’m sure, though, that what wouldn’t get blocked in the Senate is a move

to lower the taxation level on superannuation generally. As I understand it,

the problem you’ve got in the Senate is that they think your changes advantage

the rich and not the average income earner.


No, the problem we have got in the Senate, is, that the Labor Party is beholden

to the unions, which run the industry superannuation funds, and unless the unions

approve, you can’t get any legislation through. That is our problem.


Well, even the Association of Superannuation Funds says about this Budget,

it says you’ve failed to deliver on last year’s Budget promises and that the

Budget is a huge disappointment in that it offers no long term commitment or

strategy to help people save for their retirement. That’s what Philippa Smith



Yes, well we have delivered in full on last year’s Budget promises, and they

are currently in the Senate awaiting legislation.


But you don’t deliver until they’re through the Parliament, surely?


Sure. I agree with that. I agree with that. Absolutely. Absolutely. And to

get through the Parliament, they pass the House of Representatives and they

have to pass the Senate. Now give me a clue, Paul. How do I get the Labor Party

to pass our legislation in the Senate?


Well, what the Association says, is, that it’s time for the Government and

the Opposition to step away from partisan politics in the Senate and to find

a compromise solution that works in the interests of average Australians.


Could not agree more. Don’t you think the Government should be entitled to

implement its election policy? You know, Paul, in a democratic society, you

put your policy out and, if you are elected, you go and implement it. We put

our superannuation policy out. We were elected. Labor lost the election. Shouldn’t

we be allowed to put in place our policy? What is our policy? Freedom of choice.

What is our policy? Reduction in the superannuation surcharge. What is our policy?

Allowing higher income earners in the family to make superannuation contributions

on behalf of the lower income earners, mainly husbands in respect of wives.

We have delivered in full. It is through the House of Representatives. It is

in the Senate. Shouldn’t we be allowed, having been elected, to get that legislation

through? Surely.


Well, that’s an issue about the Senate, isn’t it. Peter, there are callers

lined up for you, to talk you. Humphrey is first up. Good day, Humphrey. Peter

Costello’s listening.


Good day Paul, good day Mr Costello. Mr Costello you might have noticed in

the polls that we are more concerned about education than four bucks a week

and apart from the glaring inequality of battlers like me paying for your free

education, could you tell me why athletes are exempt and under the next Liberal

Government, will the various institutes of sports around the country become

fee paying institutions?


Well thanks for that question Humphrey. I think that Australians are interested

in keeping the tax burden as low as possible, and that’s what the Government

is doing in this budget. Not only have we introduced a surplus but we have returned

to the taxpayers and you will have noticed that most of the State Labor Governments

have been increasing taxes. We think it’s important that we keep that tax burden

as low as possible. Can I say in relation to Higher Education, that the taxpayers

pay about three-quarters of the university course and the student pays about

a quarter of the full cost of the course and they are given an interest-free

loan, which is not repayable until, under our changes, the student goes above

$30,000 worth of income. Now we think that’s a fair distribution between the

taxpayer and the student, it’s still good value for the student and this was

a system that was as you know introduced by the Labor Party back in the mid-80’s.

It’s one that we are preserving and building upon. We think it will make a more

flexible higher education system.


Thanks Humphrey, Liz Thompson, from the National Union of Students is on the

line for you Treasurer. G’day Liz.


Hi, Mr Costello, I was just interested to hear your comments on the Business

Council of Australia’s report in August 2002, that demonstrated that Australia

is in fact, a high user pays, low graduate benefit system compared to other

countries in the OECD. You have graduates from a secondary school, sorry graduates

from university earning on average an extra, 36 per cent income in Australia,

when the OECD average is 60 per cent, and the UK 71 per cent, the USA 80 per

cent, so in fact we are already facing a situation where graduates in Australia

find it very difficult to earn a higher income despite the fact that they pay

significantly higher fees than a lot of other OECD countries and I was very

interested in your comments about, I think you would like to check your figures,

first of all our figures demonstrate that students are paying more than 40 per

cent for contribution towards their education, in some courses like Law, it’s

closer to 80 per cent. I was interested in your comment on…


Is there a question in here anywhere Liz?


…yes certainly…


Well let’s get to it.


…in how you have said that there is going to be all this extra money for

higher education, how do you justify, first of all you have taken out $1 billion,



Well, I can answer that question because we haven’t taken out $1 billion. In

this Budget we actually announced a 7 ½ per cent increase in Commonwealth

funding for universities. A 7 ½ per cent increase on the forward estimates,

so Commonwealth expenditure is dramatically growing. The figures have been out

for a very long period of time, they are published by the Government. Three

quarters of a place is paid for by the taxpayer, and one quarter by the student.

It is true, that what some of the universities do, is where they have high demand

courses, sometimes they don’t direct as much resources into those high demand

courses, and they use high demand courses like Law, to subsidise other lower

demand courses. But at the end of the day the taxpayer is still paying for three-quarters

of the place. And you have got to remember this, that there will be a lot of

people who will never get near a university, people who will be working in trades,

or in service industries, who are paying taxes all of their lives, and they

will be making a contribution to the students, which is three-quarters of the

cost of the course and the student is asked to make a contribution which is

one quarter, with an interest free loan. We think that is a fair system and

a system that has been in place for quite a long time.


Andrew from (inaudible). G’day Andrew.


Hi G’day Paul, Mr Costello…


Good Morning Andrew.


I was just curious as to what you are saying about the industry-based super

funds, I actually have one of those from a previous employer, and one currently

with AMP. Now, the industry-based super fund is far and away out performing

the AMP fund, with 7 ½ per cent better return last year…


But that is a good thing, I mean I am not complaining about that. I am just

saying if it were doing worse you should have a right to take your money out.

If it is doing better you should have the right to leave your money in. My point

is this, shouldn’t you have the choice?


Yes, for sure you should have the choice. What my question was, was is there

going to be some sort of regulatory body that investigates why a company like

AMP, who was obviously, should have better financial advisers, is so badly under

performing in comparison to a super fund which you would assume would have a

generic type financial adviser, doing bulk deals?


Well, I think the fact that AMP has performed so badly is a disappointment

to everybody, especially its shareholders, but they have now got rid of previous

Chief Executives, and Board Member. They are now attempting to restructure themselves,

I think as the Chairman of the AMP said in a moment of candour, at the annual

general meeting, they were in the wrong business, in the wrong country, at the

wrong time. They were a company that mucked it up. And now they are trying to

restructure themselves, and perform better for their shareholders, and if I

was a shareholder in AMP I would be pretty angry about that, but unfortunately

that is what happens in the business world. Some people run companies well and

some run them badly. And if you are a shareholder, the trick is to try and pick

the good Directors and the good Chief Executives who are going to run companies

that get you a better return rather than a loss on your share income.


Alan from (inaudible) on the line for you Peter. G’day Alan.


Good Morning Mr Costello.




I am president of the EDA, War Veterans EDA Society which is the most disabled

war veterans of all, no matter who you speak to, as has been accepted by the

Vets Affairs and we are. When are you going to give GST free cars (inaudible)

of TPI. A number of people of the Second World War like myself, cannot get a

TPI because we are over 65 years. We paid tax all our lives and we do not, get

any of the benefits of the TPI, when are you going to get us a GST free car?


Well, look I would actually have to have a look at, and speak to the Veterans

Affairs Minister in relation to the entitlements, but as far as I know the War

Veterans who have seen active service are entitled to full medical health, they

are entitled to a Veterans pension, and they are entitled to a additional benefits,

I can’t tell you every precise one and I’m not quite sure of the age limit that

you refer to, but I will take it on board and we will come back to your association

and I will speak to the Veterans Affairs Minister and see what we can do.


Ok, thanks for that call Alan. Peter yesterday you drew a crowd of about 500

to the 500 Club, a fund raising outfit for the liberal Party, I know that the

Liberal Party were putting great stock in getting you here to raise some money

for them. It does raise the question about an early election and that the party

is trying to get some sort of war chest up. I mean there’s almost, well there’s

certainly a $900,000 debt in the Liberal Party here in WA. What are the chances

of an early election, I mean you certainly have no shortage of triggers?


Well, we would like the Senate to pass our legislation, because I think the

public feels that you elect a government – you have only got a three year term,

the States have got four year terms, we have only got a three year term – elect

a government, they want us to get on with governing. Now as you know, the Constitution

says that if the Senate becomes obstructionist and defeats too much government

legislation, it’s up to the government what it would want to do about that.

But I hope it doesn’t come to that. We don’t need an early election, what we

need is, we need the government to be able to pass its legislative program.

Now you ask me about, meetings, we have had some terrific meetings here in Perth,

I am always working as hard as I can to help the local organisation, we had

a terrific lunch yesterday, if it raises money well and good, but you shouldn’t

read any particular election timing into that, Paul.


The AC Nielsen poll says 77% of Australians would have rathered to have the

tax cut money spent on health and education, a matter that you and I discussed

the day after the budget. Would you really want to go to an early election on

this Budget?


I think that, this is a very responsible Budget, Paul. We balanced the budget,

we funded a war, we funded the worst drought in Australia’s history, we have

upgraded Australia’s security and we have reduced taxes. There aren’t many countries

around the world that would be in that position, not the Americans, not the

British, not the Europeans, not the Japanese. In this country we can all look

at things that we want improved, and there are many things can be improved,

but let me say this Paul, if you want to compare where Australia is, to other

countries around the world, other advanced industrial economies around the world,

to be able to do all that puts us in a pretty special class.


Good to talk to you, thanks for coming to see us today.


Great to be here Paul.