TRANSCRIPT
Of
SENATOR MITCH FIFIELD
Sky News AM Agenda
Ashleigh Gillon & Senator Mark Arbib
27 October 2008
8:45am
E & OE
SUBJECTS: Bank deposit guarantee, budget surplus, Julie Bishop
ASHLEIGH GILLON:
Let’s go straight to our panel now. Joining me from Sydney is the Labor Senator Mark Arbib and from Melbourne the Liberal Senator Mitch Fifield. Thank you both for your time. Senator Arbib firstly to you, some mortgage funds are saying the only way to restore investor confidence is to extend this guarantee. Mr Rudd as we saw there indicated that that’s unlikely to happen. So now what else can be done to protect these investors who have found their funds frozen?
SENATOR MARK ARBIB:
Well there’s going to be ongoing talks there’s no doubt about it. There’s talks today, there’s been talks underway between the regulators with these financial institutions for a while. More has to be done obviously. But in terms of providing a guarantee well I think the Prime Minister has made it pretty clear, Lindsay Tanner the Finance Minister has made it pretty clear, that can’t happen. I mean if people are putting their funds into banks then they’re obviously putting in place deposits, for safe reasons, we’ve decided that we will guarantee those, something that we had to do. But in terms of market-related investments well there’s obviously added risk when you take those type of investments. Most of those investments are in equities and that’s something that we just can’t guarantee and it would be I think it would be irresponsible for the Government to take on such a guarantee. I mean we have to take a step back and remember why we took this decision in the first place. It was something like two and a half weeks ago, three weeks ago, the world economy was absolutely on the edge and there was talk about a systemic collapse. Banks weren’t lending to each other. Banks weren’t lending to businesses, small businesses, look at what was going on in the US. So the guarantees had to be put in place. And imagine what would’ve happened if we hadn’t have guaranteed deposits. There could have been a run on the banks. You just don’t know, this is how serious this situation is.
GILLON:
Okay well Senator Fifield, what’s the Opposition’s stance on this? Is extending the guarantee the answer?
SENATOR MITCH FIFIELD:
Ashleigh it’s important to look at why we find ourselves in this situation. On October 12 the Government announced their bank security package and part of that was providing a guarantee for bank deposits without a cap and without a fee. The Opposition originally proposed a $100,000 cap. But we took the Government on good faith. We took the Government at face value and we assumed, as I think all Australians would have, that the Government consulted with the relevant regulators. We were reassured time and again that the Government was acting on the advice of the regulators. Subsequently we found out that the Government had at no stage sat down and spoken directly to the Reserve Bank of Australia. Had they done so they would have realised that there were downstream consequences of what they announced. The situation we find ourselves in with a flight of funds from one set of institutions to another was foreseeable. The Government should have seen that this was a very real possibility. They didn’t because they didn’t sit down with the Reserve Bank of Australia. We’re in this situation because the Government rushed this decision. They didn’t sit down with the Reserve Bank of Australia. They should’ve done so.
GILLON:
But Senator Fifield the Prime Minister this morning said that the Opposition really isn’t in a position to criticise. He said today that the idea to cap it at $100,000 would’ve left, he said, three quarters of a million deposits uncovered and would lead to, he said, mayhem in the financial system.
FIFIELD:
Well we took what the Government said at face value, that they were acting on the advice of the Reserve Bank of Australia. Our bottom line was and remains that we think the Government should act upon the advice of the Reserve Bank of Australia. One of the best things the Government could do to help engender confidence would be to actually release the advice that has come through from the Reserve Bank to the Treasury. That way we will know what it was that the Reserve Bank suggested in the first place.
ARBIB:
But Mitch the Liberal Party is making this up as they go along. We all know they agreed from the start, they agreed with this position in terms of guarantees. In fact, Mitch and I both debated this and he agreed with it. So I mean now they’re sort of re-inventing history saying we all should have seen what was coming…
FIFIELD:
Not at all…
ARBIB:
…no one saw what was coming. But I think Ashleigh made a good point Mitch…
FIFIELD:
No not at all Mark…
ARBIB:
…what is the Liberal Party, what is…
FIFIELD:
…you can’t ignore the Reserve Bank advice which we all saw on the front page of The Australian. You can’t wish that away…
ARBIB:
Mitch the regulators, the regulators…
FIFIELD:
The Reserve Bank made clear that…
ARBIB:
We took the advice of the regulators Mitch.
FIFIELD:
…there should be some sort of a cap…
ARBIB:
Mitch we took the advice of the regulators. I think Ashleigh made a good question…
GILLON:
Okay we actually need to move on here gentlemen. Senator Arbib I just want to mention another, of course, implication of this financial downturn is what impact it could have on the surplus next year. Yesterday the Finance Minister Lindsay Tanner said that it’s impossible to say whether it could stay in surplus or not because we just don’t know how bad the downturn will be. But today the Prime Minister sounded very confident that he can keep the budget out of the red. Is it too early to tell?
ARBIB:
Oh well no, I mean, the Prime Minister and Lindsay Tanner are at one saying that the next surplus will be healthy, so I mean that position is…
GILLON:
But there are no guarantees it will stay in a surplus.
ARBIB:
Of course there’s no guarantees. I mean we are in the worst economic crisis since the great depression so no one can foresee the future. But at the same time as that, what the Government is saying, and they do believe we will be, we are confident we’ll be in healthy surplus next year. The MYEFO figures come out next month so we’ll know more then.
FIFIELD:
You’re confident Mark, but there’s no guarantee that we’ll be in a surplus, they seem to be…
ARBIB:
Well no one…Mitch no one can…
FIFIELD:
They seem to be contradictory points, Mark.
ARBIB:
Mitch no one can guarantee anything at the moment. The things that Governments are having to deal with on a day-to-day basis are unparalleled. No one has seen anything like this for 80 years. But in terms of…
GILLON:
Okay we are running out of time. I just have one other issue we need to cover off before we get going. Today the Deputy Liberal Leader, Julie Bishop, has been caught plagiarising. There’s a report today saying she had to apologise to a Kiwi businessman for using his words in a new book that’s been published about the future of the Liberal Party. Senator Fifield this is pretty embarrassing isn’t it?
FIFIELD:
Well I note in the paper that one of Julie’s staff have taken responsibility for that and I imagine that will be the beginning and end of the matter.
GILLON:
But Senator Fifield this is a book that’s meant to have contributions by senior Liberal figures. Is it now that press secretaries are writing these contributions for their ministers, or shadow ministers?
FIFIELD:
No not at all. Not at all. I think everyone knows that staff make a contribution to the work of parliamentarians and this is one case where the staff work clearly wasn’t the quality that it should have been.
GILLON:
Okay we have run out of time. Mark Arbib and Mitch Fifield thank you both for your time.
ENDS