Doorstop Interview
Brisbane
11 October 2009
SUBJECTS: 'Welcoming the Babies' community event; Residential Mortgage Backed Securities announcement; Liberals delaying CPRS; Ken Henry's testimony on unemployment; mortgage interest rates
TREASURER:
Well, this morning we've got the 10th Welcoming the Babies ceremony here. We've got something like 200 babies. And what this event is all about is saying to parents: you're not on your own, the birth of a baby is something which is important to the whole of the community. And what we have here this morning is the whole of the community welcoming those parents and their babies - all the service providers - because the truth is this - that strong families are the basis of a strong community. And parents need to know what services are available. And they need to know that the rest of the community is with them in the birth of a child and will assist them in the growth and development of that child, because we've all got a very, very big stake in the healthy development of young people in our community.
Now, this morning I'm announcing that the Australian Government will continue to invest up to a further $8 billion in Residential Mortgage Backed Securities. This is a program we began just over twelve months ago to support the smaller lenders in the home mortgage market because competition is very important. Competition puts downward pressure on rates and it's very important that we have a competitive mortgage market. So, the investment this morning will be a considerable assistance to the smaller lenders. The program has already supported something like five smaller banks, credit unions and other non-bank lenders over a period of time, to the extent that it's supported something like $10 billion worth of loans in the mortgage market. So this further initiative will support and keep the mortgage market more competitive. It will mean the market is more competitive and that's good for families with a mortgage or those that are contemplating taking out a mortgage.
And the third thing I guess is the issue of climate change. We've seen more chaos and confusion over night in the Liberal Party - the rebuff yesterday to Mr Turnbull. The country needs certainty on climate change. Mr Turnbull can't allow the dinosaurs on climate change in the Liberal Party to dominate this debate. He needs to guarantee that they will not engage in the Senate in tricky procedural motions to frustrate the passage of this very critical legislation - legislation that goes to the core of the sustainability of the Australian economy and the Australian environment over a long period of time. Over to you.
JOURNALIST:
While we're on ETS, if it is so critical - this legislation - why not wait another fifty days until after Copenhagen?
TREASURER:
Well, this legislation has been developed and on the books for months. Last year we went through a Green Paper, we went through a White Paper, earlier this year we presented legislation. Business demands certainty. The framework is out there. What we need is the Liberal Party to get serious about climate change. But unfortunately this delay is caused by the fact that the dinosaurs in the Liberal Party don't believe that climate change is a problem for Australia. And the sooner the Liberal Party and their dinosaurs face up to the reality and deal constructively with this issue, the better off Australia will be.
JOURNALIST:
But if you waited and negotiated, wouldn't you have a better chance of getting it through the Senate?
TREASURER:
I don't believe the Liberal Party are serious about negotiating. What they are going to do is to use procedural tricks in the Senate to block any intelligent discussion of this legislation. They have had two years to get a policy position together. The legislation has been on the books since early this year. We had a Green Paper and a White Paper brought out and they still have not managed in all of that time to produce one sensible amendment. And now as we move towards the end of the year where business demands certainty, where the country demands that political parties deal with this serious issue, they're once again playing silly, tricky political games and that's not good enough from the Liberal Party.
JOURNALIST:
Can you explain how the $8 billion dollars works? Do you get any interest back on that?
TREASURER:
Well, what the Government gets is an asset – a AAA-rated Residential Mortgage Backed Security. So it's an investment for the country. The issue here has been that securitisation markets that have been the source of funding for the smaller lenders have dried up because of the global financial crisis. So last year we issued (a directive) and invested in Residential Mortgage Backed Securities to provide for competition in that market. The problem is that the securitisation market is still weak and that's why the Government has decided to provide further support to that market, because that will increase the funding that goes to the smaller lenders, and we need the smaller lenders in the game to keep the market competitive.
JOURNALIST:
So it's not more debt?
TREASURER:
No, it's an investment for the country. It is no addition to the net debt of the country at all. It is actually an investment, for which there is a return. So it's not more net debt at all. But what it is is vital support to a section of the mortgage market that is really important to ensuring that it is more competitive. And that's why we're putting it out there now.
JOURNALIST:
In layman's terms, are you just giving $8 billion available for them to draw on to lend out?
TREASURER:
No, in layman's terms we are investing in up to $8 billion of Residential Mortgage Backed Securities - an asset for the Australian people. And that provides more reliable funding to the small lenders. So it's an investment for the country and it means the small lenders can get access to increased funding because the securitisation market is still weak because of the global financial crisis.
JOURNALIST:
What's the return on the $8 billion?
TREASURER:
The return on the $8 billion will be the return that the AOFM negotiates when it buys the securities. So I can't predict on this day the exact return.
JOURNALIST:
On the stimulus spending, the Opposition's come out this morning questioning Ken Henry's evidence that if it was stopped immediately, the 100,000 jobs would be at risk. Is the Government standing by that figure?
TREASURER:
Most certainly. The truth is that if the Liberal and National parties had their way Australia would be in recession right now. There would not have been a stimulus package and Australia would have went into recession, and tens of thousands of Australians would have been unemployed, and tens of thousands of small businesses would have went to the wall. Ken Henry was absolutely correct in his evidence to the Senate on Friday and that's why it's important we must continue with our stimulus package. The stimulus package does wind down as we go through next year. It was always designed to be temporary and to be withdrawn gradually as we went through next year as the private sector recovers. What the Liberal and National parties are talking about is its complete withdrawal right now, and that would result in many more people being unemployed and many more small businesses and tradies going to the wall.
JOURNALIST:Are you surprised that the four majors indicated they'll go higher than the RBA?
TREASURER:
I can't see any justification for the four majors to further increase their rates over and above any decision that is taken by the Reserve Bank. I think many Australians will have taken them at their word when they said last week, publicly, that there was no justification for that action at all. And I think the Australian people and the Australian Government would be quite angry with the four majors if they were to move outside the official Reserve Bank cycle. Thanks.
