Tuesday, October 21, 2008

On the QT: Malcolm's a Cottees Kid

Today was perhaps the best QT of the year - the opposition thought it had a winning strategy, and Rudd thought he had a winning response. It was also in some way highlighted everything that is good and bad about Turnbull's performance as opposition leader.

It all stemmed from a report in The Australian this morning which suggested the Governor of the Reserve Bank was not in favour of the Government's decision to guarantee 100% of all bank deposits. This did not square with Kevin Rudd's assertion in Parliament last week that the decision was made with advice from Australia's financial regulators (of which the RBA is the big one).

And so Turnbull put on his lawyers cloak and proceeded to cross examine Rudd in QT. He first up asked if the RBA had recommended that the deposit guarantee be unlimited.

Rudd responded with his line of the year - that Turnbull "had been out there today hyperventilating like a kid on red cordial". Rudd then stated that the decision was made on the advice of the Secretary of the Treasury who had said it was also the advice of the regulators.

It was a pointed shift - from seeming as though Rudd had got direct advice from the Governor Glenn Stevens, to it now being that the Sec of the Treasury (Ken Henry) had told the Strategic and Budget Committee of Cabinet that the RBA supported the measure.

Turnbull went into full-on QC mode asking next if the PM had talked to Glenn Stevens before taking the decision. Rudd said no - and he stated very clearly that at the Strategic and Budget Committee of the Cabinet meeting he "explicitly put the question to the Secretary of the Treasury, 'Is the position being recommended here that of the regulators, he [Henry] answered, "It was (and that includes the Reserve Bank)".

And so Turnbull kept on about whether the Governor had provided advice, did the Government seek his explicit advice, how did it square with earlier statements made etc etc.

It was all nice stuff from Turnbull if Parliament was a court of law. Unfortunately for him, he missed the whole point of the debate. The debate should not be whether or not Glenn Stevens provided advice, but whether or not the guarantee should cover all deposits, or only some.

The other problem for Turnbull is that this morning Glenn Stevens said in a speech:

“The Australian Government has announced a general guarantee of deposits, as a precaution to allay any public anxiety over security of their savings. It has also decided to offer to guarantee wholesale debt obligations of Australian authorised deposit-takers and authorised Australian subsidiaries of foreign banks, on commercial terms.

"This will ensure that Australian institutions, some of which are among the highest rated of the world's banks, are able to retain adequate access to term funding in an environment where banks of other countries are able, in effect, to use the rating of their governments when borrowing.

"Steps in these directions, in the context of what other countries were doing, were sensible and the RBA supported them. As is also the case in other countries, the design features of the various guarantees will be important.”

So the RBA is in favour of guarantee, and thus Turnbull's argument in QT was reduced to what did Rudd saying the RBA recommended mean - was it enough for the Secretary of the Treasury to say they did (and remember Ken Henry is a member of the RBA board), or did Rudd need to have spoken to Glenn Stevens in person.

What this meant is that by the end of QT, Turnbull was virtually calling for the resignation of Ken Henry on the basis that he may have lied to the Cabinet Committee.

Now, geez, talk about getting led astray. I don't know if Rudd put out his first response knowing that Turnbull would prick up his ears and think "Gotcha!" but if he did, it was beautifully done. Because it meant Turnbull wasted the whole QT on a point about which most in the public couldn't give a damn. No one cares if Glenn Stevens did or did not advise Rudd directly, they care about (perhaps) if he agrees with it, and more than that, whether it will work.

Turnbull asked no questions which examined the validity of the decision, just whether or not Rudd was right to say he had acted on advice.

As a series of legal questions they were excellent (if overly pompous), but as politics, they were incredibly dumb, and they allowed Rudd to perform brilliantly - because he was able to focus wholly on the fact the Government was doing something in a crisis (and reinforcing that he was a man of decisions), and also gave him a chance to get hairy chested about the confidence he had in Ken Henry. In fact by the end the whole point of QT seemed to be whether or not Ken Henry told the truth to Cabinet - and I don't need to say that 99% of the population couldn't give a stuff who Ken Henry is, or what he says to Rudd (and especially so, when it seems he has told the truth).

Malcolm Turnbull is a fine lawyer, but he is no politician - he is too interested in differences in the meanings of words instead of differences in policies.

The problem for Turnbull is last week he said the Government's economic stimulus package could reduce the falls in interest rates. Since then the CBA, NAB, ANZ and today Westpac have all dropped their rates. That's what the public cares about.

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