On the QT: The Region is Exhausted

Well it is not often that the star performer of the day is Joe Hockey and the one over-reaching is Malcolm Turnbull, but today was that day. Do not worry however, for the world is not upside down – Barnaby Joyce was there to restore order.

Turnbull in attempting to sell his NBN cost benefit productivity commission Private Members bill said:

"I have not met anyone in the telecommunications sector who has not said this project will be anything other than thoroughly reckless and imprudent."

Really? Not one? I guess that is why everyone in the telecommunications sector is jumping over themselves to bag the whole thing. Still at least he didn’t actually say what was in the headline of the story:

NBN a conspiracy against taxpayers, warns Turnbull

Now if he had said that, I’d be sending a nice tin-foil hat, Express Post, Point Piper way. The actual quote was:

He said many industry sectors that support the scheme did so because they had vested interests as suppliers or potential users.

"You run the risk of a conspiracy against the taxpayers, where everybody has an interest in something that is bad for the taxpayers and nobody says no,

So he wasn’t actually saying the NBN was a conspiracy – he wasn’t even warning that it was one. What he was saying that there was a risk it could become one. But hey, who needs accuracy in a headline?

Joe Hockey on the other hand, having had such a good time of it dealing with the media last week, this week gave a speech to the Australian Industry Group that allowed him to make his own headline:

ADDRESS TO THE AUSTRALIAN INDUSTRY GROUP ANNUAL NATIONAL FORUM - CANBERRA

Ok, not exactly a barn burner, but the speech was excellent. Unlike last week where he got confused and befuddled and vague on the issue of bank reform, here he had a message to sell and he sold it well.

He noted what is without doubt the number one reason why banks may increase the mortgage rate above the increase of the RBA’s cash rate – competition.

And more broadly, the ACCC [due to the Global Financial Crisis] waived through mergers of lenders it would never ordinarily permit, as it has acknowledged.

These actions have irreversibly changed our financial landscape. Once truly independent concerns, such as:

·        St George,
·        BankWest,
·        RAMS, and
·        Wizard, are now gone.

That iconic brand, Aussie Home Loans, is now one-third owned, and wholly funded by, Australia’s largest bank, CBA. And what was Australia’s biggest non-bank lender, Challenger, has divested its lending business to NAB. In short, the four major banks have largely become the Australian financial system. I should add in there the fact that major international players who have reduced their activities in Australia has also contributed to the reduction of competition.

That is a huge shakeup, and you don’t need a PhD in Economics to understand what impact it has had. Hockey then came up with nine areas for the Parliament to examine – the five that I thought most of interest (but they all deserve an examination) were:

1.      Let’s give the ACCC power to investigate collusive price signalling (that is, oligopolistic behaviour), which is exactly what Graeme Samuel has called for;

2.      Let’s encourage APRA to investigate whether the major banks are taking on unnecessary risks in the name of trying to maximise short-term returns that conflict with the preferences of those that backstop the system, namely taxpayers;

3.      Let’s formally mandate the RBA to publish regular—rather than irregular—reporting on bank net interest margins, returns on equity, and profitability so that we can all determine whether the major banks are extracting monopolistic profits; that is, whether taxpayers are effectively subsidising supernormal returns;

4.      Let’s investigate David Murray’s proposal for Aussie Post to make its 3,800 branches available as distribution channels for smaller lenders. To be clear, the Coalition does not endorse Australia Post assuming balance-sheet risk and getting into the banking business itself;

5.      Let’s ask the Treasury and the RBA to investigate ways to further improve the liquidity of the residential and commercial mortgage backed securities markets, which are an alternate source of funding for smaller lenders, including consideration of the Coalition proposal to extend the Government’s credit rating to AAA rated commercial paper in those markets to improve liquidity;

The others get a bit financially wonk-loving, sop have a look on his site if you want to find them. But these five are all pretty good, and worth considering.

• Number 1 seems smart – if there is no collusive price signalling, then there should be no problem
• Number 2 again is one that I am surprised the ALP would be against – do we really want our banks taking on unnecessary risks?
• Number 3, for example, seems a no brainer – more data is always good.
• Number 4 I think this is a smart function for Australia Post to undertake, and
• Number 5 I’d be pretty sure Treasury are already doing – I’d doubt Treasury and the RBA are ever not investigating such things, but if not, it again seems sensible.

Maybe they are silly ideas, but if so they’re going to need a better reply than that given by Bill Shorten in Question Time today.  

In response to a Dorothy Dixer on the issue, Shorten went well over the top talking about overseas investors and confidence and interest rates etc. It was a shame. The ALP should be cracking open the champagne now that the Liberal Party have finally got on board serious reform of the financial system. They have in effect given the ALP a green light to try on a few things that will limit the profits of the big banks. The ALP through Swan and Shorten should not be rubbishing Hockey, they should be standing up at the Dispatch Box and saying, welcome to the party, glad you could finally make it.

Hockey has some good ideas here – Labor should be smart and quickly own them. Hockey wants a fight on this – he wants to be the friend of the little guy, the one who stood up to the banks, while the Labor Party defended the big end of town. Instead Labor should get into bed with Hockey, steal the covers, give him a nudge and before he knows it he’ll be on the floor.

Last week knocking down Hockey was easy – he did the hard work himself, all he needed was a push. But today his ideas warrant respect – and even better, they warrant stealing…

The opposition in Question Time, unfortunately did not follow up Hockey’s good work done in the morning (perhaps suggesting he does not have much sway in tactics’ committee?), instead they focused on asylum seekers (yes, I will now pause while you all get your jaws from back off the floor).

Abbott wanted Temporary Protection Visas brought back (of course he does). That they didn’t work and only served to encourage more families to come by boats never seem to concern Abbott or any of the Liberals.

The reason of course the Libs want to focus on this can be seen in the result of an Essential Media Poll today, When asked about asylum seekers here is the response:

Yep, even 49 per cent of Labor voters think the APL is “too soft”

And then on this latest policy of moving children out of detention centres (yes, children), here is the result:

What can you say, really? Fifty three per cent. are opposed. Twenty-nine per cent are strongly opposed to the policy. 

There’s a lot of anger out there, and do you think Tony Abbott is going to like that go unfuelled?

But Temporary Protection Visas and detention centres were not the big issue of the day. No not even Jamie Briggs being the staunch defender of the views of 500 odd people in Woodside who got blanket coverage in the media was the big issue.

Today’s big issue was the proposed East Timor processing centre, and just what constitutes “the region”.

This whole thing flowed from Julie Bishop’s line last week in Question Time, but more so from a response in Senate Estimates last week. At least the Libs are using Estimates to generate some questions, even if they are pretty well having to verbal the Departmental officials to get something.

Bishop asked Gillard:

I refer the Prime Minister to the statement by he secretary for the Department of Immigration [Mr Andrew Metcalfe] in Senate Estimates that it is the Government’s intention to draw asylum seekers into her proposed regional processing centre in East Timor from, and I quote, “beyond the region”. How many of the 18 million defined by the UN High Commissioner for refugees as a population of concern beyond the Asia –Pacific will be eligible to be transferred to the Prime Minister regional processing centre.

First off, it is good to see Bishop acknowledge there are over 18 million refugees out there – so yes, we really should worry about our 5,000. Here is the exchange Bishop refers to:

Senator CASH—Seeing that we know what we would like, has any consideration been given to the thousands of people in camps on the Thailand-Burma border and whether or not they would be transferred to the regional processing centre?

Mr Metcalfe—We have largely been thinking about people who come from beyond the region and who move through the region. We are not talking about the fact that there are, of course, thousands of displaced people in the Asia-Pacific region. This is very much around the people who have been seeking to come to Australia. It is about people moving in an irregular fashion from outside this part of the world—Afghanistan, the Middle East, Sri Lanka—and who are moving through this region primarily with the objective of seeking asylum in a developed Western country.

Metcalfe is acknowledging that as the Bali process involves countries including Afghanistan (in fact about 44 countries) they are currently considering how that would work. But here is the crucial thing that the Libs are ignoring, and which the ALP hasn't publicised enough:

Senator CASH—How do you understand a regional processing centre will differ from a centre on Christmas Island?

Mr Metcalfe—Firstly, it is not in Australia. Secondly, it would be a place where people could be sent, thus denying people the opportunity to come to Australia. Thirdly, it is a place where we would hope a range of resettlement countries would assist in meeting the needs of refugees, rather than people simply being resettled in Australia, which is what happens for people who make it to Australia or what happened to people who went to Nauru.

The Libs (as I guess is their right) are attempting to suggest East Timor will be a fast track to settlement in Australia. It will not.

There were six questions to Gillard on this issue (including the detention centre and TPV ones), and she did not really nail the opposition on this important point – East Timor is NOT just another Christmas Island. The ALP are fighting against the type of public opinion on this. They will need to not only hold their nerve – they will also need to explain again and again and (sigh ) again their policy.

***

And so now over to the Senate and the debate on Afghanistan. Barnaby Joyce stepped up to the plate, to give us his wisdom. Firstly he gave us his expertise of the area:

Just the other day in flying back from Europe I flew over Afghanistan. I went to a section of the plane where I could stare out of a window at the countryside that was beneath me. What a wild, rugged and diverse place Afghanistan is.

Yep – her flew over and stared out the window at the place. Seriously.

But the golden moment of Joyce’s speech was when he indulged in some historical analysis:

When people talk about protracted battles and say that Vietnam was a failure, I do not believe that; I think Vietnam was a success. We tied up the resources of the Communist insurgents in such a way over such a long period of time that it exhausted them of their energy and of their capacity to continue.

Yes, I guess in 1975, when the North Vietnamese Army rolled into Saigon, the US must have just decided they had exhausted the enemy’s resources enough. That Vietnamese Army was then so exhausted it went on to defeat the Khmer Rouge and then China. Good to see Joyce is hoping we have such a similar outcome.

Anyone worried that the Senate will decline in idiocy when Stephen Fielding leaves, need not be concerned.