28/06/2011
The European debt crisis, the genuineness of NAB's "breaking-up with the other banks" campaign, and the superiority of a carbon tax over direct action, were the key topics touched on by NAB Managing Director Cameron Clyne in a wide ranging interview at a recent CEDA event in Melbourne.
Mr Clyne said the Greece situation was interesting because it was difficult to know if it was a 'business as usual' crisis as part of negotiations for the bail-out package or a real crisis of systemic global significance.
While he said it was generally agreed Greece in its own right was not likely to have a significant impact on the global economy, the counterpart impact was of significant concern.
However, Mr Clyne said while the situation was fragile, he was optimistic a solution could be found.
On the resources boom in Australia, Mr Clyne said that he subscribed to the view that it would be a long-term boom that would run for some time and, coupled with demand out of Asia, would have very positive implications for Australia.
However, he said the boom did present some near and long term challenges.
In the near term he said that was presenting as a high Australian dollar, causing some industries to suffer and a structural readjustment of our economy.
On the threat of mineral investment in places like Africa reducing the length of our resources boom, he said they generally considered it a 30 year plus proposition before that would have any impact.
On climate policy, Mr Clyne said of the two options on the table - direct action or a carbon tax then ETS - the carbon tax was better.
"If you're looking for a purely economic assessment, the carbon tax is economically superior to direct action…it will drive investment and certainty," he said. "And we do need to see certainty because investment is not flowing into that sector."
When asked if the Reserve Bank should raise interest rates Mr Clyne used the question as an opportunity to highlight concerns with the new bank regulations.
"Several months ago I'd have happily answered that but with the new price signaling legislation we don't have a transparent conversation about those things so I don't know what the reserve bank should do."
There should be real scrutiny of pricing decisions and I should be held accountable for explaining pricing decisions above the reserve bank, he explained. However, the new legislation provides a reason not to talk.
On questioning about NAB's genuineness about competition and "breaking-up with the other banks" campaign, Mr Clyne said it was the real deal.
While he highlighted that it was a strategic move by NAB to increase their share of the retail banking market, he said it was also about ensuring industry acted first, so that Government did not need to intervene with more regulation around competition.
Mr Clyne said he rejected claims their approach had destroyed industry profitability and it was actually about saving industry profitability by acting before government.
There was a perception in the community that there wasn't competition in banking and that needed to be addressed, he said.
"This took many years in planning; we didn't wake up on February 14 and decide we wanted to break up," he said.
"Government's intervene where they see opportunity and a strong sense of community concern and where the industry that is generating that concern is not actually responding.
"When (government) tend to respond they use blunt instruments and those instruments are the only ones at their disposal."
If you're deaf to concerns of consumers all you're doing is inviting government intervention as we've seen in other markets, he said.
He said the result was that while there had been some government intervention at the fringes there had been little intervention necessary.
Click here for the full audio.