Treasurer Swan, Coalition Exchange Barbs over ANZ Rate Hike
The Coalition says Australian banks were merely laying out policies that would shield their profit margins as Australia & New Zealand Banking Group (ANZ) decided on Friday last week to push up its interest rate, again ignoring the April rates hold announced by the Reserve Bank of Australia (RBA).
The six basis points jump on its standard variable mortgage rates, leaving it at 7.42 percent, takes effect on April 20, according to ANZ officials, adding that the move will serve as its firewall against the onslaught of rising funding costs.
ANZ's upcoming rate hike will put the bank in line with its nearest competitors - the three remaining members of the country's so-called four pillars of the banking industry namely the Commonwealth Bank of Australia (CBA), National Australia Bank (NAB) and Westpac.
The three had recently rolled out rates above the seven percent mark, way beyond the benchmark level of 4.25 percent imposed by the central bank since December last year, though experts said these rates could possibly move up again soon.
Yet according to opposition finance spokesman Andrew Robb, ANZ and its peers in the industry were merely reacting on the existing threats posed by deposit costs and increasing wholesale funding.
Short of saying that the Big Four were justified on rolling out rates outside of the cash rate policies of the central bank, Robb instead blamed Federal Treasurer Wayne Swan and the Labor-led government for mishandling the economy.
"The fact of the matter is that it's his (Swan) government that has put this pressure on interest rates which actually increases the cost of money," Robb told ABC during an interview on Monday.
He scored Swan's insistence on delivering the budget surplus at any cost which in turn brings more pressure on the local economy and leaves many sectors dealing with serious problems, chief of them is the banking industry.
The banks' actions, Robb said, were reflective of the true state of the economy.
"They're not stupid, and I don't think they would willy-nilly put up their margin like this if they weren't suffering a problem with their margins," he stressed.
Swan, however, said that Robb's declarations effectively betrayed the stance of the Coalition in the matter, that is in defence of the interests of the country's major banks, which have been raking in huge profits year after year.
The Treasurer added that he was not surprise by Robb's declaration, who he noted was one of the major economic managers that presided over the imposition of high interest rates during the Liberal government of former Prime Minister John Howard.
"Andrew Robb is out there going into bat for a huge bank over struggling families ... So it's no wonder he has no idea of what rate rises mean for families and small businesses," Swan told the Australian Associated Press (AAP) on Monday.
Earlier, he assailed ANZ for rolling out the rate hike, which he said would only earn the wrath of Australian households and small businesses.
Swan stressed that the move was completely unjustified following ANZ's recent announcement of substantial windfalls and job cuts.
Meanwhile, the federal government has expressed optimism that the interest rate movements will soon reflect the positive impacts of the promised budget surplus once it becomes a reality.
In an interview with ABC, Trade Minister Craig Emerson is hopeful that confidence among small businesses and home loan borrowers should be propped up in an economic environment that operates without deficit concerns.
"We want to create the capacity for the Reserve Bank to further reduce its cash rate," Emerson said.