Anna Bligh interview on ABC Radio National Breakfast speaking about the banks’ response to the Federal Budget 

16 May 2024

Patricia Karvelas   

Before Tuesday’s federal budget, the big four banks were predicting interest rates to start falling before the end of the year. But in response to what they say is expansionary spending, including tax cuts and billions for renewable energy infrastructure, some economists are changing their tune. Treasurer Jim Chalmers has promised the budget won’t add to inflationary pressures. But will it add more grief to people who can’t actually repay their home loans? That’s a big question that many are asking. Anna Bligh is the CEO of the Australian Banking Association. And she joins us this morning Anna Bligh, welcome. 

Anna Bligh   

Good morning. How are you Patricia? 

Patricia Karvelas   

Good thank you, does this budget make further interest rate rises more likely? 

Anna Bligh   

Well, the art of economics seems to be that of speculation and forecasting Patricia, and there’s plenty of economists out there doing just that, including from within a number of our banks. What you see is some economists falling on the side of this might mean higher interest rates last longer, and others are saying it’s entirely plausible that we’ll see interest rates start to ease by the end of this year. So, I don’t intend to add to the speculation. But one thing we do know is that people who are having trouble with paying their mortgages or any other loan, credit card, anything else, banks are actually standing ready to help them. They are doing very practical things like restructuring people’s loans, reducing payments, going to interest only for a period. So, we wouldn’t want anybody who’s finding it difficult to meet their mortgage payments to be suffering unnecessary financial stress when banks can help them. So regardless of what interest rates do next week, or next month or next year, people who are in financial stress, there is help there at hand. 

Patricia Karvelas   

Do you think this budget is expansionary? 

Anna Bligh   

Patricia, I know you’d love me to answer that question. I’m not an economist. And I don’t tend to add to the speculation because there are plausible scenarios being put forward on all sides of this debate. What we do know is that within about six to 12 months we’re going to know the answer, we won’t have to speculate. Either inflation will go up or it will go down, and interest rates will follow. So, a budget is certainly one thing that contributes to what happens in the economy, however there are many other factors that will play out. You know, six months before Russia invaded Ukraine, nobody could have predicted it. Who knows what will be happening in the global economy and the national economy in the next six months. And there are many factors that will play into the Reserve Bank’s thinking on this issue. So, I know that economists love this speculation but as I said, I’m not an economist, I’m not going to start speculating. 

Patricia Karvelas   

Okay, we know the number of people who aren’t making payments on their loans is growing. Treasury is forecasting cuts worth 0.75% to interest rates over the next two years. That’s their projections. Would that be enough to help people who currently can’t make repayments on their loans? 

Anna Bligh   

Well, first of all, what I’d say is Australians really take their mortgages very seriously. And for most people, it’s the first thing they pay out of their wages every fortnight or every month. So ,what we see in banks at the moment is an incredibly resilient banking book, most Australians making their payments in often quite difficult circumstances. That doesn’t mean though, that they’re not doing that, some sacrifice to a whole lot of other things that can be quite necessary in their lives. And, so any movement in interest rates right now, particularly any movement down, I think would be very welcome. In most households that have a mortgage, when it’s higher people will feel it when it comes down, and I think they’ll really welcome it. In the meantime, though, if they’re struggling, banks have an interest in keeping people in their homes. If people stay and pay off their mortgages, their banks do well and the customer does well, so people who are struggling, and I think the point here is even if your interest rates stay where they are, if they stay at this higher rate for a prolonged or a longer than expected period of time, we would expect to see more households struggling and potentially defaulting on their mortgages. So, people who are worried that that might be about to happen to them, people who have already missed a payment should be talking to their bank now because banks have a very practical toolkit to help and very experienced teams that work with people all the time. There are literally 1000s of Australians who already are on hardship arrangements with their bank. There’s no shame in it. It’s going to be hard to talk about money. But there are 1000s of Australians who’ve already got this assistance. And we encourage others to do it if they need to.  

Patricia Karvelas   

And is it growing? Just give me a state of play. 

Anna Bligh   

Yes, banks are saying two things, an increase in the number of people who are ringing their helpline. Wanting to know what their options are, you know they’re thinking ahead and I guess starting to get worried that they’re finding things more difficult. So, there’s a lot more traffic on helplines. Not all of that is translating into defaults, or people going on to formal hardship arrangements, more that people are wanting to know, gee I’m finding it tough, if I can’t keep stretching what are my options? So I think that’s very encouraging that people are seeking good advice early. But we are also seeing some of that translate into more people moving onto a formal repayment plan with their bank, not in huge numbers we’re not talking about and it’s not an avalanche here. But it is ticking up slightly, it’s starting to get close to where it was before COVID. So, we’re still at pretty low rates. But even 1% of the banking book is a lot of Australians. So, we’re very conscious of that. 

Patricia Karvelas   

Just changing the topic, and another element of the budget, you’ve welcomed the $67 million allocated to fight scams, and $288 million for more secure digital identification. How should this money be used to achieve that? 

Anna Bligh   

Well, very pleasingly we’re starting to see in Australia for the first time, the number, the amount of money being lost to scams by Australians is on the way down. And we’ve achieved that by a lot of work between banks, telecommunication providers, government activity. ASIC, for example, has been using a takedown power to take dodgy financial advertising off platforms so that people don’t get tricked by it. Banks have stopped, or delayed payments to crypto platforms. We’re seeing a lot of activity that’s starting to work on scams, but we really need to keep it up. So, the government has put in place a new body called the National Anti-Scam Centre. Banks welcome the funding that will increase the activity and the capability of that new institution because we know you can’t stop scams by any one part of the system, the system has to work together and it has to be coordinated. A scam comes to you through your SMS, it comes to you via social media, the scammer tricks you to take money out of your bank account and then it escapes the country on something like a crypto platform. So, you need all parties in that chain to cooperate, and you need government to coordinate it and you need good law enforcement as well. So, we’re very, very pleased to see the government taking such a lead and such importance on reducing scams even further. Australia is one of the few countries in the world right now that is seeing the amount of money lost to scams on the decline. We need to keep it up. We can’t afford to take our foot off the accelerator.  

Patricia Karvelas   

Just finally on another issue. Major banks say they are blocking hundreds of 1000s of abusive messages sent to domestic violence victims through online bank transfers. So, they say things like abusers sending one cent transactions to victims with an abusive description attached, which is really disturbing. What else banks doing to address these awful messages? 

Anna Bligh   

I think it would surprise a lot of your listeners, it certainly shocked me when I realized it, and when banks realized how perpetrators were using their platform to further abuse their victims. So, for your listeners, when you make a transfer of funds to a friend, to a relative, to paying a plumber, you know there’s a little place there where you can put in a description. Banks discovered a couple of years ago that there were people who were using that ability literally to transfer one cent maybe 20, 30, 40 times a day. The only purpose of transferring that one cent was to use the platform as a vehicle of abuse and some of the messages are horrifying. You know, they’re life threatening. They’re coercive, they’re intimidating. This is the kind of lengths that some perpetrators will go to. A woman who leaves a violent situation can change her phone number, she can change her email, she can change her social media tags but if she relies, for example, on child support, then she does have to keep a bank account that her spouse knows the number of. So, banks have changed their terms and conditions. The bank that discovered this, thankfully shared it with all the other banks and everybody has now taken action to change their terms and conditions, and to say if you use our platform for abusive purposes, we can see it, and we can basically suspend your bank account. They’ve done that in a number of cases. One of our banks says they get about 15,000 of these messages a month, that’s for one bank. So, it’s quite astonishing that people are doing this. There’s also a trial now with one of our banks and the New South Wales Police Service, looking at how these messages might better be used by police with the consent of the woman to identify very, very high risk behavior, and to use these messages as evidence in the courts to stop the perpetrator before things get to something that might be literally deadly. So, you know, 10 years ago, people wouldn’t have thought that banks were involved in this issue at all, but actually, financial abuse is one of the ways, it’s the very frontline if you’re controlling someone’s finances. Financial abuse can be the reason why a woman stays, or why she goes back after having had the courage to leave. So, banks have got training packages for their staff, they’re using algorithms to identify disturbing and difficult behavior. 

Patricia Karvelas   

Anna Bligh, thank you so much for joining us this morning. 

Anna Bligh   

Thank you very much, Patricia. 

Patricia Karvelas   

That’s the CEO of the Australian Banking Association, Anna Bligh, and you’re listening to RN breakfast.