Government hypocrisy on rate cuts? Take it to the bank

The Prime Minister and his Treasurer are being disingenuous in criticising the big four banks.

Artwork: Eric Lobbecke.

If there is one thing nobody likes it’s a hypocrite. So I’ll leave it for readers to decide if hypocrisy is the right word to describe the government when it comes to its frequent attacks on the banks for not passing on the full interest rate cut when the Reserve Bank recently dropped the cash rate to a historic low of 0.75 per cent.

Scott Morrison accused banks of “profiteering” and called on them to pass on the full cut. He pointedly suggested Australians would judge the banks on their selfish actions. Josh Frydenberg also thumped his chest, issuing similar demands and criticisms.

Bank bashing is nothing new. It has become louder since the Hayne royal commission into financial services. And I certainly have no problem with calling out the banks for not passing on the full cash rate cut. Not passing it on is all about the banks improving their profitability at the expense of their customers.

However, as Coalition MPs called out the banks for not passing on the full cash rate cut, the government failed to pass on any of the recent rate cut in its own loan scheme for pensioners with reverse mortgages.

In fact, the last three times the cash rate has been cut, not once has the government reduced its reverse mortgage rate by even a small amount — all the while criticising the banks when they have passed on at least some of the cuts.

Only politicians could be so brazen as to lash out at the banks for only partially doing something they themselves haven’t done at all, and on three occasions during the past 18 months.

Reverse mortgages are a valuable lending tool, especially for pensioners. The pension often isn’t enough for elderly Australians to live on. The government offers a reverse mortgage scheme that allows pensioners to borrow up to 150 per cent of the annual pension to top up their income. The loan doesn’t have to be repaid immediately, accumulating interest against the value of the pensioner’s home.

The point for paying back the loan generally happens when a deceased estate is being administered. Because Australian property prices are so high, the family home is tax-exempt, and pensioners often are loath to sell up and downsize so the scheme is a great way for them to access equity without selling.

The pension for a single person is a maximum $21,500 a year, so under the reverse mortgage scheme a pensioner could lift their annual income to as much as $50,000 tax-free. So there is no criticising the scheme. But the government is charging pensioners an interest rate of 5.25 per cent, unchanged across the last three cuts to the cash rate.

For context, it is easy for anyone looking for a home loan from one of the big banks now to get a rate below 3 per cent — notwithstanding banks failing to pass on the full cuts. What a bunch of hypocrites politicians are, especially the Prime Minister and the Treasurer, who could have adjusted the rate they charge pensioners in a heartbeat.

Apparently there is a review under way (only because of media scrutiny), which I’m led to believe will adjust the high interest rate, even if it will only be a delayed reaction and almost certainly won’t reflect all three cash rate cuts, much less be backdated. It doesn’t make up for the hypocrisy but it’s better than nothing.

Pensioners accessing the reverse mortgage scheme have had their savings gouged by a government that used fear and loathing at the election in May to frighten them out of voting Labor. The Coalition misrepresented the extent to which Labor’s franking credits policy would apply to them (pensioners were exempt), and outright lied that Labor had plans to introduce death duties. Which is not to say there weren’t problems with Labor’s policy mix. No wonder former Labor leader Bill Shorten took up the cudgels of this issue, using the Federation Chamber in parliament this week to criticise Morrison.

As Ian Henschke from National Seniors Australia told me, the 5.25 per cent rate, unchanged despite reductions in the cash rate — “doesn’t pass the pub test” and is an example of the government building towards its politically needed surplus on the back of pensioners.

On a separate matter, what a week for the Your Right to Know campaign to upscale its attack on the lack of transparency in government. It came as Senate estimates exposed the willingness of ministers to shut down bureaucrats answering questions.

We also saw just how redacted Freedom of Information searches are when journalists get them back from government. Stonewalling about one simple question also continued: did the Prime Minister seek an invitation to the White House state dinner for Hillsong pastor Brian Houston, a man the Royal Commission into Institutional Responses to Child Sexual Abuse criticised for failing to report his father to police for the alleged sexual abuse of children in his church?

The report first emerged in the world’s most respected newspaper, The Wall Street Journal, yet was dismissed as mere “gossip” by Morrison, repeatedly refusing to give a straight answer. When a politician refuses to answer a question, their goal is for journalists to stop asking it so the politician never has to reply. Which is why we need to keep asking. To give up is exactly what Morrison wants. The dogs bark but the caravan moves on most of the time.

Not any more. The stonewalling and refusal to answer questions is the worst I have seen since I started covering politics. It’s the worst across the history of Australian politics I’ve read about and researched as an academic.

When any of us has the temerity to call out misinformation, journalists and commentators are threatened with being “cut off”. Bosses get complaints. I don’t believe the culture of cover-up we are in is hiding wrongdoing. That said, a federal corruption watchdog would help ensure I’m right about that. I simply think the culture of cover-up (and complaining above the heads of anyone who seeks to expose it) is an extension of arrogance: the belief that it’s OK not to answer questions, not to be held to account. This attitude will persist if we don’t keep asking questions. Because elected leaders refusing to answer questions is always newsworthy, in and of itself.

Peter van Onselen is a professor of politics at the University of Western Australia and Griffith University.