Thursday, August 14, 2014
Commonwealth Bank boss Ian Narev signals need for gov't compromise on budget woes; warns uncertainty not helping business and consumer confidence
The chief executive of the Commonwealth Bank has weighed in with advice on the government's budget woes, signalling compromise might ultimately be necessary.
Ian Narev has told the "AM" program that the Prime Minister and Treasurer need to be pragmatic about what spending and cost-cutting measures will make it through the Senate.
Mr Narev says while the government's controversial paid parent leave policy "is ultimately a political judgement", in the eyes of voters it was a key part of Tony Abbott's election mandate.
"By and large, I think when people elect politicians they understand they stand for certain policies but we've also got to be pragmatic and understand that in a certain political environment that governments need to make compromises," Mr Narev said.
But Mr Narev rejected suggestions that a review of all budget measures in the form of a mini budget might be necessary to reset the debate.
"I'm not sure a mini budget is the answer. The Treasurer can make his own judgement on that. He has outlined what we consider to be a very appropriate high level vision which is to say over the medium to long term you need a government which is fiscally responsible," Mr Narev said.
"In order to achieve that, there's a series of policies that need to be passed showing where the allocation of that is going to happen in terms of cost cutting or revenue raising.
"That is a big political challenge in the context of the current makeup of the Senate."
Mr Narev also warned that the uncertainly surrounding elements of the budget had the potential to harm business and consumer confidence.
"It doesn't help. But there's no doubt that to the extent we can get a very clear medium to long term policy picture of the environment, that most be good for confidence.
"The budget is a challenge. We've got a lot of a lot of political tensions still in Canberra, there's a lot of debate around individual policies and it is a tough time to be the government."
Mr Narev, who was speaking after the CBA revealed a full year net profit on $8.63 billion, said the government needed consider how its budget problems might be viewed by international ratings agencies.
Last week, respected economist Saul Eslake warned that a failure to get the budget deficit below $3 billion as forecast by 2017-18 could put Australia's AAA credit rating in the spotlight.
"He (Mr Hockey) has outlined that he feels that is a risk and I think there's no doubt that there is a risk," Mr Narev told AM.
"The idea of getting the fiscal balance sheet to the point where it is in balance has got to be a critical part of the economic vision.
"The ratings agencies in the long term are some of the important stakeholders you've got to bear in mind."