NEOS KOSMOS- NOVEMBER 3, 2008.

A NOTORIOUS PHILHELLENE

Alexandros Logothesis

The Leader of the Opposition, Malcolm Turnbull, spoke warmly about the contribution of the Greek community in Australia and clearly signalled a new era for the Coalition's position on multiculturalism. In an exclusive interview with Neos Kosmos last Wednesday, Mr Turnbull confessed that he is a "notorious Philhellene" and shared his imposing and detailed historical knowledge of all things Greek.
The leader of the Coalition also talked extensively about one of Australia 's greatest strengths, "its cultural diversity".
Turnbull explained why the Opposition has shifted positions from originally supporting to currently criticising the government's unlimited bank deposit guarantee measure. He underscored the Coalition's initiative for an immediate increase of old age pensions while pointing out the need for a major overhaul of the present system.

Mr Turnbull reaffirmed his commitment to the bipartisan position in regards to the naming issue of the Former Yugoslav Republic of Macedonia and shared his cautious optimism for a breakthrough in the new round of talks in Cyprus .

Would you attribute the current economic crisis on 'extreme capitalism' as PM Kevin Rudd has suggested?
What does extreme capitalism mean? The origins of this global financial crisis actually lie in something which is not new at all, which is essentially... banks and other institutions in America lending too much money to too many people who didn't have the capacity to repay the loans. That's what basically went wrong.

These securities... these dud loans... as they turned out to be looked great as long as [home] prices kept rising... if you give a person with no money a loan to buy a house, its a reckless thing to do, but if the house doubles in value you get repaid and he's happy and everyone's happy. So essentially this was founded on poor lending practices and a property bubble.

But, then the securities got sliced and diced and turned into derivatives that found themselves on the balance sheets of banks all around the world.

This undermined confidence... banks stopped lending to each other and you got what is now called the global financial crisis. A better term for this could be a global credit freeze, or a global credit crisis. And as far as capitalism is concerned, you got to remember there are a lot of aspects of regulation and government activity in the United States that contributed to this.

There are a lot of programs in America that effectively compel banks to lend money to people, typically from minorities who wouldn't normally be lent money, we don't have [in Australia] any counterpart to that... you have these big government sponsored enterprises, Fannie Mae and Freddie Mac which were purchasing with the benefit of an implicit government guarantee so many of these mortgages and in effect providing financial backing for what turned out to be very poor practices.
So, the idea that this was the result of laissez-faire capitalism is simply not right. The American governments over a long period of time had interfered and regulated this mortgage market pretty extensively.
Why shouldn't the Australian government provide a 'blanket' bank deposits guarantee scheme?
After all, you initially supported this!

What we did, was to recommend that the guarantee be set at $100,000. And the idea is for a guarantee of that kind to provide comfort to smaller depositors - households small businesses - but not to be so large as to distort the financial and money markets.

That is why deposit guarantees around the world are set at around that level. How does this guarantee distort financial and money markets?

We've heard all about the mortgage funds and the cash management trusts and what happened when you don't have the benefit of guarantees. But let me give you another example. Let's say you're a finance company that provides leasing finance for motor cars...GE. General Electric is one of the biggest companies in the world.

How does it get the money to lend to you to buy a car? It raises what's called commercial paper, in other words, it goes and borrows money from the market and it does it in big licks... millions of dollars. But what has happened, once the government guaranteed all deposits of banks regardless of their size... it means that the smallest credit union in Australia has a higher credit rating than GE does, because it's backed by a government guarantee.
GE's ability to access short term money markets is dramatically reduced. The broader you make the guarantee, the more distortion you create.
And that wasn't necessary. There weren't newspapers writing articles saying Australian banks are going to collapse.
There was a high degree of confidence in our banking system, correctly because it's well regulated and stable. There was clearly a perception for there to be some additional comfort given, principally to ensure that smaller depositors didn't move deposits away from the smaller institutions unnecessarily, because of anxiety.
The deposit guarantee's impact is more psychological than it is financial. So, when the government announced that they were going for the "full thing"... clearly it wasn't our policy... it was quite different from what we had proposed... they said they worked through it in great detail in the closest possible contact with the Reserve Bank... we said all right... we'll go along with that... we'll support that because you're saying you've done your homework you've sat down with the best and the brightest and it turned out that they hadn't done that at all!
Mr Rudd hadn't even spoken to the Reserve Bank and the policy has in any event turned out to be a blunder.
There is no doubt about that! And that is why they have already abandoned it... now they've reduced the guarantee to a cap of $1 million... there are a lot of people arguing that it should be reduced to a figure close to the one we recommended in the first place.
Do you support an immediate increase of the old age pension for both singles and couples? And, how would you fund it?

Any funding has to come out of the budget planning process. It's easy to give the answer depending on the circumstances... governments may be more or less prepared to do it. But, our view is that pensioners have been left behind in the last year or so and that's why we advocated a $30 a week increase in the single aged pension.
What the government has done is that they're making a one-off payment to pensioners both singles and couples which comes to a similar amount as we suggested. So, we're pleased the government has done that and we support that.
Some pensioners have said; "Thank you for making the case for us the government took it up" but we don't seek to claim any credit, we're glad that the pensioners are getting a better deal. For the longer term situation the pension system is being reviewed and while this one-off payment will be very comforting, the pensioners are going to need the reassurance of a more equitable deal going forward.
Given John Howard's reluctance, while in government, to even use the term multiculturalism, what is the Coalition's present position on multiculturalism?

We are a multicultural country. One of our greatest strengths is our diversity.But it wasn't professed in the recent past?

Well I'm not going to debate that, I'll leave you to write about the past. We have a higher percentage in Australia of migrants than any other country in the world, with the exception I believe of Israel where of course all those migrants are Jewish, so they have that in common. We have so much diversity and it is one of our greatest strengths. When you think of how diverse our country is, how rich that diversity is, the benefits it brings us and the fact that we've been able to manage to get along with each other so well...little bits of friction here and there.... but really not very much when you look around the world, it is fantastic! It is one of our greatest achievements. I rejoice and I celebrate the diversity of Australia ! So you wouldn't hesitate, if you come into office, to be using the word multiculturalism?
No! Not at all! But I don't want to get into a debate about semantics, although it's a very Greek thing to do of course. I'm a notorious Philhellene. I rejoice in the fact we have such a strong and vibrant Greek community in Australia .
There's a strong Greek community in my own electorate.
When I go to a Greek Orthodox Church I sit there...
I mean you're carried back to Constantinople .
The robes, the liturgy all have a direct thread right back to Constantinople .
That continuity is so important. Let me give you a very Greek example and this I think might resonate with some of your readers. If you look at, going back centuries, of the most successful, vibrant, prosperous communities in the Mediterranean... you look at Constantinople... you look in more recent times at Smyrna, Alexandria... what did they have in common... diversity, people from every race and background.
I grew up with a friend of mine who had a Greek father that had been brought up in Constantinople and he spoke 7 or 8 languages... his family were in business so he had to.
All of that diversity has been lost.
There are hardly any Greeks left in Constantinople, the Patriarchate struggles to maintain its presence in Turkey , which is a tragedy... you look at Alexandria , that city that was so diverse and quite recently, is no longer diverse.. and of course Smyrna following the catastrophe of 1922... was by far the most prosperous city in Asia Minor and the reason it was prosperous was because it was so culturally diverse.
Diversity, tolerance, cosmopolitanism, all of those things result in a more creative and more prosperous society.
Will you continue the bipartisan support of the official Australian position on the naming of the Former Yugoslav Republic of Macedonia ?

We don't see any need to change that. The policy for the Opposition is the same as the one we had in government and I haven't seen any move from the government to change that.

Have you spoken to Mr Downer since his nomination as UN special envoy for Cyprus ?

Yes I have many times, he's a very close friend of mine. Has he told you something regarding his role that you could relay to us?

Well he hasn't and if he had I wouldn't tell you! What is your take on the the new round of talks on the Cyprus issue?

Alexander Downer is a very capable guy and he'll do well with that, but obviously its not exactly a new problem.
Well last time I spoke to him, without being indiscreet, he had a very positive attitude to it, but I wouldn't want to say more than that.
The UN Secretary General, Ban Ki-moon was very wise in choosing him.