Turnbull's Dream - Part 2

Part 1 | Part 2 | Part 3

Turnbull had a dream and in this dream, he called for a review of his near death experience in winning by only one seat in the election. "when has this happened before in history?" He asked his wise Treasurer Morrison.

Next Turnbull called on the wise men from his party to nominate to become the next Treasurer.  Rather than anoint a replacement he sensibly called for submissions from people who could lay out a one-year plan for Australia, a five-year plan for Australia  and a ten-year plan for Australia.

"How can we get there if we don't know where we are going" yelled Turnbull.  A wise minister was found.

He was called before Turnbull who said "wise Treasurer, I am hearing complaints from local, state and federal coffers that funds are drying up and worse, underemployment has reached 10%.  The citizens are not happy.  Go and find the cause".

The wise Treasurer soon returned with news.  "Mr Prime Minister, Mr Byers two years ago decided to restrict employment in the construction sector." "But" interrupted Turnbull, "the Reserve Bank issued instructions that that sector was to be the job generator in the economy after the mining mirage!"  Turnbull could feel his approval rising!

The new wise Treasurer then counselled "yes, the RBA had its foot on the accelerator but APRA had its foot on the brake and dictated that banks could not expand lending to investors more than 10%.

The now impatient Turnbull interrupted "surely this bone head produced a white paper to justify such an extreme restriction on the economy??"

The wise new Treasurer sadly shook his head.

"Then off with his head" yelled the now dynamic and energised Turnbull. Feeling his approval soaring.

What can our new wise Treasurer do to correct the dilemma?

"Oh wise Turnbull, I have a cunning plan," said the new Treasurer.  "You know that Rudd took our competitive banking situation in 2009 and created a banking monopoly!" Turnbull interrupted "but APRA say it wasn't a monopoly, it was an oligopoly."

The new wise Treasurer was dismissive. "It's the same - as Gail Kelly, CEO of Westpac, said some years ago "we take our direction from Commonwealth Bank" - therefore I call it a monopoly."

An impatient now activated Turnbull said, "what is your cunning plan?"

The Treasurer responded "let's reverse the monopoly.  Let's encourage the non-majors back into supporting safe residential lending.  I propose that the Reserve Bank extend $100 billion credit to the non-majors on the basis that they must lend out at 0.5% cheaper rate than the majors."

Turnbull responded "Oh goody.  This will reverse the favouritism that Rudd gave to the majors at the non-majors expense back in 2009!"

The wise Treasurer responded "I've done even better than that Prime Minister, I've rung the major banks and insisted that they pass on in full, all Reserve Bank deductions since 2009.  I have found that they have been sitting on 1% that should have been in the pockets of the citizens.  Hence they have caused a credit squeeze to our beloved citizens."

Our Prime Minster clapped his hands! By now even the press were applauding this dynamic Turnbull.

Within days the wise Treasurer was swamped by stories from intending borrowers that had been approved by the majors but then suddenly denied finance at the last minute.  In many cases, this had caused them to lose their deposit.

"This is so unfair," said our now beloved Prime Minister.  "What are you going to do about it oh wise Treasurer?"

"Prime Minster, I have dictated that people so treated by the majors can now not be funded by the majors but must first go to the non-majors who will be able to lend to them at the special 0.5% discount that you have granted them, Prime Minster."  The Prime Minister clapped in glee.  He also noticed his approval rating had now reached near record heights.  He was seen as a man of action. The new Treasurer was tempted to say that this increase in popularity was all his work.  He thought better of it and kept his head and position instead.

An amazing thing happened in the property market.  Mothballed developments started to proceed creating jobs and more supply.  As in 2006, 7 and 8 in Melbourne and Sydney, this supply eased the property boom again.  The restrictions of APRA were a distant memory.

To Be Continued….

Written by Kevin Young

Part 1 | Part 2 | Part 3