NAB CEO Andrew Irvine spoke to 3AW host Tom Elliott on Monday 14 October on topics including housing, interest rates and the economy. The full transcript is below.

***Check script against delivery***

Tom Elliot (TE): Well, banking is one of those industries if you like that all of us are touched by. It is impossible to survive in the modern economy without having a bank account. It’s like not having a mobile phone or saying I’ll never buy groceries from the supermarket. It’s just something that most of us have to do. Our next guest was appointed CEO of the National Australia Bank six months ago. Andrew Irvine, good morning.

Andrew Irvine (AI): Good morning, Tom. How are you?

TE: Thank you so much for joining us. I’m well. Now bank branches, I mentioned Bank of Melbourne, which has nothing to do with you of course, but they’re shutting down it seems almost all of their branches. Do you intend to keep all of yours open?

AI: Well, I can tell you that I personally think branches are an essential part of the banking proposition and I think we’re gonna have branches for a very long time to come. In the six months I’ve been CEO, I haven’t shut a branch. And we’re just taking a good look at how we want to set ourselves up for the future. The challenge, of course, is that more people are doing their banking digitally today and fewer people are going in the branches. So as a steward of our resources, we have to look at putting them where our facilities are being used.

TE: Wasn’t there an issue just a few months ago, I think it was Armaguard was going broke and suddenly we faced the very real issue of not having a safe and reliable way to transport cash around. Has that been sorted out?

AI: It has been, thankfully, as one of my roles as the CEO of NAB for the next two years I’m also the chair of the Australian Banking Association. So I’ve been having to deal with that matter specifically, and thankfully, at least for the next year, it’s been solved and we’re working with Armaguard so that we can put them on a stable foundation so that there’s no questions around cash going forward. The challenge for them has been there’s fewer people using cash so they’re making less money in their business. That’s the issue.

TE: Yeah. Because I mean, you sort of just take it as granted that cash can go from A to B, but someone’s gotta carry it. It’s gotta be proof against robbery and all the rest of it. Interest rates. Now I know the Reserve Bank sets the sort of basic rate of interest and you price all your loan products from home loans to term deposits to credit cards off that. Do you think there’s a chance they might fall in the new year?

AI: Yeah, we do. Our economists’ view is that February or March is the most likely time for the first rate cut. There’s some people thinking it will happen this year. I don’t think that’s going to happen. Inflation is still there. It’s proving sticky, particularly on the services side and that’s what the Reserve Bank’s looking to get under control. So we think Feb, March next year.

TE: Do you think lifting interest rates is actually the right way to try and cut inflation? I mean for example, two of the biggest issues households face at the moment are grocery prices and there’s an inquiry into that. And of course petrol prices, which are forecast to rise again. Now neither of those is really directly affected by interest rates. So I know it’s the only tool the Reserve Bank has, but is it the right tool to try and combat inflation?

AI: I think it’s difficult, is what I would say. It’s the only tool the Reserve Bank has and what they’re trying to do is match supply and demand and their view was that we still had excess demand and insufficient supply in the economy that made price rises higher. And so I think we’re getting closer to equilibrium there. But look, it’s a blunt tool, there’s no doubt about it.

TE: And how is the economy going? I mean, I looked at some figures over the weekend, which suggest that on a per capita basis per person, we’ve been in recession for 18 months and that’s why most people sort of look at their pay pack and say, wow, I can’t buy as much of this now as what I could a year or two ago. So although the government won’t call it a recession, per person it is a recession. Are there any signs that that’s improving?

AI: Yeah. Look, the challenge we’ve got in Australia is it’s a big country and they’re actually pretty big regional divides. Southeast Australia and Victoria in particular is doing it toughest. There are other areas of the country, WA and Queensland, doing quite a bit better. Then you’re right to say that we’ve also had significant net migration into the country and if you were to add all that together, we would be in a bit of a per capita downturn.

TE: Why is Victoria struggling?

AI: A couple of reasons. One, we’re more correlated to domestic demand, we’re less resource intensive. So states that get more stuff out of the ground or are more agriculture focused are doing relatively better, whereas our economy is skewed a bit more to consumption. And therefore is more impacted by interest rates than some other states.

TE: Is the government doing a good job down here?

AI: Look, I think the challenge that we’ve got in Victoria is that as a result of COVID, the state’s got a tonne of debt and they now are looking at how they can build a set of policies to get us out of it. My personal view is that you can’t spend or tax your way out of the problem. The economy here in Victoria has to grow its way out of the problem. That’s the only solution here and so we need to have a state-based economy that’s attractive where people want to live and work and where businesses want to hire people.

TE: So how do we do that? I mean, it’s great to say yes, we need to grow our way out. In fact, the Victorian treasurer, Tim Pallas wants to do the same thing, but how do we do it?

AI: I think you gotta have an economy that’s attractive for businesses to wanna locate and hire more people. So you gotta look at the ultimate level of taxation and in some areas, I think it’s too high.

TE: I mean, you’re obviously English by your accent. You’ve come to live here in Australia. You’re living here in Melbourne.

AI: That’s right.

TE: So have you found that it’s a good place to live in and a good place to work and a good place to do business?

AI: Yeah. Melbourne’s a wonderful city and for many years I think it was either first or certainly in the top three cities in the world in which to live in pre-COVID. We’ve had a tough few years, but there’s, you know, ultimately this is a wonderful country, wonderful city and my family and I are loving living here.

TE: Now the housing market, there’s evidence, anecdotal from real estate agents, a lot of landlords in particular are selling up. They say land tax is too high. You know, the state government takes all the land tax is almost equal to the rent. There’s no point in being a property investor. Are you seeing that with your loan figures?

AI: Look, on housing the biggest issue that we have in Victoria and across the country is too little housing is getting built. We’re building fewer houses today than we have in the last 20 years.

TE: Well just on that, there was some numbers out this morning suggesting that the government’s got a annual target or quota of 80,000 new homes right in the year to come. We’ll be lucky to build 45,000, so only slightly more than half. I mean, I mean that’s a significant problem.

AI: Yeah, this is, in my opinion, the single biggest policy challenge in the country, period. We’ve gotta be building more houses. And, you know, when I talk to our clients, the developers and builders, there’s a plethora of issues. They’ll say it’s too damn hard to get planning approval, it takes too long, and by the way, when it’s too hard and too long, that makes it expensive and we pay. In this state, taxation is too high. I think the cost of building a dwelling, something like 45% of the cost of the dwelling is tax.

TE: Tax and charges is yeah… So I’ve spoken to a property developer 10 years ago back then said it was 35 to 40%, so it’s even more and I mean, seems to me if governments wanna bemoan the cost of housing well reducing the taxes and charges on housing might be a good place to start.

AI: They’re passed on to everyone, so I think that’s something we gotta look at. We also need more of our incoming migrants being in the trades. I think we brought in something like 700,000 people to Australia last year and the stats I’ve seen say only about 10,000 of those had trade skills.

TE: So we should look at people who actually know how to build houses or the various trades that go into building a house.

AI:100% we’ve just got too few of those people with those skills in the country and that’s a problem.

TE: Can I ask you another thing? I’m in the process of switching banks. As I mentioned, the Bank of Melbourne and I’m switching to its parent company, which is Westpac who I’ve never banked with before. They’ve been fine. I mean, they’re trying to help me with it, but it’s an extraordinarily difficult process. All your direct debits have gotta come over. You’ve got gotta used to, you know, if you billed people for things, you gotta change your details. You gotta redo everybody’s payment details like it’s taken me 3 weeks and it’s not done yet. Is there a way to make it easier to switch banks? I mean, often the federal treasurer will say, oh, well, if you want the best home loan shop around. But my experience is that if you switch your loan and all your other accounts from one bank to another bank, it’s like a torturous process. Can we do something about that?

AI: Well my view is it’s not as hard as you’re making out, Tom. You can open a bank account with us in minutes online. We can give you a simple digital form to send to your employer to put your pay check in. I think it’s pretty easy, but if you wanna give us a try, join the NAB. We’ll look after you.

TE: Sure, the people at Westpac could be pleased to hear about that. Andrew Irvine is going to stick around, he is the newly appointed CEO of the National Australia Bank. If you’d like to ask him a question, just quickly I read in the paper today that you’re  banning booze at staff functions. That’s gonna make for a pretty sober Christmas party isn’t it?

AI: Yeah, I don’t know where that one came from, must be a slow news day.

TE: Is it not true?

AI: There’s been no substantial changes to our alcohol policy at all.

TE: Do you have like a limited number of drinks at the Christmas party? Like, no one has more than two or three?

AI: No. Our policy is pretty clear. We just want people to be responsible and have a safe workplace, but we’re not telling people what they can or can’t do with regard to alcohol consumption. Just be responsible.

TE: Have you picked an AFL team yet?

AI: I have and I didn’t do great. I’m a demons fan. Yeah. Tough sledding.

TE: Alright, come join us 133693. Your banking questions answered at 9.19am.

TE: It is 9.22am. The CEO of the National Australia Bank, Andrew Irvine, is with us. And Andrew, we talked about bank branches and you’ve said that in your six months running and you haven’t closed a single branch and is the idea to keep the existing branches open?

AI: As long as they’re busy, that’s the view I have and I’m looking at. Look, I’ve got branches where there is no one in there, I think we’ll have to have a question. But if the branches are busy, we’ll keep them open. Absolutely.

TE: Because Kim said here it’s like chicken and egg. She sent us an email at mornings@3aw.com.au. She’s says as branches get closed. This is a general thing, not just the NAB. People are forced to go online and you know the implication is that’s what bank CEO’s really want, that you would prefer people to do their banking online than in branch?

AI: Ohh, I’m not sure that’s how I think about it. I want people using our services across the board. You know for me the best customer is someone that uses your digital solutions, but also someone that we know personally and we have a relationship with.

TE: Let’s get to a few calls. Frank joins us, Frank, go ahead.

Caller: Good morning, Tom and Andrew. Andrew, I live on the Bellarine Peninsula near Port Arlington, my closest branch is 30 kilometres away and when I do get to a branch, the queue is 2 miles long. It takes me over 3/4 an hour, half an hour to see a teller. I tried using the post office but you can’t get more than $2000 a day out of them. So yeah, it’s hopeless, I’m considering changing banks to the Bendigo.

TE: Well, postal banking, Australia Post is shutting a lot of outlets too, and that that was sort of like considered the answer to bank branches being closed. But is it?

AI: Well, we’re working with the post office right now. I’d love to see the post office have the same limits that we would have in any of our personal NAB branches. So I think it’s $10,000 and obviously we’re working with them on how we could enable that. They’re 3500 post offices around the country and you know having banker posts available in all those locations, I think it’s a real asset.

TE: Annie joins us, Annie good morning.

Caller: Hi, I’m good. Thanks. I’m in Mildura and I’ve been a NAB customer for over 30 years. I’ve seen it diminished a little bit. We’re down to two tellers now, but it is always busy. There’s always someone in there taking cash out. I’m happy to wait in the line for half an hour if I have to. The service there is really great, just hoping that that one will never close down.

TE: So the branch in Mildura?

AI: If it’s, if it’s busy as you say, then it’ll never close down. I’ll tell you that for nothing Annie. Thank you for being a customer for over 30 years, Annie. And I’ll take a look at the staffing at that location to see if we need to add some.

TE: Alright. Thank you, Annie. George, good morning.

Customer: Yeah, my question is, why do I have to justify drawing cash out of the bank? If I want to draw out and I tried one branch for $5000 and the man said, what do you want it for? and I said fish and chips, and she said not good enough.

TE: That’s a good point. I’ve heard a few calls about this. I mean, you know, if I went and got $1000 and I said I’m off to the TAB to stick it all on, you know, horse three, race 4 at Randwick this afternoon. I mean, but why is it the bank’s business what I do with the money?

AI: Well, I think there’s a few things. One is we want to make sure that we understand, it’s kind of part of know-your-customer regulations and the law in Australia, that we know who our customers are and what they’re using the money for. So if there’s criminal activity, we want to be able to on a underline basis understand that, and obviously if you’re using it for your day-to-day needs, that’s OK. But if you’re constantly taking out significant amounts of cash, that’s a bit of a red flag.

TE: But I mean, let’s say you know someone is gambling, would you refuse to do that or if you think someone spending too much money at the bottle shop, would the bank get involved?

AI: I think then there’s a question around vulnerability. And there what we’re looking for is, are you being potentially abused? Is someone taking advantage of you? And we would just want to understand that and make sure that you’re safe and OK and not being a victim of abuse, apparently and sadly, that’s quite rife in this day and age.

TE: Look, I know you gotta go. I do appreciate you coming in. Andrew Irvine, CEO of the National Australia Bank. Let’s do it again sometime soon.

AI: Thanks, Tom. Thanks for having me on the show.