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Category: Business, Economics and Finance / Banking / Industry

Former CBA boss critical of new chairman after 'nightmare' Telstra service

Thursday, 20 Oct 2016 15:53:17 | Ian Verrender

David Murray said he formed his view of Catherine Livingstone during her time as Telstra chairman. (ABC/AAP)

Former Commonwealth Bank chief executive David Murray has again poured scorn on the Commonwealth Bank of Australia's newly appointed chairman Catherine Livingstone.

Key points:

  • David Murray says he formed his view of Catherine Livingstone during her time as Telstra chairman
  • He says she is not starting from a "good position" as chairman of the CBA
  • Mr Murray warned a credit rating downgrade would make the country vulnerable to further downgrades

In answer to a question from The Business host Ticky Fullerton about his criticism of Ms Livingstone's performance while leading the Business Council of Australia, Mr Murray said he formed his view of her during her time as Telstra chairman — a time when he was Future Fund chairman, the telco's major shareholder.

"I have to tell you that that [criticism] was after six months of absolute nightmare service I got from Telstra personally," he said.

Mr Murray experienced a litany of mistakes at his home, which he said were either ignored or ineptly dealt with from Telstra, but refused to use his position to his advantage.

"It was devastating trying to deal with that," he said.

"And yet she as chairman, with the chief executive, had held out the world at large that they had made a service transformation at that company and they hadn't.

"That is not a good position to start from as chairman of the Commonwealth Bank."

Credit rating downgrade would flow through banking system

On the issue of Australia's AAA credit rating, the former head of the Financial Services Inquiry warned that a ratings downgrade would hurt Australian businesses and households in the long term.

Adding to concerns raised by Federal Treasury secretary John Fraser this week, Mr Murray said the effects of a downgrade would be magnified over time, particularly when global interest rates returned to more normal levels.

"At first it will appear not very significant," he said.

But Mr Murray warned that a downgrade would make the country vulnerable to further downgrades as debt becomes more expensive.

"It should be looked at on normal interest rates and it will affect the cost of borrowing of the Government, of state governments, of semi-government authorities and of corporations in Australia," he said.

He also said a downgrade would flow through the banking system, forcing up the price of mortgages and all borrowings.

"It's not a good situation because we want to avoid a spiralling of ratings and, to do that, the fiscal position of the Commonwealth has got to be in better shape," he said.

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