SUBJECTS: Employee share schemes, superannuation.
ALAN KOHLER, PRESENTER:
Well Minister you've inherited major reviews in virtually every important or controversial part of your new portfolio, and I suppose on one level that means that you can coast for awhile and wait for the reviews to be finished, but on the other hand you're a bit constricted, in the sense that you have got all these things happening already. How do you see it?
CHRIS BOWEN, FINANCIAL SERVICES MINISTER:
Well Nick Sherry my predecessor was an active Minister in superannuation in particular, as well as corporate law, and he has commenced a number of processes, and that's normally the case when you take over a new portfolio, you takeover process halfway through.
I'm spending my time at the moment getting up to scratch on where they're all at and what their objectives are, and I'll sort them through in a methodical way, as methodically as I can, as the coming weeks and months unfold.
KOHLER:
On executive share schemes, which has been very controversial, the government has admitted to having made some sort of mistake with that, how likely is it, or even possible, for the Government to just go back to the way things were?
BOWEN:
Well of course it's no longer a matter for me directly, it's now Nick Sherry and Wayne Swan matter to deal with, but as the former Assistant Treasurer, I was involved in obviously the policy options paper that we put out. The Treasurer has said there were some mistakes made and some unintended consequences. The important thing is to get on and quickly fix it. There's been instances of this before under the previous government, where tax evasion changes have been made and there's been unintended consequences, they haven't dealt with it; haven't fixed it. We've taken a different approach. We've taken on board the concerns, worked them through and put out on alternative...
KOHLER:
But companies are still cancelling their share schemes.
BOWEN:
Well at the end of the day, that's a matter for them, and look there will be changes. People who want the old regime to continue unabated, completely unchanged, need to accept that the government has made a change here. What we've said is that we're more than happy to make sure that the change is sensibly balanced, it's calibrated properly, that there's no unintended consequences, and we've worked those issues through.
KOHLER:
On superannuation, which is now being examined by Jeremy cooper and a panel of people, what do you think is the key priority there, leaving aside what's in front of them and what Nick Sherry said. What do you think they need to most look at?
BOWEN:
Well certainly I'll be meeting with Mr. Cooper soon and I'll be discussing issues with him. It's his enquiry, I won't be interfering in how he does it, or what he looks at, and how he conducts himself; that's a matter him. But obviously, it's a big, important enquiry, and I'm keeping a close interest in it. But the way he does it is a matter for him.
KOHLER:
A couple of weeks ago on the program we talked about the difference between master trust, retail master trusts, and the performance of industry funds. Do you think that's a problem?
BOWEN:
Well look you're always going to get different performances at different times. And it's not my job to be a cheerleader for one particular segment of the superannuation industry over another. I've said, for example, on commissions that there's a problem with commissions, whether the conflict of interest is one in reality or perception, there is certainly a perceived conflict of interest and it would be better for the industry to move away from that, to come to a new arrangement for paying for advice, and that's my very strong view. And to pay credit where it's due, I think the peak bodies have taken that on board, IFSA and the Financial Planning Association in particular are showing some leadership on that, and have taken the community's concerns and the government's concerns on board, so I'm keen to work with them to progress that further.
KOHLER:
The financial planning association head, Joanne Bloch, actually said in an interview recently that one of her problems was that nick sherry the minister, your predecessor, was on the fence, and she wished that he wasn't. So are you on the fence?
BOWEN:
Well I've made my views clear that commissions are problematic, and that it would be better all round if there was a better structure in place. I've expressed that privately, and publicly, and as I say, I think that the Financial Planners Association and IFSA are acknowledging that and showing some leadership there, which I welcome.
KOHLER:
Are you inclined to look at legislative solutions to that?
BOWEN:
Legislation should always be the last resort. And I'll be looking through the issue thoroughly. If the industry can come up with a solution itself, that's always better. It's always better that they will sort it out themselves rather than government interfering, but I'll be obviously keeping a close interest in it.
KOHLER:
There's a Productivity Commission review into executive pay. Do you think that the government can seriously get involved in that, I mean, really get involved in it, or is it really the only thing on the table the possibility of the non-binding vote at AGM's becoming binding?
BOWEN:
Well the first and general point to make is that the Productivity Commission is by far the best organisation to do this work. They're well respected, they're very methodical, they take into account all the issues. I've had a number of chats with the chairman Gary banks about it. In general terms, they're looking at a range of issues and they'll be making their recommendations to government, which we'll then work through.
KOHLER:
This is the problem isn't it Minister, you've got all these areas which require government decision and ministerial approach to, but everyone else is looking at them, except you?
BOWEN:
Well, no, I mean I was involved in the reference to the Productivity Commission.
KOHLER:
Not just that, but also superannuation, and there's a whole list of things. There's about seven reviews going on.
BOWEN:
Well that's as appropriate, because you do want to take a very considered approach to what are some very big questions. That doesn't mean that I won't be inactive, it doesn't mean I won't be making policy decisions from time to time, of course I will be. But they'll be informed and educated by those review processes as well, even if they're not all complete at any particular point in the cycle, I'll be taking into account their work.
KOHLER:
And on the subject of short selling, is that all completed now? Are you are satisfied that that's resolved?
BOWEN:
I think the balance has been struck. I think both ASIC and Nick Sherry did some good work here and that the issue is largely resolved. Obviously ASIC continues to monitor the situation very closely. If market conditions change they'll respond accordingly. We haven't been the first to lift our changes, we haven't been the last, we've dealt with it in a moderate and considered way, ASIC and Nick Sherry have, and they're to be congratulated for it.
KOHLER:
Thanks for joining us Chris Bowen.
BOWEN:
Great pleasure Alan.