SUBJECTS: Government decision to support competition in financial markets, independent tax review, workforce participation.
ROSS GREENWOOD:
Joining me now is the Minister for Financial Services, Superannuation and Corporate Law, and that's Chris Bowen. Good evening to you, Chris. How are you doing?
CHRIS BOWEN:
Good evening, Ross. Good to be with you.
GREENWOOD:
Yes, thank you. Tell me about this: a new stock exchange. I mean, for 150 years, give or take, that we had state stock exchanges. For a long time, we have had one system for people to trade shares. Why is it now time, do you think, to have more than one system?
BOWEN:
Well, what we've had effectively, Ross, for a long time in Australia is a monopoly and I think you've got to have a very good case for a monopoly. In monopolies, consumers aren't always at the front of mind. Where you've got two organisations or more competing for your business, then that leads to innovation, it leads to downward pressure on prices.
So we've got this organisation called Chi-X that's been wanting to operate in Australia and I can see no good reason to tell them that they can't.
GREENWOOD:
But the one thing is, I guess, the Australian stock exchange has always been a very robust organisation. It's been at the forefront of technological change; like it went to T3, in other words, trading and transactions in three working days. It's also been at the forefront of the electronic platforms when they came in. It seems as though it's been a very solid platform for Australian citizens and so therefore does this in some way potentially weaken that platform?
BOWEN:
No, I don't think so. I'm not critical of the ASX at all. I agree with you, I think they've done a good job. But as I say, I think you've got have a very good case to say to people who are willing to come in, operate in Australia, employ Australians and, they say, offer prices which are up to 50 per cent less, that they can't do that.
We have competition for stock exchanges in Europe, in the United Kingdom, in the United States and in Canada, and for Australia to be, if you like, left out of that group, and Australian consumers and investors to miss out on those benefits, I don't think is justifiable.
GREENWOOD:
It's true, although of course the Australian stock exchange is an Australian organisation, listed on its own stock exchange, whereas, of course, it is obvious that all the shareholders of this company coming in, Chi-X, are very much foreign shareholders.
BOWEN:
Sure. But I make this point, Ross: I don't think it's in the long term interest – they wouldn't agree with this – but I don't think it's in the long term interest of companies to be monopolies. I think it's better that they have competition driving them, spurring them on to innovate further, spurring them to make their pencils as sharp as they can be, and I think the economy wins from that.
And I don't think we can adopt the point of view that the ASX is an Australian company so we're going to deny Australian investors and consumers. There are six million direct shareholders in Australia and the rest of us are indirect shareholders through our superannuation funds. I don't think we can deny shareholders and traders the opportunity for that competition, which will benefit shareholders and traders, and it also is important for our mission to become more of a financial services centre in Australia.
GREENWOOD:
And do you believe, really, you or I as superannuation fund members or even individual shareholders, do you think they'll notice even a jot of difference with Chi-X being introduced?
BOWEN:
Well, I know that without competition, then they won't. Competition gives it a chance. Now, Chi-X have said that they believe they can offer broking prices of about 50 per cent less. That's a matter for them. The pricing mechanism is a matter for them. There's experience from Canada and the United Kingdom in particular, that broking prices do come down and consumers do get the benefit. As I say, I think it's worth a go and the one thing I do know is that without competition we would never know.
GREENWOOD:
Another question for you. I know today the Treasurer did indicate that it appears as though the Henry Report may be released before the Federal Budget. Is this what the Government's intention is now, do you imagine?
BOWEN:
Yes, the Treasurer has indicated it will be released on that timetable, and we've left plenty of time for the public to have their say. We also need to provide some guidance when we release that report as to our intentions. I think that would be welcomed by industry and business to say that the Government's intentions are clear on many of the matters, whether there are some things that we could rule in in the report, some things that we would rule out and some things we would say we need to consult with the community about, and that's been a process which has taken some time, but that's an appropriate way forward.
GREENWOOD:
As Laurie Oakes indicated in his news report a couple of weeks ago, people who were familiar with what was inside the Henry Report suggested it was like a dozen black snakes in a sleeping bag. Is this something that the Government is concerned about, that there may be recommendations in that Henry Report that may be electorally inpalatable?
BOWEN:
Well, I can't go through what's in it and what's not, Ross. But what I will say is this: there are things in there, in the report, which is important that we properly consider and that we give some indication of our views on before, as it's being released. Otherwise there would be considerable uncertainty about where the Government's heading on some of these policies.
GREENWOOD:
One other question, I've got one – and I appreciate that – one I've got from a bloke called Bruce, and I said I'd raise it with you. Kareela, he comes from. He's at a company, he's 66, getting towards 70, and he's in a situation where he may be available to get a redundancy. But on checking, he's found that because he's over 65, there's no tax-free component for him that will apply to him when he gets an eligible termination payout. The question for him is, given the fact the Government wants people to work longer, would it – should it – consider changing the laws, which he claims are discriminatory because of his age? I'll shoot you this email, but it's clearly a point where you want people to work longer and people are almost forced to work longer, that they shouldn't be discriminated on payouts if they are ultimately made redundant.
BOWEN:
I will have to take that on notice, Ross. I'm more than happy for you to shoot it through to me. We are interested in measures to encourage workforce participation. A lot of people are willing to work longer, and we are keen to encourage that, but on the specifics of that case, I'd need to have a look at it and I'm more than happy for you to shoot it through to me.
GREENWOOD:
Good on ya. I'll send it through. We appreciate it very much, as I say. That's the Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen. Many thanks for your time.
BOWEN:
Pleasure.