PHILIP CLARK: Joining me on the line is Joe Hockey, Minister for Financial Services and Regulation. And I wanted to talk to him about this issue of dividends back from the banks. He's suggested this morning that banks should be delivering dividends to customers and not just shareholders. He thinks that the reforms that the government's put in place as a government have delivered a dividend to the banks. It's time, he says, "for the banks to starts to deliver a dividend back to consumers."
Mr Hockey joins me on the line this morning. Mr Hockey, good morning.
JOE HOCKEY: Good morning, Philip.
CLARK: What do you mean by "dividend back to consumers"? We should get some money back from the banks? That'd be a first.
HOCKEY: Well, I don't know about money. I think it's related to services. And when we came in in 1996, we sped along reform of the banking sector so that banks could buy insurance companies and offer stockbroking services and funds management services to consumers. And the banks had argued for that so that they could get better value for their dollar when they were entering financial services products.
And so what we've said now is, "Okay, you've got those reforms, you now own funds managers and you now offer stockbroking services and so on, it's time to put consumers' interests for a moment ahead of shareholders' interests and focus on what your consumers want, what your customers want, and what's in their best interest."
CLARK: Well, I think there'd be a rousing three cheers for that point of view going up. But I mean, what should they be giving back?
HOCKEY: Well, it should focus on service, I think. You know, I went out to regional Western Australia and went to a town that had closed the last bank branch and the locals there were offered EFTPOS cards and there wasn't an EFTPOS machine with 150 kilometres. So I rang up the CEO of that bank and said, "What's going on here? It just doesn't make plain sense." Someone way down in the bank thought it was a great idea to close this bank branch and to replace it with nothing.
And my main concern at that point was for all the small businesses in the town who were carrying an enormous amount of cash in the back of their car and driving 150 kilometres to somewhere to deposit it.
So, it's not another round of bank bashing. I think - you know, everyone seems to have a good kick at the banks. I think it's about encouraging the banks to focus on consumers' needs. And one good way of doing that is to start displaying on automatic teller machines the costs of transactions.
For example, if you go to a St George automatic teller machine and you want to get some money out of a Westpac bank account, it'd be great - it should happen that St George display the cost of that fee to the consumer when they get the money out.
CLARK: Yeah. Well, you know. The banks have only got themselves to blame, haven't they, Mr Hockey? For years and years their rhetoric was, "trust us, stay with us, be loyal, don't go away, we'll look after you, we're the rock," you know, and all of that. And then it is undoubtedly true that the financial services that are being offered these days are more sophisticated. Banks in may ways offer greater services at less cost than they used to, but the way they charge them has changed.
But they can't blame anybody but themselves if their rhetoric - which has done a 180 degree U-turn - is not understood by people, can they?
HOCKEY: No, you're absolutely right. And I've been saying for the last few years that the banks have only themselves to blame because they've abandoned the concept of loyalty to their customers in pursuit of greater shareholder returns.
And now they're saying, "Well, our customers aren't loyal, in fact our customers are belting us up but it's not our fault." Well, it is their fault because they abandoned the concepts of loyalty to customers.
And you know, now is the time to start focusing on the future. And what I'm saying is there's currently a review of the banking code of practice, the government is taking it very seriously. We expect the banks to. The Labor Party and the Democrats have made no submission for the review at all. I put in a very extensive submission, making a number of suggestions about the way the banks can move forward.
CLARK: All right. Just on the BAS, by the way - I know it's not your direct responsibility, but you talk to business people and small business people all the time, I'm sure. It's been a real bugbear and a headache. Is there a case for reform of the form, perhaps a once-a-year return?
HOCKEY: Well, I think the Prime Minister and the Treasurer certainly made it clear that they're having a look at it. It's important to emphasise, Philip - I mean, I've spent the last few weeks spending a lot of time with small businesses in my electorate, from fridge shop owners to party hire groups and so on. And they're saying, "Well, look, you know." Some of them are saying it's been a real pain going through the BAS again. Others have said, "Look, it's been quite a good discipline on my business."
And I think the people that have been upset about it have been obviously the loudest. The ones that are coping quite well are not saying much. But I think, yeah, there is genuine need for a good look at the BAS. I think some of the questions are quite complex and the language in some of the questions is quite complicated.
And so there is a fair call for a good look at the statement. But at the same time, I think businesses are also starting to discover a lot about their own cashflow and if nothing else, I think the BAS has helped them to understand more about their businesses.
CLARK: Just before we go, on a personal note. I'm sorry to hear that Mr Fahey has had to go into hospital week for what, I must say on the surface, sounds like a fairly serious operation. Did you have any other information about that?
HOCKEY: No. I haven't spoken to him. I've been speaking to John a good amount over the last few months and he's a very close friend of mine. And I think we all wish him God bless and best of luck for the days ahead.
CLARK: All right, Mr Hockey, thank you.
HOCKEY: Thanks, Philip.
CLARK: Joe Hockey, Federal Minister for Financial Services and Regulation on customer dividends for the banks. I'd be surprised if the form, the BAS form, stayed as it was. I'd be very surprised.