DAVID KOCH:
Treasurer Josh Frydenberg joins me now. Treasurer, good morning to you.
JOSH FRYDENBERG:
Good morning.
DAVID KOCH:
Clearly APRA needs to lift its game. A good thing to do, this review. What’s your plan to ensure these recommendations happen?
JOSH FRYDENBERG:
Well, I’ve already spoken to the head of APRA, Wayne Byres, and he has assured me that he already has changes underway following this report. As you say, there are a series of recommendations both for the organisation itself and the Government. The Government will be taking actions on all the recommendations to it. The fact that APRA has been slow to respond to some of the technological challenges like cyber security, the fact that too many of its negotiations with banks and other financial institutions have been conducted in secret, and the fact that it hasn’t focused enough on member outcomes in superannuation are all issues that it now needs to do better on.
DAVID KOCH:
Have you put enough money into APRA so it is fully resourced? One of the issues particularly from staff saying it’s run on a shoe string. Has it got too much to do and not enough money from the Government to have the appropriate resources?
JOSH FRYDENBERG:
Well we’ve actually increased the resourcing of APRA by over $200 million since late last year. There was a $50 million injection and then there was $150 million in the Budget but what we…
DAVID KOCH:
But that was after the horse had bolted though.
JOSH FRYDENBERG:
Well, what we’ll do is always ensure the organisation is properly resourced and we will consider in the next Budget any other further requests, but APRA is moving from having just over 600 staff to over 700 staff this year, and we will ensure that it’s not only got the right legislative tools and the right penalties in place, but also the right resourcing to have the best possible people to do their job.
DAVID KOCH:
A couple of interesting recommendations. It will have the final say on hiring of executives and directors, rather than just leaving it to members; and a focus on performance which, you know, you’ve got to weigh up performance returns with risk as well, isn’t it? There are a lot of factors to keep in mind.
JOSH FRYDENBERG:
Absolutely. But there was a recent Productivity Commission into the Superannuation sector and it identified that there were some chronic underperforming funds. There’s a sense that APRA does need to better understand the performance of those funds. But I do want to underline for your viewers, Kochie, that the report also identified APRA’s success when it came to managing the financial stability of our system and as you know, we got through the GFC because we had well prudentially supervised banks.
DAVID KOCH:
Yeah, that’s a very, very good point to make as well. So, everything’s safe; we’re just tightening up the regulations. Treasurer, thanks for joining us.