DEBORAH KNIGHT:
Treasurer, good morning to you.
JOSH FRYDENBERG:
Good morning, Deb. Nice to be with you.
DEBORAH KNIGHT:
The Royal Commission came up with 76 recommendations to fix systemic problems, huge problems within the sector. You're implementing them all in full but where do you start? What changes should we expect by the end of the year?
JOSH FRYDENBERG:
Well, we've already announced and introduced in the Parliament and passed through the Parliament legislation, particularly in the superannuation sector, we've conducted a review into the prudential regulator, made a number of other changes. Fifteen commitments have already been implemented by the Federal Government but there is more to do. For example, we're putting in a best interest duty for mortgage brokers, we're going to be preventing unfair contract terms in insurance and we'll be taking a number of other measures which will help small business, help families, help regional communities get a better outcome from their financial institutions.
DEBORAH KNIGHT:
A lot of people have simply lost faith in the banks and in the finance sector, will this restore that faith?
JOSH FRYDENBERG:
Absolutely. We are absolutely focused on restoring trust and confidence in the financial system. Deb, the financial services sector is the single largest sector in the Australian economy, makes up around 10 per cent of GDP. Over 15 million Australians have a superannuation account, more than 3 million Australian households have a mortgage and millions of Australians see financial advisers. So we are all affected by the conduct and the performance of our financial system. That's why the Government is acting in record time implementing the recommendations of the Royal Commission with Commissioner Hayne putting the sector under a microscope and finding it wanting.
DEBORAH KNIGHT:
To have faith in a system, you really need to see people held accountable when they do things wrong. Have any criminal charges been laid or is anyone in jail because of what the royal commission uncovered?
JOSH FRYDENBERG:
Well, we've seen today the regulator talk publicly about the fact that they are now bringing people to justice and institutions to account.
DEBORAH KNIGHT:
But no one has been charged, have they? No one is in prison as a result of the appalling behaviour uncovered.
JOSH FRYDENBERG:
There actually has been a number of cases that have been brought to the courts and there are a number that are under way. We have ensured that ASIC and APRA have received record funding and that they're focusing on ensuring that the consumers get the best possible outcome because, again, in Commissioner Hayne's pretty scathing assessment of the sector he did find that our regulators could do better.
DEBORAH KNIGHT:
Now you are in a bit of a bind here, aren't you, because the share market took a $60 billion hit last week off the back of fears of a global recession. The Reserve Bank pointing to more interest rate cuts. By clamping down on the banks it's effectively reigning in the finance sector, having a dampening effect on the economy, when it's really in desperate need of a boost.
JOSH FRYDENBERG:
Well, I don't think the objective of restoring trust and confidence and strengthening consumer protections is actually mutually exclusive from enhancing competition and getting a better flow of credit to borrowers. I mean, they both can be done at the same time. That's why we're very careful but also at the same time moving quickly to implement the recommendations and I do point out, Deb, that the Australian stock market is up around 15 per cent for the year and we've seen relatively good returns in superannuation funds. But you are right, there is some global tensions and the global economic outlook has been downgraded and that's why the Government is implementing its plan outlined in the budget for tax cuts, more infrastructure spending and more apprenticeships.
DEBORAH KNIGHT:
It's certainly a tricky balance. Treasurer, we thank you for your time this morning.
JOSH FRYDENBERG:
Nice to be with you.