FRAN KELLY:
Josh Frydenberg, welcome back to Breakfast.
JOSH FRYDENBERG:
Good morning to you, Fran.
FRAN KELLY:
I’ll come to the population meeting in a moment. First, the resignation of NAB’s Ken Henry and Andrew Thorburn last night. They quit after that blistering criticism from the Royal Commissioner, Kenneth Hayne. Did you agree that they had to go? Was that your view?
JOSH FRYDENBERG:
Well, I was reluctant to comment specifically or individuals, as you can imagine. Those decisions are ones for boards and for shareholders. But, Kenneth Hayne did provide a very scathing and clinical assessment of the culture and the conduct in our financial institutions and we have seen not just broken businesses as a result of misconduct, but also broken lives. So, with Ken Henry and Andrew Thorburn’s resignations, together with what we’ve seen by other senior leaders within the financial system during the course of the Royal Commission. Now, the focus must turn to the culture within these organisations and the practical changes that must be made. We, as a Government, are putting in place more accountability mechanisms, better resourcing our regulators. The regulators are firmly aware of the challenge that they have and the changes that they need to make. But, ultimately, and Kenneth Hayne made this point. Ultimately, the responsibility for the misconduct falls at the feet of those senior executives and those board members within the companies.
FRAN KELLY:
And, did you make that message clear either to Ken Henry or Andrew Thorburn yourself or to the NAB? Did you have any contact around this?
JOSH FRYDENBERG:
Well, I received a call yesterday from Ken Henry telling me of his decision. But, it wasn’t the message from me that really mattered, it was the message from Kenneth Hayne as the Royal Commissioner and…
FRAN KELLY:
I’m just wondering if you had any intervention in this?
JOSH FRYDENBERG:
No, the decisions were obviously taken by Ken Henry and Andrew Thorburn and their board. But certainly, the strongest words came from the Royal Commissioner himself.
FRAN KELLY:
What did Ken Henry tell you when he rang you?
JOSH FRYDENBERG:
Well, he told me of the decision he had taken and Andrew Thorburn and that was the conversation.
FRAN KELLY:
Given what you said, the responsibility falls at the feet of the leadership of these institutions. Should other banking bosses follow then? I mean, NAB wasn’t the only offender and Commbank, I think, was once declared the gold medallist when it came to ripping off people with fees-for-no-service.
JOSH FRYDENBERG:
Again, I’m not going to specify individuals or companies other than to make the broadest possible point which is that the misconduct must stop. The reports we saw through the Royal Commission of fees- for-no-service, fees charged to dead people, the miss-selling of insurance was absolutely terrible and has had a profound impact on the community, not just of those who were affected but has undermined the trust of the broader community in our financial institutions.
FRAN KELLY:
I’ll leave this. But, would you expect more changes at the top of our major banks?
JOSH FRYDENBERG:
Look, again, only time will tell. The change that I’m interested in and that matters most to the public is a cultural change within these organisations…
FRAN KELLY:
Okay…
JOSH FRYDENBERG:
Where people are held accountable for their misconduct.
FRAN KELLY:
I will come back to the banks, but let’s go to the meeting today of Treasurers, where population growth is on the table. You’ve asked the states to come up with their own population targets and projections and plans for infrastructure, for instance, to support that. As Treasurer of Australia, do you want our immigration intake to remain the same?
JOSH FRYDENBERG:
I want Australia to continue to maintain a very strong immigration intake because immigration has contributed to the rich cultural diversity we enjoy in this country which has made the nation what we are today, with so many people being born overseas, or with parents born overseas. But, what you were saying in your introduction about the permanent migration number being 190,000 people, that’s a cap. And for the last few years, it has actually been around 30,000 below that cap.
FRAN KELLY:
And, do you think it should be capped at around 160,000 then?
JOSH FRYDENBERG:
Well, let’s look year by year as to what are the needs across the community. But, certainly, there are population pressures that are contributing to congestion in our major cities. I mean, two thirds of our migration has been going to Melbourne, to Sydney and to South-East Queensland and the infrastructure hasn’t kept up with those needs. That is what we will be discussing today, how we can as federal and state and territory governments share responsibility for managing population change; how we can improve data sharing; how we can better understand each-others infrastructure needs; and how we can exchange information about movements between states of migrants or within states.
FRAN KELLY:
As Treasurer, though, are you concerned about any talk of limiting our migration levels. Last year, the Reserve Bank Governor cited Australia’s faster population growth, which is fuelled by migration, as one of the key drivers of higher than average growth. And earlier this week, the Governor was already hinting at slower economic growth, revealing today’s Quarterly Monetary Statement will revise growth down. It’s a fragile time to be talking about capping our migration intake. As Treasurer, what is your input?
JOSH FRYDENBERG:
Well, I want people to have the highest possible standards of living. That means strong economic growth, that means lower unemployment…
FRAN KELLY:
…strong immigration.
JOSH FRYDENBERG:
Well, immigration is absolutely part of that but it also means congestion-busting infrastructure. And, what I think has gone wrong in Australia on the population question is that we haven’t planned well for the future. So, if you go back to 2002 with the Intergenerational Report, there was an expectation that Australia would reach 25,000,000 people by 2040. Well, we met that number last year and now we have the fifth fastest rate of population growth in the OECD. And, we are seeing it concentrated in our big cities. We need to send people where the jobs are and we need to cooperate between state and territory boundaries.
FRAN KELLY:
A bit to get through, Treasurer. The Royal Commission through up a lot. But, there is also this issue about whether there was any insider trading, whether anyone got an early leak on the recommendations. There were $500 million of bank shares bought hours before the Royal Commission’s final report was publicly released. Have you asked ASIC to investigate whether there was any insider trading here?
JOSH FRYDENBERG:
Well, those are matters for ASIC as relation to the market activity…
FRAN KELLY:
Are you troubled by this?
JOSH FRYDENBERG:
Look, I think this is, again, a political stunt from the Labor Party. They set this up before we even received the report or talking about AFP investigations if there was a leak…
FRAN KELLY:
So, you don’t think it happened?
JOSH FRYDENBERG:
Well, again, that is a matter for ASIC and I will let them be the judge. But, you know, Labor has form on this. They’re seeking to distract from the main question which is what is their response to the Royal Commission. They have now had the report longer than we did and we have given a final response. We are taking action on all 76 recommendations…
FRAN KELLY:
Labor said the same. We had Chris Bowen on the next morning, saying they will implement in full all of the recommendations.
JOSH FRYDENBERG:
No, they’ve actually said in principle they will do that, whatever that means. I want to hear from them directly that on once only defaulting superannuation funds that they will commit to that, that they will actually move ahead on the changes to mortgage brokers. It will be interesting to see what they actually do there because they’ve sent mixed messages. So, I think Labor are trying to walk both sides of the street and in typical form, come up with political stunts as opposed to practical solutions.
FRAN KELLY:
How about we all get to hear what both sides think in the Parliament. Labor wants the Government to sit for an extra two weeks in March to pass some of these recommendations. The Government says no. Why? Why wouldn’t you want the chance to get some of this done and dusted if it’s all about protecting the rest of us?
JOSH FRYDENBERG:
Because, again, this is a political stunt not a practical solution. There are 76 recommendations. Forty of those recommendations will require legislation. We need to consult, obviously, with key stakeholders and we need to draft that legislation…
FRAN KELLY:
Are there none that could be just done quite simply? Are there none that can be done in two weeks of sitting?
JOSH FRYDENBERG:
I will get to that in one moment. But, one of the key points that Kenneth Hayne made in his report is that the law is too complex. We don’t want to compound that problem by rushing this process. There are a number of things that we can immediately do, which we are doing. For example, we have legislation before the Parliament to improve member outcomes in superannuation. We are putting civil penalties…
FRAN KELLY:
But, we are looking direct recommendations from the Royal Commission.
JOSH FRYDENBERG:
And, this is one. This is actually one. So, let me take you through it. Well, Fran, we are putting in place civil penalties for the first time on directors in the super funds. Kenneth Hayne said it should extend to trustees. We want to do that. We are setting up a compensation scheme of last resort, so I’m giving a direction to AFCA. We’re also actually doing other things like an APRA capability review which we’ve announced with Graeme Samuel. So, across the board, we are doing things both legislatively and in other ways to quickly progress Kenneth Hayne’s recommendations.
FRAN KELLY:
Alright, Treasurer just finally, your colleague Tim Wilson has chair of the House Economics Committee and has been having hearings into Labor’s franking credits policy. You, as the Treasurer, referred Labor’s policy to the committee, I understand. Why did you do that? Labor said it’s unprecedented to refer an opposition policy to the Economics Committee.
JOSH FRYDENBERG:
Well, this is a critical issue for the Australian public to have an opportunity to be heard. There are 900,000 individuals…
FRAN KELLY:
But it is an opposition policy.
JOSH FRYDENBERG:
There are 900,000 individuals that are going to be affected, 200,000 self-managed super funds…
FRAN KELLY:
...but it is opposition. That is stuff for election campaigns, isn’t it? Not for Parliamentary committees.
JOSH FRYDENBERG:
Well, this is an opportunity for people to put their case and their concerns on an important piece of public policy…
FRAN KELLY:
But, is this committee being compromised by the behaviour of Tim Wilson and other Liberals around it? We’ve heard of Liberal membership forms being handed out at these meetings. We now hear Party fundraising events being book at the same venue, at the same time as the hearings. I mean, these are official Parliamentary business paid by the tax payer. Should they be the focus of Liberal Party fundraising and membership drives?
JOSH FRYDENBERG:
And, Tim Wilson has adhered to the rules, he has adhered to his disclosure requirements and the only thing that he has done wrong is get up the nose of Chris Bowen because this actually, these hearings and this policy announcement by the Labor Party, is causing an enormous amount of disquiet. And again, it is a distraction from Chris Bowen’s arrogant dismissal of the concerns of more than 1,000,000 Australians saying simply just don’t vote for the Labor Party if you don’t like this policy. What we’re saying to these people is that we don’t want you to be silenced, we want you to be heard.
FRAN KELLY:
Treasurer, thank you very much.
JOSH FRYDENBERG:
All the best.