LAURA JAYES:
Treasurer, thanks so much for your time. 76 recommendations, will you be implementing all of them in this term?
JOSH FRYDENBERG:
We’ve said we'll be taking action on all 76 recommendations. 54 of those were directly for the Federal Government, the others were for the regulators and for the industry itself, but the financial services sector, Laura, is a key part of the Australian economy. It relates to the financial security and wellbeing of every Australian but when put under the microscope by the royal commission, it was found wanting and Commissioner Hayne has given us a road map for going forward and we're going to be implementing those recommendations in record speed and it has to be emphasised that this package of reforms is the most comprehensive to the corporations law, to superannuation, to insurance, to financial services, to the whole sector in round three decades.
LAURA JAYES:
That is all true, but when you say the Government is taking action on 76 of the recommendations, you're not actually implementing what the royal commission did set out, particularly when it comes to mortgage brokers. You're actually going against one of the recommendations. Why?
JOSH FRYDENBERG:
Well, when you're talking about upfront fees and trail commissions, what we have said is we'll do a review in three years' time, and the reason for that is we want to enhance competition. We recognise that around 60 per cent of mortgages are actually written by these mortgage brokers and not all lenders actually have branches in every regional town or, indeed, in every major city. So mortgage brokers play an absolutely critical role and we don't want to see their business simply migrate to the big banks because that wouldn't be in the interests of consumers. So what we've said is we'll implement the recommendation around the best interest duty and we've outlined that that will be brought into the Parliament before the end of this year. We're also getting rid of volume‑based commissions, but when it comes to the trailing commission, and when it comes to the upfront fees, we want to see how the best interest duty plays out and that's why we'll do a review in three years' time.
LAURA JAYES:
You will further outline this road map today. There is some fast tracking. You're giving yourself until the end of 2020 to actually introduce all the required legislation of which 40 of the recommendations do need, but many would be asking themselves this morning how you can actually qualify fast tracking as just introducing legislation by the end of next year?
JOSH FRYDENBERG:
Well, as you know, and we've set this out today, that around a third of those commitments will either be implemented or introduced by the end of this year, around 90 per cent by mid next year and then the balance by the end of next year. Now, it has to be kept in perspective, Laura, this is the most comprehensive set of reforms in three decades and it's been fast tracked in a way that is really unprecedented. If you think back to when Labor was doing the Future of Financial Advice reforms, there was nearly two years before when they got the report and when they actually introduced the legislation. We're doing this as quickly as possible. We're obviously working with the industry, working with the regulators, and putting extra resources in Treasury where we have a special implementation task force.
LAURA JAYES:
You wrote today that change is undeniable from what we heard out of the banking royal commission. Do you accept that misconduct is still happening now?
JOSH FRYDENBERG:
Well, we would hope not and that's why the regulators have been beefed up and given record funding, both APRA and ASIC, to tackle misconduct. Now you can never stamp it out but what you can do is what we're doing now, is ensuring that the laws are strengthened, that the regulators are awake to the challenges that they face and that most importantly of all, there's a change in culture in these financial institutions themselves because what Commissioner Hayne pointed out in his report was that the recurring themes were of dishonesty and greed and that ultimately it was these financial institutions themselves, Laura, and their senior management and their boards which need to take responsibility for fees for no service or charges to dead people or the mis-selling of insurance. So it's ultimately up to the industry itself to step up, they're on notice and the Government will be holding them to account.
LAURA JAYES:
You say you can never stamp it out. What are you referring to exactly? Are you saying that you can never stop some of these big banks from time to time ripping off customers? Is that acceptable to you? Is that the world we need to live in?
JOSH FRYDENBERG:
No, it's not acceptable to me but what I'm saying is you will always have people that seek to break the law and what our job is is that the law, these people are held to account if they do break the law and if the laws are strong, that they're enforced and that they are well known. So where our focus is is on ensuring the regulators are up to the task and fit for purpose, that the laws are amended in ‑ consistent with what Commissioner Hayne has actually said and that the industry recognises that their culture needs to change and that is going to be a real focus for the Government going forward.
LAURA JAYES:
In the last couple of weeks Kenneth Hayne has actually blasted the Government, the judiciary, the legislative ‑ and executives for a culture which he described as being captured by vested interests and he really took aim at the political class as well. He said, you know, it was essentially sick and that's why there was a need for a royal commission. Do you agree with his assessment and do you see anything improving with those three branches?
JOSH FRYDENBERG:
Well, he actually also attacked ‑ put a focus on the media too, Laura, he said that the media would often report on things that divided us as opposed to what united us.
LAURA JAYES:
Fair point.
JOSH FRYDENBERG:
I mean he's absolutely right that there is a degree of cynicism with the political processes but I would say that's not necessarily new or, to a degree, that's not necessarily unhealthy. But what he is also right in saying is that we do need to have mature conversations about the big issues that face us and obviously they're the ones that the Parliament and that the politicians, the elected leaders of the public, need to focus on and that may be everything from the ageing of the population to issues in relation to our strategic environment in which we live, to digital disruption across the economy, to a changing energy landscape. They are big issues. They don't necessarily require royal commissions but they require that politicians and the Parliament work effectively in the best interests of the public.
LAURA JAYES:
Just finally, you did write about mental health today in News Corp newspapers. I have previously written about this and that, you know, both sides of the political divide seem to be really committed to doing something about suicide rates and mental health in this country. Do you believe that we are on the cusp of something big here? Is this an opportunity where both political leaders, both health and shadow ministers really are personally committed to this and therefore something can be done?
JOSH FRYDENBERG:
Well, we have no other option, Laura, than to act and to act effectively and this issue certainly cuts across any partisanship in the Parliament. This is one where everyone has been touched by people with mental illness and, indeed, suicide and everyone has an obligation to do everything that we can to ensure that it is reduced in our community. One suicide is one too many and those numbers are just horrific. 65,000 Australians every year, you know, try to take their life. We lose eight people a day to suicide. If you're the ages between 15 and 44, you're more likely to die at your own hand through suicide than you are in a car accident and for every person who takes their own life there are so many others who are deeply affected. So the Government and Scott Morrison and Greg Hunt are leading the charge here and need to be commended for the work we're doing, the extra resources we're putting in but ultimately it's got to be a bottom‑up not a top‑down solution, working with community organisations like Lifeline, who I had the privilege to talk to last week because they do wonderful work in our community.
LAURA JAYES:
They certainly do. Treasurer Josh Frydenberg, appreciate your time this morning.
JOSH FRYDENBERG:
Nice to be with you, Laura.