JOSH FRYDENBERG:
Good afternoon. Today I want to provide an update on the Thom review into ASIC Governance matters but first I want to refer to some economic data that is out today that again confirms that Australia’s economic recovery from a once in a century pandemic, the most significant economic shock in the Great Depression, is well underway.
Significant banking data has shown that the $250 billion worth of loans that saw their repayments deferred during the crisis, have started to see people repay back those loans. It’s a sign of confidence across the economy, it’s a sign again that jobs are coming back and the recovery is well underway. So at the peak of this crisis, $250 billion worth of loans had their repayments deferred. About three quarters of those loans were home loans and about a quarter of them were referred to as SME loans. As of the most recent data, 80 per cent of those home loans where the repayments were deferred, payments have started again. And about 90 per cent of those small business loans, where the payments were deferred, we’re now seeing the payments being made again. This is off the back of the most recent jobs numbers which saw 50,000 jobs created in the month of December, the unemployment rate fall to 6.6 per cent, 785,000 jobs created in the last seven months, it’s off the back of rising housing prices in our capital cities and our regional areas, off the back of strong retail numbers, off the back of increased economic activity and economic growth. And of course the IMF’s recalibrated economic forecasts which sees Australia better positioned than nearly any other country in the world. And, I repeat, the IMF is forecasting for the Spanish economy to contract by 11 per cent in 2020, for the French and Italian economies to contract by more than 9 per cent, for the UK economy to contract by 10 per cent, for the German, for the Japanese, for the Canadian economies to contract by more than five percent, the United States economy to contract by 3.4 per cent, the Australian economy in our latest MYEFO forecasts to contract by just 2.5 per cent in 2020. So again, it sees Australia in a much stronger economic position than nearly any other country across the world.
The other matter than I wanted to refer to today is to provide an update on the outcomes of the review into ASIC governance, conducted by Dr Vivienne Thom, the former Inspector-General of Intelligence. On 25 October last year, the Secretary to the Treasury appointed Dr Thom to conduct a review into the findings of the ANAO’s audit in relation to payments made to key management personnel of ASIC and related governance matters. In particular, payments made on behalf of the ASIC Chair, Mr James Shipton, relating to taxation advice, and then Deputy Chair, Mr Dan Crennan QC relating to housing expenses. Dr Thom submitted her report to the Secretary of the Treasury on 17 December last year. Both Mr Shipton and Mr Crennan were at all times fully co-operative with the review process. Dr Thom made no adverse findings regarding Mr Shipton and Mr Crennan. In relation to Mr Shipton, Dr Thom recommended that it was open to Treasury to seek legal advice about whether Mr Shipton breached applicable codes of conduct and, if so, what actions might then be taken.
After considering Dr Thom's report and supplementary legal advice provided to the Treasury concerning these matters, I am satisfied that there have been no instances of misconduct by Mr Shipton concerning his relocation arrangements, including ASIC's payment for tax advice resulting from his relocation to Australia in early 2018, nor have there been any breaches of applicable codes of conduct. Dr Thom made recommendations for significant improvements to ASIC’s internal practises, systems and processes, to enhance its management of matters recommended for action by the ANAO, including internal audit management, quality assurance of legal advising processes and improving the management of and the controls for spending relating to commissioners. Given the nature of the matters raised, the Government expects ASIC to implement, as a priority, the recommendations made by Dr Thom concerning its internal risk management and governance arrangements and to report regularly to me on its progress. In the light of the outcomes of the review, Mr Shipton will return to his role, but Mr Shipton and I have agreed that it is in the best interests of ASIC that he will step down as the chairperson of ASIC in the coming months. I thank Mr Shipton for his three years of service and dedication during his time as chairperson of ASIC.
The Treasury will immediately conduct a search process for a new chairperson of ASIC. I intend to finalise the appointment within the next three months. Mr Shipton will resume his position on Monday 1st of February, next Monday, and continue into his role until a new chairperson commences. The review also concluded that the Treasury could improve its processes for managing the appointments of statutory officers under Treasury portfolio laws. In response, the secretary of the Treasury has moved to implement a new system immediately. I thank Dr Thom for her conduct of the independent review. Happy to take any questions on those or other matters.
QUESTION:
Treasurer, Paul Sakkal from The Age, given he’s not being found to have done anything wrong, why is he stepping down?
JOSH FRYDENBERG:
Both James Shipton and I discussed these issues at length and he has served ASIC well for three years. But we believe that it is time for a fresh start at ASIC and a fresh start will begin with the search for a new chairperson.
QUESTION:
Is this part of the broader overhaul of ASIC? Does it need a broader overhaul?
JOSH FRYDENBERG:
There are going to be changes at ASIC and we will be releasing an abridged version of the report after taking advice from the Treasury and from the AGS. That abridged version of the report makes it very clear that there were deficiencies within ASIC as to the way decisions were taken in respect to these matters and that the governance and audit processes and management processes and, indeed, the legal processes can all be improved. So there will be a need for changes at ASIC and I look forward to working with James Shipton now that he will be resuming his duties to implement the recommendations from the Thom Report, and I will be working with Treasury and be in discussions as well with James Shipton about broader reforms to ASIC that the Government will consider.
QUESTION:
Will there be changes to the rules that he didn’t break, given it probably didn’t fall within public expectation, the actions that he carried out. Will there be changes to those rules?
JOSH FRYDENBERG:
This goes to the heart of the recommendations from Dr Thom about how there can be more transparency and accountability through the internal ASIC processes and, indeed, working with Treasury. One of the recommendations is that Treasury set up standard conditions and formats for the terms and the conditions of these statutory office holders. There is a recommendation for new committees within ASIC to manage such matters, and, of course, accountability, because in the case of James Shipton, he was the accountable authority within the organisation and there needs to be very clear lines of decision-making and authority with respect to matters that may involve the chairperson in future.
QUESTION:
Thank you, Treasurer. When will you be releasing the abridged version of the Thom Report and can I also just ask on the finances? The tax bill and the housing allowance, they’ve been repaid, I believe. Will they remain repaid by Mr Crennan and Mr Shipton or will they now be footed by ASIC again? And Mr Shipton’s forfeited about $200,000 in foregone pay because he’s gone to be on leave without pay, will that be back paid to him or will he miss that money? And also, it’s a five-year term, will he be paid out for the entire five-year term after he leaves after about three and a half or so years?
JOSH FRYDENBERG:
Well, the first thing to answer your question John, is I will be releasing the abridged version immediately of the report, and it is very detailed. You will be seeing Dr Thom's reflections and recommendations through that abridged version. With respect to the payments for accommodation expenses for Mr Crennan and in relation to the tax advice for Mr Shipton, in both cases both men have paid those amounts and that remains the case. So the Commonwealth will not be picking up the bill for that taxation advice or for those accommodation expenses. With respect to a separation payment, there will be none, so Mr Shipton will be paid for the time that he is in the job. He will be paid for that time that he was on leave and that is appropriate in light of the findings and the fact that that was a voluntary decision that he took at that time. So I think what we have reached here is an outcome that serves the taxpayer well, but importantly serves the interests of the organisation and it’s future well. That is what I’m focused on, ensuring that ASIC, as the cop on beat in the marketplace, continues to do its job and I am looking forward to working with Mr. Shipton and indeed, all the commissioners across ASIC in the period ahead.
QUESTION:
Just wondering where the Thom Report says Treasury’s processes actually fell down? Could these kind of issues and these complications around the employment of statutory officers be resolved by an exchange of letters involving the parties?
JOSH FRYDENBERG:
Again, you’ll see very clearly Richard, in the report where Treasury systems and processes can be improved and that involves also having standardised formats for such arrangements. Treasury are moving immediately to implement that. So, you’ll see that very clearly in the report. In terms of Dr. Thom’s recommendations with respect to Treasury, all have been accepted and all will be implemented.
QUESTION:
Is it embarrassing that JobKeeper has been paid to jailed criminals and dead people?
JOSH FRYDENBERG:
JobKeeper has been a remarkable program and its supported 3.6 million Australian workers and around a million Australian businesses. The money got out the door very quickly and helped provide an economic lifeline to the Australian economy at a time when it was hit by this once-in-a-century pandemic and the greatest economic shock since the Great Depression. JobKeeper is tapering off, it was always a temporary and a targeted program and it will end as scheduled in March. With respect to compliance of the program, the ATO have comprehensive processes in place using single-touch payroll where they’re able to assess the employees of organisations and to ensure that that money flows. I’m very confident in the processes of the ATO around compliance and what has been delivered so far as a remarkable program that has helped save our economy in one of its darkest hours of need.
QUESTION:
There’s been concerning reports about a right-wing extremist group gathering in the Grampians over the Australia Day weekend, engaging in anti-Semitic behaviour using Nazi salutes and shouting ‘white power.’ Do you believe these actions should be condemned?
JOSH FRYDENBERG:
Absolutely. Such behaviour has no place in our freedom-loving democracy here in Australia. I am very concerned about extremism in all its forms and I know our intelligence and our law enforcement agencies are very seized of this issue. As you know, the 27th of January was International Holocaust Remembrance Day and I attended a service alongside my colleagues, Minister Tudge and Minister Seselja, as well as Chief Minister Andrew Barr. What is very clear is we need to constantly be vigilant against extremism and intolerance and racism in all its forms. Now I know that our intelligence and our law enforcement agencies are very seized of that issue.
QUESTION:
JobKeeper will come off the end of March. Are there any updated forecasts on the unemployment rate and how concerned are you for the economy’s recovery once that tapers away?
JOSH FRYDENBERG:
Our most recent forecasts are those that were in MYEFO and what we are forecasting was that unemployment will reach and peak at 7.5 per cent at the end of the March quarter and then come down to 7.25 per cent by the June quarter. Any further updates to those forecasts will be made at this year’s Budget. But the labour market has surprised on the upside. It has been beating market expectations with the unemployment rate falling to 6.6 per cent at the end of the month of December. What we’ve seen with those 50,000 new jobs being created, were more than 70 per cent of those were full-time jobs. It’s been very pleasing to see the strong recovery in the labour market. That being said, there are sectors and there are regions that continue to do it very tough. That is why our economic support will continue long after JobKeeper. Our economic support being in the form of the JobMaker hiring credit, the tax cuts, the business investment incentives, the infrastructure projects that were brought forward, all of which were combined to support the Australian economy as it continues to recover. There were reports, as you know, out of Queensland suggesting we extend JobKeeper beyond the end of March. What I did point out in media interviews earlier this morning is that the Morrison Government has done the bulk of the heavy lifting when it comes to the economic supports being delivered across the country. In the case of Queensland, the Morrison Government has delivered $27.9 billion through the COVID pandemic. $27.9 billion. This compares to a commitment, not a delivery, a commitment of $8.8 billion from the Palaszczuk Government. So the Morrison Government has delivered more than three times what the Palaszczuk Government has committed to. When it comes to JobKeeper, 650,000 Queenslanders received that payment. When it comes to the Coronavirus Supplement, 650,000 people received the Coronavirus Supplement. 1.5 million Queenslanders received the $750 payment. More than 100,000 businesses in Queensland received the Cash Flow Boost. So our support to the people of Queensland has been there for everyone to see and it's measured there in dollars and cents. What I do know is that our support for the economy, for various sectors, is continuing and will continue long after JobKeeper.
QUESTION:
(inaudible) UK response to the travel ban, what is your advice to those Australians whose flights home will be cancelled as a result of this?
JOSH FRYDENBERG:
As you know, nearly 450,000 Australians have made their way home since March. We have put on an additional twenty flights and will continue to work with the airlines to ensure that Australians can get home and obviously taking into account those quarantine arrangements and the limitations on quarantine in the various states.
QUESTION:
Just on the repatriation flights, how many of the twenty promised flights scheduled a fortnight ago will be leaving from London?
JOSH FRYDENBERG:
Again, you’ll have to put that to the Minister for Foreign Affairs, but as I’ve said, we have committed to those extra flights and we have also helped facilitate, with payments, with economic support, thousands of Australians to come home and will do so in a COVID-safe way.
QUESTION:
Malka Leifer- do you have any views on her return this week? Are you confident of a fair trial for her?
JOSH FRYDENBERG:
Again, I’ll let the legal processes take their course, but it’s very pleasing that she has come back to Australia to face justice because justice delayed is justice denied.