ANDREW PROBYN:
Kelly O'Dwyer, Queensland LNP MP George Christensen says the Government was dragged kicking and screaming to the Royal Commission. Is he right?
KELLY O'DWYER:
What the Government has done in all of this is make sure that we put consumers and businesses and our economy front and centre in our consideration of the national interest. We have continued to do that. The Government has taken some very practical measures to ensure that consumers who have been treated badly by financial institutions get access to redress. We have got a bill in the Senate which will be dealt with next week that will be establishing the Australian financial complaints authority. This is a game changer...
ANDREW PROBYN:
But this was not your preferred option, a Royal Commission?
KELLY O'DWYER:
The Government has always said that we have a strong and stable financial system and we continue to have a strong and stable financial system. On coming in to Government we had the Murray Financial System Inquiry, which said we have one of the best, prudentially regulated systems in the world.
ANDREW PROBYN:
As recently as Tuesday, the Prime Minister was saying there wouldn't be a Royal Commission. This is an extraordinary backflip.
KELLY O'DWYER:
The point I was going to make, Andrew, is that that continues to be true. But what has changed, what has changed, is the fact that there has been so much fevered speculation, so much so that the cost of not doing a Royal Commission is much higher from an international reputation point of view than the cost of actually conducting a Royal Commission. That tipping point has happened very recently. We believe it is important for our international reputation to remain incredible is strong. The government has taken control of this situation. We have announced a Royal Commission. We have got broad terms of reference that are looking at our banks, our insurers, and also the superannuation sector. It is going to be very comprehensive but importantly, it's not going to delay the critical reforms that the Government has already introduced – the one-stop shop for consumer complaints which will see businesses get access to up to $1 million if they have been found to have a case, the ability for us to lift the standards of financial advisers, that has already been established.
ANDREW PROBYN:
I will go to the terms of reference in a tick but let's just stick with the Royal Commission, the fact you have called it. Isn't it embarrassing for the Government that the banks, the subject of this probe, are the ones that have given you the political cover to call one?
KELLY O'DWYER:
What we have said is that we will always act in Australia's national interest. A responsible Government does do that. We will always protect the Australian economy and we will protect the ability of our financial system to have a very strong and stable reputation, one that is well deserved and one that does not damage that. But with all of the fevered political speculation, with all of the calls and discussions, with all of the events in the Senate, it became very, very clear that the Government needed to take strong action, decisive action, and that is exactly what we have done.
ANDREW PROBYN:
The Government have lost control, haven't they?
KELLY O'DWYER:
No, the Government have taken strong and decisive action. The Government is delivering on the reform initiatives we have set out. We now have a conduct regulator, ASIC, that is very well resourced...
ANDREW PROBYN:
Let's look at the conduct, because misconduct is one of the terms of reference, including conduct that falls below community standards. That seems quite broad, given that you want this Royal Commission to be reporting within 12 months.
KELLY O'DWYER:
We believe that the Royal Commission can absolutely report within 12 months. We believe that it is important to actually have a timeframe on the Royal Commission, and we believe that the terms of reference need to be abroad so that the Commissioner has the freedom to look at those aspects that are required in order to make recommendations and to have findings.
ANDREW PROBYN:
What sort of systemic misconduct do you believe has happened? Is it criminal, or is it simply unethical?
KELLY O'DWYER:
We do not think there are systemic issues with our banking system so let's be very clear here. We don't believe that there are systemic issues within the banking system. Has there been misconduct? Yes there has and we have seen examples of that. We have seen banks needing to provide redress to their customers, and we have seen ASIC, the conduct regulator, take action. We have also seen AUSTRAC take action and there are proceedings on foot in the courts right now in relation to those matters. Obviously a Royal Commission will not interfere in any way with those important actions but it is critically important for those people, more broadly, to have confidence in our financial system, to have confidence in our banks, to ensure that they are treated appropriately and fairly, which is, you know, a fairly fundamental expectation.
ANDREW PROBYN:
Let's look at some of the complaints from your side is that manipulated defaults, effectively where banks have increased repayments beyond the comfort of their clients, that they might have kept up with them but it became impossible for too long. What sort of redress is going to be available for these people?
KELLY O'DWYER:
We have always said that a Royal Commission cannot order $1 of compensation and that remains true. It cannot order $1 of compensation for anyone.
ANDREW PROBYN:
Can it reverse bankruptcies?
KELLY O'DWYER:
But what it can do is it can make recommendations and findings. Now, you've referred to cases that have been put before parliamentary inquiries in your question to me. There has been something like 17 inquiries in more recent times. Clearly the Royal Commission will have available to it the information from those inquiries, and it will be able to organise, according to what it sees fit, the focus that the Royal Commission will have in relation to those matters.
ANDREW PROBYN:
Could some of these bankruptcies be overturned?
KELLY O'DWYER:
The Royal Commission will not be able to obviously change those cases that have been heard before courts, and if there have been bankruptcy proceedings before the courts, well obviously that has been dealt with. But what they can do is that they can look at those matters and those issues, as to why it was that those bankruptcies might have occurred. It can interrogate that in some detail. And, as I said, there is full scope within the terms of the Royal Commission that we have set out today that will give them the freedom to be able to look at all of those issues that people wish to raise.
ANDREW PROBYN:
Lastly, on citizenship, are you aware of any of your colleagues in the Senate or the House of Representatives who've got something to declare?
KELLY O'DWYER:
I am not aware. I have been doing my own due diligence in relation to my own family circumstances. I can happily reveal to you, Andrew, that I am an Australian citizen and that my grandfather was born in Bairnsdale. I have learnt so much about my family history as a result of this particular process, as have many of my colleagues.
ANDREW PROBYN:
Kelly O'Dwyer, thank you very much.
KELLY O'DWYER:
Pleasure.