BEN FORDHAM:
Treasurer, good afternoon.
TREASURER:
G'day Ben. I am actually in Sydney but anyway that's alright.
FORDHAM:
Sorry to do that to you. Although the weather in Sydney today looks a little bit like Canberra kind of weather. How are you doing?
TREASURER:
I am well thanks, Ben.
FORDHAM:
You have just held a news conference with Prime Minister Malcolm Turnbull announcing that the heads of the Big Four banks will be hauled before a Parliamentary Committee every year. I don't know whether hauled is the wording that was used by you or the Prime Minister, but I think you get the idea. The PM says it will make them regularly accountable to the Australian people. Why are you doing this?
TREASURER:
Well, it is important that we have transparency around the decisions that we are making and this is the point that I have been making now as Treasurer for many months. They make their decisions and it is important that they explain their decisions to their customers. Now, there is no reason why the banks wouldn't have been able to pass on the rate cut that we had this week in full to their customers based on any reason associated with their external financing. And so there is a social contract if you like, a social licence, by banks with the Australian people and this provides a practical, permanent and regular forum in which the banks can explain these decisions. Now, we already have the process with the Reserve Bank. They appear before the same committee as does the head of APRA. So, that is why it is a good committee for them to be accountable to the Australian people through the Parliament in this committee and it adds another layer of accountability to what we have already done with ASIC - we beefed up their powers and gave them more resources and they have more than the powers of a Royal Commission to investigate and prosecute any malfeasance on the banks part.
FORDHAM:
Ok, so when you say there is no reason why the banks can't pass on the interest rate in full from this week – they don't have to though. They are a private company.
TREASURER:
That's right. But that's my point, Ben.
FORDHAM:
You can't make them do it.
TREASURER:
No, I can't and I am not going to pretend I can as others may have in the past. What I am simply saying is you have made a commercial decision. If you have decided to keep an element of this reduction in your costs to pass on to your shareholders well say so.
FORDHAM:
But they could say to you if they wanted to well, we decided to not pass on the rate cut in full – they're not going to say this – but they could say we just wanted to do it because we wanted to make more money, more profit for us and for our shareholders.
TREASURER:
Well, let them say that.
FORDHAM:
What is that going to prove?
TREASURER:
Let's not have the merry dance which somehow suggests that there is some mystery in all this and they're somehow, you know that it is not for their profit or their benefit. This is just providing transparency Ben. We rely a lot on our banking and financial system tremendously. It is the pillar of our economy and frankly it is the reason why we have survived so many shocks over the last decade or so. It is because of the strength of our financial system, our banking system. Now, we initiated an inquiry when we came into Government in 2013 with David Murray, very respected figure, he recommended a whole range of things we needed to do to further strengthen it. We are getting on and doing that. We can improve the powers of ASIC and their resources to ensure that anything being done wrong is actually being followed through on and now this adds a further layer of transparency to give Australians confidence about why things are happening and they're better informed.
FORDHAM:
Alright, issues involving the banks, I mean we are not just talking here about passing on rate cuts and during the election campaign I know when Bill Shorten came out and said, "we need a Royal Commission into banks", I remember saying on air I would rather be arguing Bill Shorten's case than Malcolm Turnbull's here. I felt that the Prime Minister looked like a bouncer standing outside the banks protecting them during the election campaign. It seems a little bit late to start bank bashing now. Aren't you supposed to do it during an election campaign as opposed to afterwards?
TREASURER:
Well, if you are playing politics – but that is not what we are doing Ben. What we said, when this issue was raised it was actually before the election. Now, Bill Shorten is still talking about a Royal Commission that he can't even define a terms of reference for. So, that just exposes it as the hollow, populist, nonsense that it is. What we have actually done is something practical. I have said the Financial System Inquiry and the very serious recommendations we are implementing to make our banking system stronger which helps all Australians. Second thing, on ASIC, we have beefed up their powers, beefed up their resources and they're stronger than a royal commission to go after the issues that need real attention with individual customers. Thirdly, now we add this to it Ben because we are practical. This isn't about some political jaunt, it is not about chest beating. It is just another practical measure which addresses the concerns that Australians have.
FORDHAM:
Alright, but what about when we have banks ripping farms away from farmers in the middle of drought? What about when we had banks giving dodgy financial advice through people who weren't really qualified to give it? When we had banks that are involved in tricking up medical reports so people don't have to receive a payout on their insurance? How are those things going to be solved by hauling in these bank bosses before a discussion in Canberra?
TREASURER:
We addressed that with the increased powers of ASIC and the increased resources for ASIC in April. That is how that…
FORDHAM:
Wouldn't a Royal Commission blow all the cobwebs away on all that kind of stuff?
TREASURER:
A Royal Commission would go for several years and at best would recommend that ASIC take some action. So, that is a lot of time and angst and energy expended in something that could already happen now and we took the position to enable that to happen now by giving ASIC the power and the resources to get on with it. I don't know why you would want to delay it for several years, Ben.
FORDHAM:
Well, your Government has announced Royal Commissions just in the last week or so into what is going on in the Northern Territory and previously into what is happening in the union movement.
TREASURER:
As we should.
FORDHAM:
So you have a track record of holding Royal Commissions.
TREASURER:
Well, when there is an event like the one we saw specifically in the Northern Territory and that required the specific attention of a royal commission and it has much shorter recording timeframe and it is very specific in its purpose. But Bill Shorten can't even tell us what the royal commission is into. One week it is into banker salaries, the next week it is on mortgage rates, on other times it is on financial advice practices. He can't decide what it is into. What it is about is Bill Shorten just trying to be a shameless populist. He hasn't got the concerns of savers and depositors or borrowers or shareholders in mind, he has only got his own interests in mind which is always his agenda.
FORDHAM:
Are these bank bosses going to be compelled to open up the books and reveal all when they are in Canberra.
TREASURER:
Yes they are required to turn up which won't be a problem…
FORDHAM:
I know they are required to turn up.
TREASURER:
They will turn up.
FORDHAM:
Mind you there is nothing forcing them to turn up though, is there?
TREASURER:
Well, there are actual ways that these things can be done but it won't be necessary though, Ben. It just won't be necessary. The Reserve Bank Governor doesn't get compelled to turn up twice a year, he comes.
FORDHAM:
But are they going to be compelled to open up the books and to be honest about everything that you are going to be asking?
TREASURER:
Well, in the same way I answer questions in Parliament and in the same way that others appear before committees, I mean, you have got to give straight answers…
FORDHAM:
When you are before a royal commission there is very…
TREASURER:
…will think you are not being upfront.
FORDHAM:
Sure, I mean, but they are not known for being upfront though, are they? When you ae before a royal commission there are serious consequences.
TREASURER:
When you are answering questions before ASIC if there is serious maleficence going on and you are obliged to give answers in those circumstances as well. That power already exists and in fact we increased the power and gave them resources to do it, something Labor didn't do for six years.
FORDHAM:
I have got a question here from Andrew who says, "Ben, please ask the Treasurer, who will be paying for the bankers lunches and travel expenses to Canberra."
TREASURER:
The banks.
FORDHAM:
Let's hope so. Good to talk to you Treasurer.
TREASURER:
Well, hang on, what do you mean let's hope so?
FORDHAM:
Well I am just hoping so.
TREASURER:
Of course they pay for their own travel to Canberra and to whatever it is they are going to. When you go to Canberra who pays for yours Ben?
FORDHAM:
Well, it depends – it depends who is sending me.
TREASURER:
Well, if your company is sending you Ben, and that is who is sending them, who pays for it?
FORDHAM:
Do you think they are quaking in their boots this afternoon?
TREASURER:
When you are out there taking people out to dinner or whatever else – who is paying for that?
FORDHAM:
Do you think they are quaking in their boots this afternoon at the thought of going to Canberra and asking some questions and as you point out they can just sit there right in front of you and say, "oh well we made these decisions for our shareholders. What have you got? Chewy on your boot."
TREASURER:
Ben, I don't share your cynicism about this. I don't. I think the process of coming before a Parliamentary Committee on a regular and permanent basis. Royal Commissions come and go – this happens every year, at least. And when you make a decision as a bank, when it comes to these issues and you know that you are going to have to sit in that seat, just like when I make a decision I will come on your program or Ray's or whoever's, on Alan's, or when I go into the Parliament and answer questions, you have got to be accountable for those decisions. Now, the banks, they are accountable for the decision that they make and they need to explain them and this gives them an opportunity to do that. If they thought they were lacking a forum to make that explanation – well there it is, right before the Parliament which represents the Australian people.
FORDHAM:
Always appreciate you coming on. Thanks for your time.
TREASURER:
Good on you, Ben.