25 July 2017
Transcript - #2017140, 2017

Interview with John Laws, 2SM

SUBJECTS: Turnbull Government commissions review into open banking; FinTec; family trusts; public sector superannuation; Tony Abbott; Murray-Darling Basin Plan; Donald Trump, Vladimir Putin.

JOHN LAWS:

Treasurer, good morning, and welcome to the program.

TREASURER:

G’day, John, good to be with you.

LAWS:

How you doing, alright?

TREASURER:

Beautiful day down here in Sutherland Shire. It’s nice to be in my electorate office down here in southern Sydney, so I hope it’s great where everyone else is today.

LAWS:

It’s a pretty good looking day where I am as well. What is an open banking regime? What is that?

TREASURER:

What it is a more competitive banking regime, it means for opportunities for businesses to get involved in the banking system, it’s something that they’ve done very successfully over in the United Kingdom over recent years. It means that, for example John, you know when you give your information to a bank, and your credit history and all of this information which the bank has, technically the bank owns that, not you. We want to change that. We think you should own that.

LAWS:

OK, but before you go any further, why? What’s the difference if the bank…

TREASURER:

The difference is that you can take that information and you can have all that information available to other people who you might want to do business with, or you might want to get loans from, and then all of them have the opportunity to work out how to give you a better deal. It’s a bit like those Youi ads, you know those Youi ads? They say you can get a better deal on your insurance, because they know more about you. Well this is the same sort of thing. And so it’s about putting the consumer, the customer in the drivers’ seat, with their own information, and ensuring the banking system is more freed up to respond to what customers really, really want, and so you don’t have the straight options of the big four. We want there to be more opportunities, regional banks have been doing much better, places like Bendigo and IMB, they’ve been offering better opportunities, and we want to see more of that, we want to see more competition in the banking system.

LAWS:

Well those smaller banks have been getting the business too haven’t they?

TREASURER:

They have, they’ve been improving and that’s one of the reasons why I didn’t put the bank levy on the smaller banks, because I wanted to ensure that they had more of a go at an even start.

LAWS:

Ok, now this fella Scott Farrell is going to lead the review, who is Scott Farrell?

TREASURER:

He is a lawyer who’s been working in what’s called the FinTech sector, that’s called financial technology and it’s one of the most rapidly growing areas in the financial services sector and these are the characters who are getting out there developing all of these new computer aps and other financial services aps, where people can process payments and take advantage of the new technology and that’s where all the new opportunities are for banking, and we want to make sure that someone has an understanding of the legal side of this and the technology side of this, and the protections that are needed for customers as well, is taken into account in this inquiry and I met with him yesterday actually to talk through a bit of this stuff. We’ll also look at what they’ve been able to do in the United Kingdom where they have a system of challenger banks which means that new banks can come in and offer new products and services and it’s a bit easier for them to do that, rather than the sort of closed-call system we’ve had for so long.

LAWS:

A lot of our listeners are calling for a Royal Commission into the banks, will this review probe the financial institutions as deeply as a lot of people would like to see them probed?

TREASURER:

What we’ve already done, what a Royal Commission would do with this John, it would take about three of four years, they’d be a lot of hearings, a lot of lawyers, and at the end of that, they’d make a set of recommendations. Here’s what I reckon they’d probably recommend. They’d say the banking executives should be more accountable, and if they make mistakes, they should be subject to penalties. Well I introduced that in the Budget. They’d say that it’s important that we have a one-stop shop customer complaints system for the banks which is binding on them, a new complaints authority. Well, we announced that in the Budget too, that’s being introduced. There is a need for some of these difficult cases that haven’t been able to be resolved, particularly for small businesses, and then potentially even a scheme of last resort to see that they are settled. Well that’s the exact scheme we’ve asked the Ramsay Review to develop and we should get a report on that next month. Now, the point of saying all of that is, you can waste a lot of time making a lot of lawyers happy, and playing the politics around the banks over the next four years, or you can just get on with it. That’s exactly what we’re doing. We’ve already given ASIC more powers and more funding to take the banks to task and I expect them to do that. But what the Australian people want is they want us to do something now, not put on some sort of lawyer’s picnic for the next four years, which at the end of the day can’t resolve anyone’s case, it can’t deal with any of those issues, all it can do is make recommendations. We think we should just get on with it.

LAWS:

In the Budget you announced that levy would be passed on to the big four banks. Malcolm Turnbull said customers should simply take their business elsewhere if the banks passed on those fees, is that a slightly naive statement or is that reasonable.

TREASURER:

I think it’s totally reasonable, and going back to your first question, in an open banking system, it will be easy to switch between banks. That’s an important thing for customers. One of the things banks rely on is you’ll never move. That it’s all just too hard. And we need to make it easier for people to take their business elsewhere because where customers are stronger at the end of the day, then your system is stronger, and that’s what we want to achieve. Now, what we’ve seen since the Budget, is we’ve seen actually mortgage rates for principal and interest only loans for owner-occupiers, in any case we’ve seen that go down, not up. We’ve seen interest only loans go up but that has nothing to do with the bank levy. What we’ve done through our regulator, APRA, they’ve introduced some rules which has slowed the growth in investor lending, who are just borrowing money with interest only loans. Because that was making the problem of rising house prices, particularly in Sydney and Melbourne, even worse where we have an undersupply of housing.

LAWS:

Bill Shorten has been making rumbling noises about tax reforms to target the richer people, to help those in need. Would you support that kind of change? I mean it’s very much a socialist attitude. Would you support that?

TREASURER:

No, you’d have a lot of listeners today John who would have family trusts, be on the land. And small businesses use family trusts, it’s a pretty simple reason why you do it, because you have good news and you have bad news, you have a good year and you pay an amount in tax, and the next year, it’s a bad year, the weather has been unkind to you, and you are borrowing money to pay last year’s tax bill. You’ve also got, who owns the property at the end of the day and you want to keep it in the family. These are all legitimate reasons of why we have a trust scheme in this country and Bill Shorten is coming after that. We don’t agree with him. We’ve had 26 years of annual economic growth now, it’s the world record, we know, you know, your listeners would know, that not all Australians, particularly in regional areas, have been feeling that growth in recent years.

LAWS:

No, no they wouldn’t.

TREASURER:

They haven’t. That’s why it’s important we did what we did in the Budget, guaranteeing Medicare, public schools funding, the pharmaceutical benefits scheme, the National Disability Insurance Scheme, making sure these essentials are fully funded and people can rely on them when they are feeling that times are more difficult. But you can’t increase wages by slowing the economy. You’ve got to have a plan to grow the economy which is what we have. 240,000 more people got a job last year. That’s the highest rate of jobs growth we’ve seen since before the Global Financial Crisis. The best form of welfare is a job. The best way of getting ahead is a job. We want to appeal to Australian’s sense of hope, and opportunity, not as Bill Shorten is doing, he is trying to play the politics of fear and frustration and cynicism. I think Australians will always be aligned with the view that we want to create better days ahead, and that’s certainly what we’re focused on. You’ve got to grow the pie, it’s not about how you divvy it up. If you grow the pie then everybody does better.

LAWS:

Yep they certainly do. We had a look at super rates the other day for Government employees, why is there a difference between the standard superannuation contribution rate, and the rate for those that work in the public sector, and I presume, that’s for you as well is it?

TREASURER:

My super rates are the same as what happens in the public sector generally, that was changed actually before I came into Parliament. I mean, back prior to 2004, there was the politicians’ pensions – they were abolished many years ago by John Howard. So we’re on the same superannuation scheme that public servants are. It’s set independently from us John, as you know. They’re not set by politicians, they’re set by the remuneration tribunal.

LAWS:

But the end result is you get it.

TREASURER:

John, what’s the alternative – the politicians set it? I don’t think we should set what it is, I think someone independent should do that.

LAWS:

Well, as a Government employee you receive 15.4 per cent right?

TREASURER:

Well we get paid our wage John and that includes the superannuation component and mate I’m not one of those ones who says we should get more or less or any of that sort of thing. I just don’t think politicians should set it. I think that’s the worst of all worlds and people like me start commenting on those sorts of things, well that’s the path we go down. I don’t think that’s going to do the right thing by tax payers.

LAWS:

Maybe not, the tax payers are still entitled to know, the public servants receive a higher rate than the average punter, don’t they?

TREASURER:

Well it’s all part of an overall remuneration package. I assume the remuneration tribunal said that they would be paid less super then that would be offset by their wage, so it’s a total package which includes your super an your wage and it’s all bundled together.

LAWS:

Hey Scott. I don’t mind how much money you get, mate, if you earn it.

TREASURER:

That’s right. I don’t complain about the conditions or wages or anything like that – I certainly don’t – and it’s a privilege to serve the country and the taxpayers. You know, I think do the right thing by them.

LAWS:

Ok, but as it is funded by the taxpayers, the point I’m making is that we have a right to know, don’t we?

TREASURER:

Well, yeah, and that’s why all that information is available and everybody can see it. People know more about my financial dealings than other Australians generally. I mean, I’ve disclosed to them and I said yesterday that some years ago when, for a period of time between jobs, I had a small, little consulting business. I had a family trust which was associated with that. That’s all on the public record – full disclosures. I think that’s as it should be.

LAWS:

I’m not singling out you…

TREASURER:

I know, mate. I know.

LAWS:

On a completely different note, one that may be a sour note – I don’t know. Should Tony Abbott get the hell out of the Party?

TREASURER:

No, no, no, no.

LAWS:

Well, you’re in a minority there, I think.

TREASURER:

No. No, I don’t think I am either. Look, Australians just want the Government to focus on them and that’s fair enough. And I think that’s exactly what we should be doing. And that’s what we’re getting about and I’ve seen that poll today. I mean, that speaks for itself and I think we need to focus. I mean, Malcolm Turnbull is the right person to lead this country, that’s just not my view, that’s overwhelmingly the view of Australians, compared to Bill Shorten and whoever else. He’s the right guy to lead this country and he’s doing that and the reason he is because he’s so focused on the things that matter to Australians. Energy prices, for example, this is an issue that Malcolm and I probably talk about more than anything other issue as we do as a Cabinet – because that’s the thing that’s really hurting businesses, it’s really hurting households, it’s really hurting people in rural areas and we need to crack this thing and it’s very, very difficult. You can’t just turn this thing around overnight. There’s been politics and bad decisions over decades and we’ve got to turn that around, and that starts by making sure our gas gets used here at home, and that’s one of the first things we’ve done.

LAWS:

Ok, you have cleverly, as politicians can cleverly do, moved away from Tony Abbott completely which is what you wanted to do, I presume.

TREASURER:

John, you’ve been involved in Australian politics longer than, I think, any other radio broadcaster, is that fair to say?

LAWS:

That’s true, yes.

TREASURER:

And a distinguished career. You’ve seen it all, mate, and you’ve seen all of them. And the biggest mistake politicians can make is to think that politics is about them. And that’s where they come undone. And it’s not about me, it’s not about Malcolm, it’s not about Tony, it’s not about Bill, it’s not about any of us. It’s about who’s listening to the program. And when politicians focus on that and forget all that other rubbish, then they earn their pay.

LAWS:

I’ll accept that but I’ll give it a bit of thought. Following last night’s revelations on Four Corners about the Murray-Darling Basin Plan, is anybody going to get prosecuted there? It looked a bit iffy.

TREASURER:

Look, that doesn’t fall specifically into my bailiwick, John, and that is an issue that I have no doubt Barnaby will be responding to. He’s very close to all of this – as you’d expect, he’s had a long history with it. So, there isn’t a lot more that I can add to that other than to say that we’re committed to implementing the Plan in the most common sense way that supports the strong agricultural industries and local communities which depends on a healthy river system and COAG endorsed a plan agreed by the Basin water ministers outlining how the Basin Plan will be implemented and that paves the way for that Plan to be put in place by all the governments and provides certainty to the Basin communities. So, that’s what we’re getting about doing and on 31 May of this year, more than 20,050 gigalitres long-term average annual yield of water has already been recovered and this is real progress in delivering the Plan. But, look, I have an interest in these issues but Barnaby, he’s the guy that’s running the show there and he’s doing a great job.

LAWS:

Ok, while the Plan is matters by the states – which is true, the Commonwealth put in a lot of money – so, what are we really seeing in return?

TREASURER:

We’re making more than $8 billion available safe for on and off water infrastructure upgrades and efficiency improvements across the Basin. Now, that’s an investment in the long-term productivity of irrigated agriculture, and the sustainability of regional communities. So, we’re investing in building capability and this is an important point – whether it’s the Murray Basin Plan where we’re investing in the plumbing or we’re investing in the Melbourne to Brisbane Inland Rail or building the Western Sydney Airport or the total of $75 billion of economic infrastructure investments, not overpriced school halls and all that sort of stuff which the previous mob did - $75 billion of economic infrastructure, that’s how you boost growth in your economy. That’s how people want to invest in your economy so that’s the sort of investment we’re making as a Government and that’s how you grow the economy and that’s how you boost wages. You don’t boost wages just by going around and taking them off someone else.

LAWS:

Ok, but this Clean Energy Target will push up power prices – so why would you do that now when record…

TREASURER:

We haven’t come to a final deal on that issue. If we’re talking about energy, the best thing we can do – apart from getting the gas back here to be used in Australia because that has a big impact on the wholesale price of energy…

LAWS:

Then why do we give it away?

TREASURER:

Because of the agreements and decisions that have been made some years ago – not by this Government – and so, we have to unpick that and we’ve taken a fairly unprecedented step in putting these exports controls in place which came into effect on 1 July this year, which ensure that we can bring the gas home for our use. But the other one is there’s a real future for coal in Australia and an important one – and I know a lot of Australians want to see a certainty around the continued use of coal-fired power stations. One of the most important things we can do is keep our existing coal-fired power stations running for longer. Now, some of them have got well past their economic life – and Hazelwood was a sad example of that – but you’ve got others: Bayswater, Liddell, and so on, which play a really important role in our energy grid and we need to keep those economic and running for as long as possible to provide the stability in our energy grid that we need.

LAWS:

I hear you’ve had a falling out with my friend Roy.

TREASURER:

With who?

LAWS:

Oh sorry, Ray.

TREASURER:

Ray. I haven’t had another one, have I? [laughs]

LAWS:

[laughs] I don’t know. What did you do to offend him?

TREASURER:

Look, I haven’t really commented on that. I wrote to Ray after that and thanked his listeners and the opportunity to be on that program for so many years. I’m not a bitter sort of person, John. I mean, it was a good opportunity to have those chats for all those years. I went on another radio program one morning in Melbourne, you know, ok. I’ll leave that for others to judge but, look, I appreciated the opportunity to be on that program for so many years and I still will always appear where people are happy to have me so it’s good to be with you, mate.

LAWS:

Ok, well, it’s very good to have you and I hope you haven’t had any meetings with the Russians or anything, have you? [laughs]

TREASURER:

[laughs] No, I haven’t. I haven’t, I can assure you that. The only time that I’ll meet with the Russians is at the G20 which is a very productive meeting.

LAWS:

Out of interest, what do you make of Putin as a man? I saw him interviewed the other night. You would have seen it too, I imagine. What do you make of him?

TREASURER:

No, I didn’t catch that. I haven’t had a lot to do [with him] – I haven’t met him personally as well, but any of these large countries which have these enormous problems, you know, we can all sit back here a long way away and make judgements about it – whether it’s China or whether it’s Russia or the United States even – they’re enormous economies and Australia is a big economy as well, but compared to that, it’s another thing entirely. But John Howard used to have a great statement about our friendship with the United States and it was based on shared values like a family…

LAWS:

Yes.

TREASURER:

…Not shared interests and I think there’s a bit of values dissonance, I suppose, between some leaders and how they run their show and how he’s gone about some issues I think would suggest that. But at the end of the day, we need to work with everybody around the world and particularly to bring peace and stability to the Middle East and what’s happening in Syria, and so, he’s obviously got a very significant role to play there and we have to work practically with all of these leaders – whether we agree with them and share our values with all of them or not – we’ve got to get outcomes because I want my kids to grow up in a safer world.

LAWS:

So do I. So do I, but it’s very interesting to note how the world reacts when somebody like Putin gets to sit down and have a talk to Donald Trump. I mean, the reaction to that was quite amazing. Do you think that was good? I would much rather that Donald and Putin be friends than enemies.

TREASURER:

Well, if they’re not talking – if people aren’t talking, there’s a greater risk of them fighting, and I think that’s why it’s always better to have people talking. I think that’s common sense and we’ve been a very forward leaning Government in practically trying to facilitate a lot of positive relationships around the world. The rest of the world looks to Australia a bit because we’re seen as an honest broker on a lot of things – and New Zealand’s a bit the same too. And we play that role quite effectively, I think Malcolm’s done that very well, and I think Julie’s done an outstanding job as Foreign Minister with that as well. She really is a dynamo in all that.

LAWS:

She certainly has a reputation that speaks for itself. Ok, well, I’ve enjoyed talking to you, Scott, as I always do. You’ve been generous with your time and let’s hope we can talk to each other again soon.

TREASURER:

Love to do that, John, and as always: up, up, Cronulla!