3 August 2018
Transcript - #2018158, 2018

Doorstop interview, Australian British Chamber of Commerce

Subjects: Consumer powered competition in our banking sector

JOURNALIST:

Treasurer, another very damning report… [inaudible]…

TREAUSRER:

And the question…

JOURNALIST:

What do you think of the report?

TREAUSRER:

Well as you’ve just heard me say at some length at the event today, this report we’ve commissioned, along with the ACCC previously, and it’s been part of a suite of things we’ve been doing to address the very genuine issues that there are in our banking and financial system. The Financial System Inquiry all through to this most recent report, the Laker Review, that went into CBA and of course there’s the Royal Commission so there’s a lot of work that’s being done, a lot of changes that are being made. Increased accountability has been a key part of that. Increased powers for ASIC to deal with misconduct in the banking sector and increased penalties. I mean the penalties we are now imposing on bank misconduct both for individuals and on banks themselves are as strong as anywhere else in the world. But what I’ve said today is, if we want a stronger banking system and a more competitive banking system, then as customers, we have to claim it back. As customers, we need to make the banking system more competitive by going out there and arming ourselves for a better deal. This is what the Productivity Commission are saying. They’re saying if we want a more competitive banking system then we need customers not being put to sleep with bewildering regulation and not being put to sleep with infantilizing regulation which leaves it to everybody else, but to ensure that as customers we actually stand up to our banks ourselves and get the best deal we possibly can. Now as a Government we need to support that with the right information and ensure that those customers are empowered by owning their own data. The opening banking regime that we are putting in place is that real change that we believe will deliver competitiveness to the banking system in Australia that we have not seen in generations.

JOURNALIST:

Before the Royal Commissioner, though, I would never have asked my bank, are you taking money out of my dead mother's account?

TREASURER:

Well as you know that very issue had already been resolved and was publicised well before the Royal Commission. So I don't know what the point is.

JOURNALIST:

There’s only so much customers can do…

TREASURER:

There’s a lot customers can do a lot. Customers can hold their banks accountable by changing banks. I mean, one of the statistics that I found really interesting was that in the past two years, only one in three people was interested in switching banks. Now, we need to be armed with what we can take back to take a better deal, and it is no different to what is happening in the electricity industry, and consumers getting out there and asking for that better deal, demanding that better deal, and being prepared to change the business and take it elsewhere if you are not happy with the deal that you are currently getting. We want to encourage customers to do that. But that is not the only thing. Of course there is the safety net is provisions we have put in place, of course there’s the tougher penalties and greater resources to hold banks to account and doing all of these things, and that is why we have been doing this now for almost five years. Lots of change, lots of action, and at the end of the day we want to see those customers getting a better deal.

JOURNALIST:

The report recommends or suggests that the ACCC should be the champions of competition. Is that something the Government will adopt and what impact will that have on customers?

TREASURER:

The ACCC doesn't actually agree with that recommendation. We have had this conversation with the ACCC because that was contained in draft report, so that is not one we have indicated we were looking on favourably. The government is the champion of competition around the Council of Financial Regulators table. The Treasury is directly represented at the Council of Financial Regulators and indeed I attend that meeting more regularly than I think previous Treasurers ever have, so competition is incredibly important to me and it’s the Government’s role to be that champion of competition policy.

JOURNALIST:

If you say that customers should desert the big four Banks, because when you’re talking about swapping banks, the Royal Commission showed they were all as bad as each other. Is that not one of the reasons why people haven’t swapped?

TREAUSRER:

Well I mean, go to IMB, go to Bendigo, go to the Bank of Queensland. Now I’m going to have to list out every single bank here to show that I’m not showing any favoritism to any one. I’m saying, go where you get the best deal. Go where you get the best deal. And what we need to be careful of is those who will tell you to disengage from the system, let the government protect you, just totally walk away and don't take your own interests into account. That is what the banks and other big companies, big energy companies, that is what they’re relying on. They’re relying on you to go to sleep. And as customers we have to be on the front foot; we have to be demanding a better deal. A more competitive market is one where customers are out there fighting for that better deal.

JOURNALIST:

Treasurer, can I ask, did you approve the $450 million Great Barrier Reef Foundation grant before the Prime Minister and Environment Minister met with the group?

TREASURER:

This was done through the ERC process and the Cabinet process as per usual.

JOURNALIST:

And what was the Treasury’s response when it learned of the initiative?

TREASURER:

Well these are matters that are done through Cabinet and you don't expect me to go through Cabinet processes in public do you?

JOURNALIST:

That was my question.

TREASURER:

Well no government goes through the details of Cabinet processes, that is why the Cabinet is in confidence. It was approved by Cabinet along with every other expenditure commitment that was contained in this year’s Budget. It was done in the normal process.

JOURNALIST:

[inaudible]… You talk about individual responsibility there. What about those at the helm of these banks? What would you like to see happen there ultimately? Is jail term appropriate for these people?

TREASURER:

We have already upped those penalties. That’s already happened.

JOURNALIST:

So you’d… [inaudible]…

TREASURER:

That is not for politicians to decide. We have put the penalties in place, we have put the laws in place, we put the resources into ASIC to pursue these issues, and then the courts decide what penalties or other things are meted out. I applaud what has happened through the Australian Banking Association for putting this new code in place. I think that is a positive move and I commend them for doing that. I commend them where they are listening and then moving forward. I welcome some of the announcements they have made on drought more recently and we welcome that. But at the end of the day there does need to be a tough cop the beat. That is ASIC, and ASIC has needed to be strengthened and more empowered and have tougher penalties at hand and we have given them all those things. It is a matter of acting right across the board, and that is what we have done. We are not making any false promises to people. We are creating a more competitive, more accountable and fairer banking system, but one that most importantly is stable and strong and underpins the entire Australian economy. Without a strong banking financial system you do not have a stronger economy. And if you don’t have that you don't have funding for hospitals, you don’t have funding for schools, you don't have funding for disability support or pensions, the Pharmaceutical Benefits Scheme – that all depends on a stronger economy, and a strong banking and financial system that is competitive and accountable is necessary for that and that is what the Turnbull Government is delivering.

JOURNALIST:

Treasurer, quick question on Brexit, if you may: what’s your assessment of the direction that this strategy is going for the UK?

TREASURER:

Well one of the things I learn when I go to the G20 is that there are some people’s jobs I certainly wouldn’t want. This is a very challenging issue for the UK Government and I commend Chancellor Hammond and, of course, Prime Minister May for dealing with what is a very challenging set of circumstances. So I’m not going to be a commentator on what they’re doing. I know they are applying themselves fully to what is a very difficult challenge. It is important for the global economy. It is very important for the European economy, the British economy, and I have only been anything but totally impressed by the way Chancellor Hammond has been applying himself to this very difficult task.

JOURNALIST:

[Inaudible]… closer alignment with the EU which would actually perhaps jeopardise the trade...

TREASURER:

Well I am not engaging in the internal politics of the United Kingdom or the path that they’re adopting, pursuing the Brexit vote that occurred there some years ago. It is for them to manage that and handle that and I commend them for the very professional and determined way that they are proceeding with trying to resolve that issue.

JOURNALIST:

Theresa May and Emmanuel Macron of France are meeting for dinner tonight. If you were at the table, what would you tell them?

TREASURER:

Well I am not at the table. I will check to see if the invitation came in the mail, but I’d say it’s… The Prime Minister engages with the other world leaders. I had the opportunity to engage with my counterparts in Buenos Aires just a couple of weeks ago, and I think Chancellor Hammond has been showing real leadership.

JOURNALIST:

Just back onto the bank report, of the dozen or so recommendations, are there any that the Government will commit to?

TREASURER:

I think I have indicated to you today that we’re looking very carefully at a couple that we are quite attracted to. The integrity officer, I think, has a lot of merit, but we’re not going to rush into this. We’ll consider that carefully. On top of that there is the access regime, and the new payments platform, I think that’s a real… [inaudible]. It fits in well with what we have been doing more broadly, but, again, a lot of people have to be consulted about how we might proceed with that. There were a range of other issues that go to commissions and rent structures and the mortgage broking industry. They were, a lot of them, canvassed in the earlier report, and they are quite complicated. The government is not rushing on that response. There will be a report from the Royal Commission in the not too distant future. And there will be another opportunity to potentially fashion any response to issues raised there or here together.

JOURNALIST:

Have you ever needed to switch your bank at all?

TREASURER:

Sorry?

JOURNALIST:

Have you ever needed to switch your bank?

TREASURER:

Well I have been getting a good deal. For a long time. But I constantly make sure I do and that is what I think I’d encourage all consumers to do, whether it is your first account and they have come along to your school and they want you to open that little bank account like I did when I was seven years old or nine years old, or however old I was, and it is an important choice that you make.

JOURNALIST:

Are you still with your first bank?

TREASURER:

I actually am. But I always check to make sure it’s the right place for me to be. It is not a passive decision, it is an active one. So long as it’s an active choice that people are making then I think we put strength in the system.

TREASURER:

Just on company taxes, will you confirm that the Government will bring debate on company tax cuts as a priority when Parliament resumes?

TREASURER:

It will be on when we come back. Ok. Thank you.