30 November 2017
Transcript - #2017231, 2017

Interview with Steve Austin, ABC Brisbane

SUBJECTS: Royal Commission – Banks and Financial Services

STEVE AUSTIN:

Australia's Treasurer, Scott Morrison, joins me now. Treasurer, in September, you said that calls for a banking Royal Commission were "a populist whinge", do you still hold that view?

TREASURER:

My view about all the actions I've taken on the banks hasn't changed…

AUSTIN:

So it is a populist whinge?

TREASURER:

No, what I'm saying is that over the course of this week, it became clear that the national economic interest was being damaged by the constant politicking around this issue…

AUSTIN:

So you've bowed to a populist whinge?

TREASURER:

No, what I'm saying is, if you will let me respond, is that the national economic interest up until this week was not served by having a Royal Commission into the banks, it was not served and that's why I described today as a regrettable but necessary action. It became necessary because of the reckless politics that have been played on this issue which was causing damage to our banking system, its international reputation and for a sector that makes up – just with four banks – a third of the stock exchange that employs over 400,000 Australians, has 17 million customers, depositors, borrowers that I as Treasurer and the Prime Minister could not allow that damage to continue and it had reached a tipping point where the impact of not doing it became greater than previously what it was - that it was less.

AUSTIN:

So that tipping point, was that created by Queensland Senator Barry O'Sullivan and others who decided that they would introduce their own bill for a banking Royal Commission last week?

TREASURER:

What was clear – and the banks made this point – but equally when I discussed it with the Reserve Bank Governor, Philip Lowe, and the Chair of APRA, what had occurred was that this uncertainty that was being created, if it lingered, would continue to damage. Now, the Commission of Inquiry discussion that was going on in the Parliament, where that was going to end was anybody's guess. It could have ended up anywhere and that would only add to the uncertainty. One of the few advantages of this process we've embarked on is that the Government can set very clear terms of reference, we can have a very clear timetable, we can keep it focused and we can keep the politics out of it. So, that option became better than the other alternatives so it was the least worst option.

AUSTIN:

Will you be writing the terms of reference?

TREASURER:

There's already a draft terms of reference that was released today…

AUSTIN:

Who wrote that?

TREASURER:

That was done by the Government, that was approved by Cabinet.

AUSTIN:

By you?

TREASURER:

It was done by myself together with the Prime Minister and the Minister for Revenue and Financial Services.

AUSTIN:

And the banks?

TREASURER:

No. The first they saw of the terms of reference, the first they heard of us actually undertaking a Royal Commission was today when the Prime Minister and I stood up at nine o'clock.

AUSTIN:

For 18 months they've been saying, "No Royal Commissions, we're having too many inquiries." Now they've written saying, "Please investigate us." And they had no influence on the terms of reference.

TREASURER:

No, they had none.

AUSTIN:

So what are the terms of reference? What can you tell me about the draft terms of reference?

TREASURER:

You should have them there, they were circulated. I'm happy to go through them. The Commission is inquiring into the nature and extent and effect of misconduct by financial service entities. Now, that includes banks, insurance companies, superannuation funds including industry funds of course, wealth management practices and it is dealing with behaviour and business activity by these entities that fall below community standards and expectations and any use by an entity of superannuation members' retirement savings for any purpose that does not meet those standards. These are the terms of reference but I should stress, as I always have, a Royal Commission doesn't settle complainants' cases, never has. Bill Shorten's cruel pledge to Australians that somehow this would resolve individual cases is a cruel hoax. It's not designed for that and can never do that and so we don't step back from any of the actions we've taken over the last two and a half years. In fact, we've acted to strengthen our banking system, make it more accountable, make it more competitive, make it fairer. If for political reasons, two years ago, we'd said what Bill Shorten had done, none of those things would have happened. It's the national economic interest that has led us to this decision today.

AUSTIN:

Bill Shorten has described this as one of Malcolm Turnbull's greatest leadership failings that we should – he says Australians have every right to be cynical about this announcement and I'm quoting him, he says that your Government, or the Government of Malcolm Turnbull, "ignored the pleas of families and small businesses, rejected the words of whistle blowers but when the big four banks write you a letter, he folds on the same day". Is he right?

TREASURER:

That's the cheap politics of Bill Shorten as usual. No one takes him seriously when he talks about…

AUSTIN:

But the facts are undisputed…

TREASURER:

The facts are disputed because the facts are that Bill Shorten for two years acted against Australia's national economic interest. If he can damage our economy from opposition, imagine what he could do from Government. This is a bloke who wants to put $164 billion worth of taxes…

AUSTIN:

Well, he's not in Government, you are so the day the banks write you a letter, you fold.

TREASURER:

He's not in Government and he's already injured our economy. Now, we've had to take action today because of his reckless politics to ensure that we can restore faith and credibility in the banking and financial system and ensure that internationally we're no longer taken in disrepute because of particularly his actions. This is a guy who is a wrecker of our economy and the way he's conducted himself on banking and financial services has been careless and reckless. The Government has acted responsibly. We've acted on people's direct concerns when it comes to individual cases. We've acted on issues of accountability, we've acted on their ability to get access to a complaints authority – which Labor still are opposing in the Senate, even as we speak. So we've been acting. We've increased the powers and resources for ASIC, we have acted on all of these issues, we currently have APRA undertaking a full inquiry headed by the former APRA Chair, Mr Laker, into the CBA over those matters. So, we've undertaken myriad actions, heaps of actions here. Bill Shorten has just been running around talking about a Royal Commission he couldn't write a terms of reference to. He's a fraud.

AUSTIN:

The Prime Minister gave a figure of about $75 million this morning and a 12 month time period. Is that likely to be changed?

TREASURER:

I don't believe why. That's the estimate we've made and that's what I'll be putting in the Mid-Year update.

AUSTIN:

Will the Inquiry be taking a specific look at – and by the sounds of the terms of reference that's on the table at least – industry superannuation funds?

TREASURER:

Yes.

AUSTIN:

In other words, industry funds that have union members control or representatives on their boards?

TREASURER:

Yes.

AUSTIN:

Will the Inquiry be having a look at mortgage documents whereby say I have five per cent interest rate on my mortgage, I tell my bank I'm in financial trouble, I'm going to have trouble meeting my payments, the banks automatically up the interest rate when I have financial trouble and are thus making things worse. Will it be looking at that?

TREASURER:

I think that does come potentially under the terms of reference, particularly on the conduct and business activity of those institutions. It will also draw on the many inquiries that have already been undertaken and a lot of the evidence that has been for those inquiries could be effectively read into this. So, it can draw on a lot of that work and that work does include those sorts of cases you referred to.

AUSTIN:

Credit card interest rates and terms of conditions?

TREASURER:

This is not an inquiry into how interest rates are set necessarily…

AUSTIN:

Credit cards are supplied by the banks.

TREASURER:

Not just by the banks, a number of people do that, nevertheless, their business practices, their business activity, their conduct and behaviour by these entities is all on the table for this Royal Commission so that can include that. But I should stress as the Prime Minister said today, this is not a Royal Commission into capitalism as some from the extreme left-wing seem to want and some in the Labor party want. This is actually trying to deal with consumer interaction, the interests of depositors and balancing those with the interests of borrowers. This is about dealing with that. It's got nothing to do with the strength of the banks. Our banks are strong. One of the great problems with what Labor and Bill Shorten have done this year is they've called into question the strength of our banks. You don't do that if you're a responsible economic manager. It's reckless and so what I said today is very clear that the systemic strength of our banks is not in question, the prudential oversight of our banks is not in question.

AUSTIN:

It's pretty good.

TREASURER:

So it's important.

AUSTIN:

I'm told I have to let you go. One quick question, the inquiry into regional lending practices, it was being headed by Malcolm Roberts when he was a Senator, but they have taken evidence. Will that evidence on Hansard be now put to the banking Royal Commission?

TREASURER:

Well, they have the ability to draw on anything so I assume if they choose to do that, they can.

AUSTIN:

Thanks for your time.

TREASURER:

Okay, thank you, bye.