30 November 2017
Transcript - #2017232, 2017

Interview with Ben Davis, 4BC

SUBJECTS: Royal Commission – Banks and Financial Services; Bill Shorten’s failure to expel Sam Dastyari from the Labor party; Sam Dastyari’s failure to resign from the Parliament

BEN DAVIS:

Good afternoon. You didn't want this, the Prime Minister didn't want this, the banks didn't want this, you've been dragged into this kicking and screaming, it is pure politics.

TREASURER:

Well if it had been about pure politics, I mean we've always been aware that the idea of a banking Royal Commission has some popular support but it's always been our view that type of an inquiry also carried real risks for our banking and financial system. But this week, that risk was surpassed by an even greater risk which was a very unstructured inquiry that we had formed the view would cause damage to the Australian economy and it was important that we restored certainty and this wasn't just my view, I consulted with the Governor of the Reserve Bank and the Head of the Australian Prudential Regulation Authority, Wayne Byers. You know the views that the banks expressed in terms of the damage that politics was doing to the credibility of the banking system, and let's not forget that everybody's job in this country depends on the health and strength of our banking system.

DAVIS:

So you're saying this is a lesser of two evils?

TREASURER:

Of course it is and what has been guiding me and the Prime Minister and all through this process over several years, where we've taken a large number of actions from executive accountability, competition, increased powers and resources for ASIC – we've got the Laker Inquiry, a formal inquiry into CBA running currently now following the issues on AUSTRAC and others which was initiated by APRA. There's a lot of things happening – a new Financial Complaints Authority – which the Senate could be voting on right now and I hope they do. All that was happening and we just got on with it and started dealing with the issues. The politics, though, around this which I blame Bill Shorten for was doing damage to our economy and if Bill Shorten can do damage to our economy from opposition, imagine the damage he could do from Government.

DAVIS:

Treasurer, what about the politics surrounding the Prime Minister's leadership? If you're having backbenchers crossing the floor, siding with Labor, you've got a by-election this weekend – it's not a good look – and then now the backflip.

TREASURER:

We have to take decisions in the national economic interest and that's what…

DAVIS:

This is not about protecting the Prime Minister's leadership?

TREASURER:

No, it's actually about protecting the strength of the Australian economy…

DAVIS:

What's changed in two days?

TREASURER:

What's changed in two days is the four largest banks, the Chair of the Prudential Regulation Authority, the Governor of the Reserve Bank, the Treasury, myself as Treasurer together with the Prime Minister formed the view that the damage being done by politics to our banking system upon whom everybody's job relies had reached a tipping point. Now, that wasn't true two days ago and it is true now and that's why we've acted.

DAVIS:

How much is it going to cost?

TREASURER:

$75 million.

DAVIS:

So taxpayers will be paying for something that you didn't want, the Prime Minister didn't want, the banks didn't want?

TREASURER:

And the alternative was worse.

DAVIS:

You can see how this looks too, especially when you look at the terms of reference all on the banks' request. It looks like it's going to favour them anyway.

TREASURER:

No this terms of reference was developed by the Government, the banks didn't even know we were doing the Royal Commission until nine o'clock this morning…

DAVIS:

But they wrote to you asking for one.

TREASURER:

No, they didn't actually. They actually asked there be an inquiry. They didn't specify whether that should be a Commission of Inquiry, a Royal Commission or a parliamentary inquiry. That was a matter for the Government…

DAVIS:

That's a bit pedantic, isn't it?

TREASURER:

No, it's not pedantic actually because a Royal Commission is something that the Government does and the reason we chose to do a Royal Commission is because we can set the terms of reference, set the time, control the costs, ensure it's focused. A Commission of Inquiry would have been subject to the crazy politics of what was occurring in the Senate and would have turned out to be a dog's breakfast which Australians would pay even more for and would have further undermined the credibility –because it would have been politics driving it – of our banking system which loans to small businesses, banking systems that loan to people's houses, depositors, shareholders. We're not talking about small matters here. We're talking about very serious matters and that's why we've always taken a very cautious approach and why up until we'd reached this tipping point, we did not believe that was the right way to go but events went to that level which, sadly and regrettably, required it.

DAVIS:

What is going to come out of a Royal Commission? I'm thinking back to the Budget last year where you set up and introduced the Banking Executive Accountability Regime, even the Financial System Inquiry from three years ago – what more are we looking at?

TREASURER:

It's a very good question and it's one of the reasons why we've just been getting on with it and what this Royal Commission will do will take on board all the myriad other inquiries that have been undertaken and…

DAVIS:

So, Treasurer, people listening will go, "Why do it then?"

TREASURER:

Because what has happened is we would have had a Commission of Inquiry that potentially would have come out of the Australian Parliament which would have gone into umpteen different directions and smashed the credibility of our banking and financial system around the world which would have been very unhelpful. Where do you think banks loan money from? Overseas. Who do you think buys Australian bonds? These issues go to the heart of interest payments paid by the Government, interest payments you pay on your mortgage – so that's what politics had done. That's what Bill Shorten set in motion – a reckless, opportunistic, populist approach for two years and the dividend of that was to undermine the credibility of our banking system and the Government has said today, enough is enough. We will do this. It's regrettable but necessary, sadly, and we'll get it done in 12 months and we'll move on.

DAVIS:

Treasurer, I have to ask about Sam Dastyari. What needs to happen there?

TREASURER:

Sam Dastyari should resign from the Australian Parliament. 'Last Chance' Sam has had his last chance. He should go. He dishonours the Parliament, he dishonours the Labor party and the fact that Bill Shorten hasn't had him expelled from the Labor party already is a disgrace. He is a complete and utter wuss.

DAVIS:

Treasurer, appreciate your time this afternoon.