30 November 2017
Transcript - #2017234, 2017

Interview with Tom Elliott, 3AW

SUBJECTS: Royal Commission – Banks and Financial Services

TOM ELLIOTT:

Good afternoon.

TREASURER:

G'day Tom.

ELLIOTT:

Does it worry you that Australians are spending thousands of dollars on Christmas presents on their pets?

TREASURER:

I haven't given that a lot of thought in the last little while. You have stumped me mate. There you go. Straight off the bat. Presents for pets hasn't come up today.

ELLIOTT:

Christmas presents for pets. On a marginally more serious note, for months, possible a year you and the Prime Minister and the Government have been avoiding saying we don't need a Banking Royal Commission. Yet, in the last 24 hours you have changed your mind. Why?

TREASURER:

Because in the last 24 – 48 hours what has become clear is what is happening in the Parliament and the Senate was going to place a far worse outcome on undermining the credibility of our banking and financial system which will have very serious consequences.

ELLIOTT:

What was the Parliament going to do?

TREASURER:

The Parliament was looking to pass a Commission of Inquiry with a very, very bewildering terms of reference that went far and wide into things where we had no idea where it was going to end and how much it was going to cost and that was going to undermine confidence in the banking system.

ELLIOTT:

So, the Parliament, Labor, Greens and the Nationals were going to team up to have a very broad inquiry.

TREASURER:

Well, they were going to have an absolute caravan of craziness.

ELLIOTT:

So your counter to that is a narrower inquiry?

TREASURER:

Well, a focussed inquiry that has a set timeframe and a set budget and this was done after it was clear the banks themselves had said, and they have never wanted one of these for their own reasons, that this was now causing so much damage and would cause further damage and it was necessary for the Government to bring it back into the realm of what was sensible.

ELLIOTT:

Do you personally think as Treasurer of Australia, do you think that we need it or are you just doing it because it was the bad or the very bad?

TREASURER:

It was the bad or the very bad. This is the least worse option. The language I used today is that it became regrettably necessary and it became regrettably necessary because of politics and people playing politics. And a worse fate befell the Australian economy and that was not just my view but I discussed that with the head of the Reserve Bank, the Governor of the Reserve Bank and the Chair of the Prudential Regulatory Authority and they agreed with that assessment.

ELLIOTT:

The average person looks at this and says, wait a moment you don't even really believe we need an inquiry but you are going to spend $75 million of taxpayers money to have one because the alternative was a longer, more expensive, broader inquiry that would have cost more.

TREASURER:

Well, what would you have done?

ELLIOTT:

I'm not the Treasurer.

TREASURER:

Well, I had the choice of something that would have done damage to our economy and cost the Budget more or have something that was more focussed and hopefully we can gain something from it and that terminated that other more dangerous path. So, in politics as you know Tom you don't always get the choice between a perfect option and an imperfect one.

ELLIOTT:

I accept that. What are we likely to get? There is an old saying that you never start a Royal Commission or Inquiry without knowing the answers in advance.

TREASURER:

Well, this is why we never thought it was a particularly flash idea in the first place, events as I have described but one of the things it won't do, this is one of the reasons we resisted it and I want to be clear about this, a Royal Commission will not settle people's cases and grievances individually with the banks.

ELLIOTT:

So, what will it do?

TREASURER:

It will inquire into the behaviour issues, business practice issues and also inquire into the industry super funds by the way and insurance companies and wealth management practices and it will look at all the things that the Government is already doing in this area and if they think there is anything further we need to do in this area well they can make recommendations on that.

ELLIOTT:

I remember back in the 90s Stan Wallis headed up a sort of general review into Australia's Financial System.

TREASURER:

Well we did one of those with David Murray – it was the same thing.

ELLIOTT:

So, is that sort of what you are doing here?

TREASURER:

No, that was a financial system inquiry under Stan Wallis and that led to a series of major changes that Peter Costello put in place. We did the same thing when we came to government in 2013 with the Murray Inquiry and it was one of the first things I did as Treasurer, with Kelly O'Dwyer and Malcolm, we implemented the response to that inquiry. So, our view has been for the last two-and-a-half years we have been very busy with this issue. We have done everything from increased powers and resources for ASIC, a new financial complaints authority which gives a binding outcome but you don't need an army of lawyers to make it happen as a disgruntled customer, a Banking Executive Accountability Regime, we have had the House of Representatives Executives Economic Committee bring the banks before the parliament. We have been very busy on this and if we had agreed to Bill Shorten's political reasons for a Royal Commission two years ago none of this would have happened. They all would have said, well you have to wait until the end of the Royal Commission.

ELLIOTT:

Well, look, the reason you've agreed is because you haven't really got control of the Parliament. If you had control of the Parliament you wouldn't have to worry about this.

TREASURER:

It's a fact of life sometimes.

ELLIOTT:

Ok, do you realise it makes you look bad though? The Prime Minister and you have been saying for ages, we don't need this, we done need this. Suddenly we do.

TREASURER:

I think what it demonstrates is that the Prime Minister and I have always acted in the best interests of the Australian economy and up until now, look, I know that having a Royal Commission was a popular thing, I know that, that's been true for years, so that hasn't changed. We actually held the view that doing that at that time would have damaged the Australian economy and we should just get on with the actions we needed to do and that's what we did do.

ELLIOTT:

So, you have essentially agreed to a smaller amount of damage to the banking system if that is what an inquiry causes to avoid in your view a bigger amount of damage.

TREASURER:

Well, not just my view, the head of the Reserve Bank, the head of the Australian Prudential Regulation Authority, the head of Treasury and the biggest banks in the country.

ELLIOTT:

Will this stop, there was talk about Nationals MPs like George Christensen crossing the floo and so forth. Will this more limited inquiry that you have announced today. Will this stop them doing this?

TREASURER:

Yes, that is my understanding.

ELLIOTT:

Have you actually spoken to them?

TREASURER:

My colleagues have, yes, and that is my advice.

ELLIOTT:

And they are happy now are they?

TREASURER:

I understand so, yes.

ELLIOTT:

The public doesn't like banks, we know that, bank bashing is politically popular. Will this meet the public's concerns?

TREASURER:

Well, they will be the ultimate judges of that. It is a targeted inquiry. It deals with the effect of standard misconduct. It deals with practices and behaviour, business activities of these organisations. It deals with whether superannuation members' retirement savings have been used for purposes that don't meet community standards. It is a fairly well referenced inquiry. But one of the reasons I had such a big problem with Bill Shorten politicking on this is I think he was making a pretty cruel promise to people. I think he was basically saying you will have this Royal Commission and all your problems will go away. That's bunkum. If someone has a case, for example, that is more than seven years old with a bank. Well, it is time limited. It is already out of the court.

ELLIOTT:

So, how long will this inquiry take?

TREASURER:

Twelve months. That is what we are giving it – 12 months.

ELLIOTT:

And will cost $75 million?

TREASURER:

That's our estimate yes and that is what I will be providing for in the half yearly statement.

ELLIOTT:

Is that a waste of money, that $75 million?

TREASURER:

Look, as I said, it is regrettably necessary. So, it is necessary.

ELLIOTT:

So, it's a waste of money?

TREASURER:

No, that's not what I said. What I said was it has become necessary and that is a regret. And it has become necessary because Bill Shorten has been playing politics with this issue and if he can do this much damage to the country and our economy from opposition, imagine what he would do as Prime Minister?

ELLIOTT:

Scott Morrison, thank you for your time.

TREASURER:

Thanks a lot Tom.