30 November 2017
Transcript - #2017235, 2017

Interview with Leigh Sales, ABC 7.30

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

LEIGH SALES:

Earlier this month you sat in that seat and said a banking royal commission was a $150 million QC complaints desk, that it would undermine confidence in the banking sector that underwrites people's jobs and savings. The Prime Minister said a royal commission into banking would lead to absolutely no action. Were you misleading Australians then or are you misleading them today?

TREASURER:

No, we have always been acting in Australia's national economic interest and what's happened in the last 24, 48 hours is something very significant. And that is not only did I consult with the chair of ARPRA, the Australian prudential regulatory authority for our banking financial system, but also the Governor of the Reserve Bank and that follows other advice that I was aware of that our major banks also believe that the politics of this issue had become incredibly destructive, risking the credibility of our financial system internationally. So, that is material and when those events occur, then you need to take heed of those.

LEIGH SALES:

But nothing has actually changed, in the past 24-48 hours.

TREASURER:

No, that has changed.

LEIGH SALES:

Nothing has changed in the economy.

TREASURER:

No, that is significant…

LEIGH SALES:

What you're saying is changed is that you've spoken to a couple of people, that's what's changed.

TREASURER:

No what has changed is when you have 35 per cent of the Australian stock market represented in just four of those banks, when you have their view confirmed by the chair of APRA and the Governor of the Reserve Bank of Australia saying – agreeing - that this politics, the situation that has developed in the Senate, and the fact that we would have had an uncontrollable inquiry going in any number of directions, costing well above what this royal commission will cost, that was not in the economy's interests and that is what has changed, and as a result the Government had to take the action that we have taken.

LEIGH SALES:

So can we just establish bit of a time line on this?

TREASURER:

Sure.

LEIGH SALES:

Of when things happened. So who was it who first floated the idea that the Government needed to get on board with the royal commission. Did you go to the banks, or did they come to you?

TREASURER:

No. I have been in discussion with the banks last week about a very different matter and that was resolving legacy case issues.

LEIGH SALES:

But what about this matter?

TREASURER:

This matter came up in the course of those discussions with the events that were taking place in the Australian Senate.

LEIGH SALES:

And who raised it first, you or them?

TREASURER:

Well I'm not going to go into the individual to-ing and fro-ing of the conversations but the events that took place in the Senate meant that these issues were becoming of greater concern to the banks themselves. Now my discussion with them was about seeking to get a proposal in place that could deal with some legacy cases. But the bottom line was the Senate was going in a completely different direction, it had been very clear where the Parliament would have rested on that issue and those events overtook those other discussions.

LEIGH SALES:

So basically what you're saying is that you and Malcolm Turnbull would have lost the day if you persisted with your view that shouldn't be a royal commission so you capitulated to the backbench, to Bill Shorten, to Labor and the Greens and said...

TREASURER:

That misunderstands the issue completely Leigh. What it means is the Australian Parliament - you have to deal with events as they are, not as you'd like them to be - the Australian Parliament was likely, very likely, to accept a camel of a proposal being developed without any constraint which would have done serious damage to the Australian economy and we were presented with that option or taking the matter into hand as we have done today. That is why I have referred to it as the Prime Minister has and indeed in my discussions with Phil Lowe and with Wayne Byres that this was a regrettable necessity. It has become a necessity but regrettably.

LEIGH SALES:

In your view though is it still a waste of millions and millions of dollars?

TREASURER:

Well we have put forward a terms of reference. We will have a commissioner which will keep this focused…

LEIGH SALES:

I noticed you ducked that direct question, though.

TREASURER:

Well restate it and I will be happy to answer it.

LEIGH SALES:

Do you believe you still that you stated previously that it's a waste of millions of dollars?

TREASURER:

I believe what we have decided to do will not be a waste on the basis that the alternative was far worse.

LEIGH SALES:

So when were the banks informed that this royal commission would in fact happen?

TREASURER:

Today at 9 o'clock when I stood up with the Prime Minister.

LEIGH SALES:

Because the National Party Senator John 'Wacka' Williams said the NAB CEO Andrew Thorburn rang him just after 8:30 this morning to say that a royal commission was going ahead.

TREASURER:

Well I have no idea how he would've had that view because I did not communicate that view to the banks.

LEIGH SALES:

So the banks' letter asking for a royal commission is dated today, the very day that the government announces a royal commission. Is that just coincidence is it?

TREASURER:

No, I became aware last night after the close of markets that the banks would be writing to me in the terms that I received this morning.

LEIGH SALES:

But you've obviously been worked on the terms of reference for your inquiry for a while.

TREASURER:

No, I wouldn't say that, what I'd say is…

LEIGH SALES:

Couldn't have got them over night?

TREASURER:

Well there were commissions of inquiries that had been floated overnight, there were amendments potentially that could have been made to a bill in the Senate. The problem with all that was Leigh was that the madness of what was occurring with the Greens and Labor and the crossbenchers and others was going to produce an unpredictable outcome which I couldn't allow and the Prime Minister couldn't allow to affect the integrity of our financial system. Remembering, there are 17 million people who are customers of banks in this country. As I said, just four banks account for 35 per cent of the stock market and the system as a whole is about 9 per cent of the economy. Now, our banking and financial system, every job in the country depends on it and the politicking that has occurred over a long period which Bill Shorten has been the keen and principal litigant of has meant that he has done more damage to the economy from opposition, and imagine what he could do to the economy if he was Prime Minister.

LEIGH SALES:

What do you say to viewers who might be watching us tonight and thinking this perhaps has very little to do with the merits of a royal commission into the banking sector, and everything to do with Malcolm Turnbull facing a defeat on the floor of the Parliament when he's already in a perilously weak position?

TREASURER:

What it has to do with is the Parliament was likely to come to an outcome which would have damaged the country's economic interests.

LEIGH SALES:

Because the Prime Minister doesn't control the numbers in the Parliament.

TREASURER:

Well you've got to deal with the events. For a start there are two by-elections going on because of the citizenship issues which I don't think Australians believe is the fault of the Government, that is just a pure happenstance that could have happened to any Government in the last 50, 60 years. So we have two members of Parliament who are not in the Parliament. That's just the straight maths. But the Parliament was going to arrive at a position likely that would have damaged Australia's economic interests. So as Treasurer and as Prime Minister we had to act.

LEIGH SALES:

Because - and it's just a statement of fact because the Prime Minister couldn't control the numbers in the Parliament.

TREASURER:

Leigh, when you're in elected office and when you hold these responsibilities you don't get the luxuries of a perfect solution and an imperfect solution. You have to deal with what's in front of you and that's what the Prime Minister and I have done. We have taken control of this situation, restored certainty, have a clear process that will not be some sort of political circus, with is what Bill Shorten wants. Bill Shorten has been misleading people around the country for years about what a royal commission will do for their settlement of cases. Today he could not even answer a question about whether he supported a compensation fund for victims, because he's not interested in victims. He's only interested in politics. We're interested in the national economic interest.

LEIGH SALES:

Malcolm Turnbull keeps telling everyone that he's a leader, that he's leading how is-

TREASURER:

And he did today.

LEIGH SALES:

How is caving in to his own backbench and to Bill Shorten leading?

TREASURER:

No Leigh, that's an ungenerous characterisation of this. What this is, is the Prime Minister and I faced with a very clear set of facts, a very clear risk to the Australian financial system and taking action to ensure that was contained.

LEIGH SALES:

Labor kicked a big own goal today with Sam Dastyari. Why would you then make this announcement today rather than giving them that space?

TREASURER:

Because it's not about politics Leigh. We needed to take the decision we took today to ensure the integrity of the financial system upon which every job in this country depends. When it comes to Sam Dastyari he must resign. 'Last chance' Sam has had his last chance. He shouldn't just get some sort of speeding fine again from Bill Shorten. He should leave the Parliament and never, ever come back.

LEIGH SALES:

Scott Morrison, thanks for joining us.

TREASURER:

Thanks a lot, Leigh.