30 November 2017
Transcript - #2017040, 2017

Interview with Laura Jayes, Sky News

SUBJECTS: royal commission into the banks

LAURA JAYES:

Joining me now is the Revenue and Financial Services Minister, Kelly O’Dwyer. She joins me from our Canberra studio. This was labelled as rank socialism from John Howard just less than a week ago. Is it?

KELLY O’DWYER:

Well look, what we would say is that we have one of the strongest and most stable banking and financial systems in the world. That is internationally recognised, it was recognised as recently as the Murray Financial System Inquiry and that certainly hasn’t changed. We have got the highest standards of prudential regulation and oversight and again, that hasn’t changed. But what we have seen…

LAURA JAYES:

OK so why do you need this royal commission?

KELLY O’DWYER:

Well what we have seen, Laura, is ongoing speculation, ongoing fearmongering, I think you were referring to it before. There’s a lot of political point-scoring and certainly it is critical now, given all of this, given the situation in the Senate, for the Government to take control and ensure that the reputation of our financial system is strong. And the Government is doing that by introducing a royal commission that has got very, very clear terms. The royal commission will go for 12 months, it will look at the banking, the superannuation, and the insurance sector of our financial system. It is critical, though, that everyone understands that the practical reforms that the Government has already embarked upon, the very practical reforms in response to the misconduct that we are already aware off is being addressed and it’s being addressed now.

LAURA JAYES:

Given all those things though, you say that the measures you have put in place have already addressed a number of issues and this has been argued by the Prime Minister, the Treasurer, you, other Cabinet ministers for months now. So what you’re telling me is this royal commission is a $75 million political fix?

KELLY O’DWYER:

What I’m saying is that given all of the speculation, the fevered speculation, the fact that we’ve even got now the Financial Sector Union that supposedly represents those people who actually work in the financial sector, who are actively and politically campaigning, possibly against the interests of their own members here, for a political outcome in relation to these matters. Given that we have got such fevered speculation, it is absolutely critical that the Government takes control of this situation. We have done that. We’re not going to have other people determine what the terms of reference should be. The Government has taken control of this issue so that we can have a sober and sensible royal commission that will look at all of the issues that people want to raise in relation to our financial system, whilst at the same time not actually stopping those reforms that are critical right now and need to be practically implemented right now. I’ll give you an example – we have in the Senate next week, Laura, the Australian Financial Complaints Authority Bill. That bill will establish, for the first time, a game changer for those small businesses and those consumers who actually want to get access to justice in a timely manner. Now we’ve got the Labor Party who are trying to play games with this legislation, who are suggesting that they might block it, which would mean that they are blocking, for instance, the ability of small businesses to be able to access up to $1 million of compensation if we can establish this particular authority. Now consumers need to be able to access justice in a timely manner. That’s what we’re establishing. We think that is a practical change that is worthwhile. Similarly, we’ve also got the Banking Executive Accountability Regime that is in the Parliament and that presents real lines of accountability so that if there are problems within our banks, we know exactly who is responsible and we know how it can be fixed.

LAURA JAYES:

Well looking at all those things you’ve just listed off and the parliamentary inquiry where you hauled banking executives to parliament a couple of times a year to question them, are you still going to do that? Is that going to run alongside this royal commission?

KELLY O’DWYER:

We have said we will continue on with the reforms that we have already announced and David Coleman and the House Standing Committee on Economics is doing a terrific job. They will continue to call the banks before them…

LAURA JAYES:

But what’s the point in having an inquiry in parliament and having a royal commission at the same time?

KELLY O’DWYER:

To ask them questions about issues of importance. We believe that has been an important change and an important reform and, as a result of that, as a result of that good work, as a result of a number of the other inquiries including the inquiry from the small business and family enterprise ombudsman, we have got reforms such as the Australian Financial Complaints Authority, which was the good work of Professor Ramsey and his expert panel that looked into this in some very careful and considered detail. We’re not going to stop the reforms that are critical to consumers that are critical to small business. The only people that will stop that are in fact the Labor Party and the Greens who will potentially play politics on it.

LAURA JAYES:

This is a huge amount of bureaucracy and, really, red tape and hoops that the banks have to jump through at the moment. Not only are you putting them through a 12 month royal commission, you’re also hauling banking executives to Canberra a couple of times a year. Is that really the right thing to do, to have these things run alongside each other?

KELLY O’DWYER:

Well as we’ve said, I mean this was the whole reason, of course, that the Government didn’t announce a royal commission straightaway, is because we knew that we needed to put in place some very practical reforms. We felt that we needed to practically deal with those issues that were being raised and deal with that very directly. That is what we have done and what we continue to do. We’ve given additional powers to ASIC, the regulator, the conduct regulator, we have given them additional resources, we’ve put in place a levy arrangement now that means that they are properly resourced to do their job as a regulator to be able to protect businesses, small businesses particularly, and also consumers from misconduct that might occur and that ultimately might harm the Australian economy. These are really important measures but we do recognise that right now, we have got a political football in relation to these sorts of discussions, we’ve got the Senate…

LAURA JAYES:

OK sure, but how important is it for you to see that this doesn’t go on for years and years and years? Because this inquiry, as the Prime Minister announced this morning, he said 12 months, a report in 2019, but you and I both know that we’ve seen royal commissions in the past that have been extended and extended and extended. How strict is the Government going to be on that? Is this a firm 12 months and that’s it?

KELLY O’DWYER:

The Government believes very strongly that this royal commission can be done in 12 months. As you say, there have been extensive reports and inquiries in recent times, something like 17 of them. Obviously they’ll be able to draw upon a lot of information in that regard. But it will be a matter for the commission to be able to determine how it conducts itself, that’s not a matter for Government, that’s a matter for the commission, and we will not be obviously directing them in relation to that, that is something they will organise for themselves. But we have given them broad terms of reference, they will not be inhibited in terms of what they actually look at here, and we believe that they can get the job done in 12 months and that it provides the certainty that is needed right now, which is what the Government has delivered.

LAURA JAYES:

Kelly O’Dwyer, just one quick last question. How much political bark have you lost over the last couple of months? You and others have argued that a royal commission isn’t necessary, this is quite an about face.

KELLY O’DWYER:

Well as we’ve said, we’ve been addressing these issues very, very practically and very soberly. As you would know, there has been a letter just released only today by the banks themselves that have said that it is untenable for this continued speculation and political brinksmanship on this particular issue and that we need to ensure that we can have confidence in our financial system. The Government needs to take control of this, the Government has taken control of this and that’s why we’ve made the announcement that we have done today.

LAURA JAYES:

Kelly O’Dwyer, thanks so much for your time.

KELLY O’DWYER:

Pleasure.