5 October 2016
Transcript - #2016060, 2016

Interview with Patricia Karvelas, RN Drive

SUBJECTS: Banking inquiry; Banking royal commission; Superannuation; Same sex marriage plebiscite

PATRICIA KARVELAS:

Kelly O’Dwyer welcome.

KELLY O’DWYER:

Great to be with you Patricia.

PATRICIA KARVELAS:

How do you think, watching today’s questioning of Ian Narev, would’ve helped a CBA customer concerned about the bank’s behaviour?

KELLY O’DWYER:

What it does is, for the very, very first time, it actually brings the major four banks before a House Standing Committee on Economics, which has oversight of the RBA, it has oversight of the regulators ASIC and APRA, and it gives the banks exactly the same treatment – three hours of grilling, and it’s going to be three hours for every single bank, today was just the Commonwealth bank. And it provides an opportunity for those house members, some from the Greens, some from Labor and obviously some from the Government, to ask questions of the bank and give the bank a response and an opportunity to talk about why they’ve made some of the decisions they’ve made and whether or not they would do things somewhat differently going forward.

PATRICIA KARVELAS:

But I didn’t ask about what it gives the banks, I asked you about the customers. What does it give the customers? What does the customer get out of that process?

KELLY O’DWYER:

It gives them complete transparency over the process. They get to listen to the evidence that is being provided. But it’s not the only avenue for somebody who is a banking customer to actually have confidence that our financial system is working. It’s only one element of that. One of the reasons that this is an additional element that is very good is because of the transparency, because it is so public, and because any question can be asked in that forum. But there are a number of reforms that the government is currently delivering on as a result of the inquiry that we held when we first came into government, the Murray Financial System Inquiry, which was a root and branch review of the financial system. This was something that was actually opposed by the Labor Party at the time, they said it wasn’t necessary. We went ahead with it anyway. They made a number of recommendations and right now we’re in the process of implementing 43 of those recommendations.

PATRICIA KARVELAS:

But on this three hour for each of these CEOs, Katy Gallagher says they didn’t have enough time to ask the questions that they wanted to ask. If they didn’t have enough time to address all of the issues, how can that be adequate?

KELLY O’DWYER:

A three hour period is the period that is provided to the Reserve Bank of Australia, for APRA and ASIC, so it’s completely commensurate with the inquiry that is actually held there. But this isn’t the only forum in which questions can be asked and I find it very interesting that the Labor Party have now come to the party in recognising that there have been some horrific financial scandals. You only need to look to Opus Prime, Storm Financial, to Trio Capital, all of which, and the list goes on, happened when Chris Bowen was Assistant Treasurer, or at a time when Bill Shorten, who is now the Leader of the Opposition, was Minister for Financial Services and Superannuation and also served as Assistant Treasurer during that entire time, the six years in government, that Labor had the opportunity to look into the financial system. They did nothing, we’re getting on with it.

PATRICIA KARVELAS:

Well, OK, you say you’re getting on with it but looking at the Commonwealth Bank, no one has been sacked, no one has worn the consequences of these scandals of the CommInsure scandal, how is this acceptable?

KELLY O’DWYER:

So the CommInsure scandal has only recently been revealed and we immediately commissioned ASIC, the regulator, to conduct a full and thorough inquiry into exactly what has gone on in CommInsure. That inquiry is on foot right now with the regulator. We also said it wasn’t simply good enough to look at CommInsure, we wanted ASIC to look at whether there was systemic problems in the life insurance sector, across the industry, that the Government needed to be aware of. We have done that at the same time that we have provided an additional $127 million to ASIC to bolster its enforcement capabilities, to bolster its data-matching capabilities –

PATRICIA KARVELAS:

After watching and hearing Ian Narev’s evidence answers today to those questions, were you really satisfied with his performance, with his answers, with his justifications for these innocent people who have been the subject of these rip-offs?

KELLY O’DWYER:

I’m not an apologist for the banks. That’s not my job. We know that there have been some terrible financial scandals in the financial services sector and the financial services sector hasn’t always lived up to expectations that the Australian people quite rightly have. That is why it is critical that we do not delay with important reform packages, to actually provide confidence to Australian consumers, and I’m very happy to take your listeners through some of the things that we’re actually doing here, Patricia, because it is very, very important. We have got legislation now prepared that will be brought into Parliament this year to actually raise the standards for financial advisers, raise their training, ethical and professional standards that will mean they are held to a much, much higher standard. It will make it much more difficult for somebody to go to a dodgy financial adviser and get bad financial advice. We’re bringing in legislation next week for life insurers to make sure that the current conflict that exists right now, where life insurers can have 120 per cent of a premium in an upfront commission, can no longer continue because they are churning through clients according to three separate reviews.

PATRICIA KARVELAS:

Kelly O’Dwyer, is this inquiry a political liability? Over the next few days the public might come around to the view, Labor’s view, that a Royal Commission is what’s needed, because we’re just scratching the surface here. If people see the evidence, see that Ian Narev has effectively said what he’s said before – I’m sorry, no heads have rolled, it’s OK, you’re going to be fine, we’re doing our job as we’re meant to – but there are no consequences. People are going to think you need to do more, they’re going to want a Royal Commission, this is what you face.

KELLY O’DWYER:

But a Royal Commission won’t deliver consequences in a way that Labor are actually pretending it would. A Royal Commission is simply an inquiry looking into these issues. We’ve actually had a financial system inquiry, which was opposed by Labor, and as recently as 2015, Labor actually voted against a Royal Commission, they didn’t think there was any issue politically –

PATRICIA KARVELAS:

Sure, and they’ve changed their view because we’ve had lots of other scandals –

KELLY O’DWYER:

Well no, the majority of the scandals that we’re talking about at the moment that relate to Storm Financial, Trio Capital, Great Southern Group, CBA Financial Planning, these scandals actually happened on Labor’s watch, when Bill Shorten was the Minister for Financial Services and Superannuation, when he was the Assistant Treasurer, when Chris Bowen was the Minister for Financial Services and also was Assistant Treasurer. And they did not lift a finger. We are acting because we know that Australian consumers demand confidence in our financial services sector. We don’t want to delay these reforms, we’re bringing them in now, we’ve already actually implemented a number of reforms and we are improving the toolkit for our regulator to be able to take enforcement action.

PATRICIA KARVELAS:

Over the next few days I suppose Australians will be able to make a judgement if really they feel that the answers are coming, if the banks are being accountable. I just want to move on to another issue which is your issue as well, one of your portfolio areas. Industry Super Australia says there’s been a sharp increase in the number of customers switching to bank owned super products because tellers get bonuses for signing up new customers. Does that concern you?

KELLY O’DWYER:

We’ll obviously have a look at the evidence that they are bringing forward in relation to this particular issue but my understanding is we’re not talking about commissions here and it’s entirely in keeping with the financial advice legislation which Labor in fact brought in during their time in government. But it does concern me to think that we need to have a superannuation system, more broadly, that people can have confidence in and we do need to have a superannuation system that has competition that is efficient, but also that people can have confidence in. So we are conducting a Productivity Commission Review at the moment that is looking at these elements and I’m sure they’ll present information to that particular review and we will very seriously consider it.

PATRICIA KARVELAS:

A policy adviser to your colleague, Christopher Pyne, is one of a group of Australians arrested for stripping to their speedos at the Malaysian Grand Prix. Shouldn’t government staffers know better than most the cultural sensitivities of travelling overseas, abiding by the rules of whichever country you’re in? These are basic rules aren’t they?

KELLY O’DWYER:

Patricia, I think any Australian that’s travelled overseas is sensible to abide by the mantra that you need to be very conscious of the country that you’re visiting, the culture and the rules and the laws of that place. And frankly, there are many Australians who at different times find themselves in trouble in those overseas jurisdictions and we’ve got a very strong consulate assistance program that does assist them. Frankly, I agree with you, they shouldn’t have to do that sort of work when people themselves do things that frankly, most Australians regard as pretty silly, but –

PATRICIA KARVELAS:

So how would you rate the awareness of these men on a scale of 1 to 10? Pretty low really?

KELLY O’DWYER:

But in these circumstances, I understand like every other Australian, they’re receiving consular assistance and I think that probably should be left at that.

PATRICIA KARVELAS:

Just finally, because it’s an issue you’ve talked about before, this is the same sex marriage issue. Professor Patrick McGorry warned that the same sex marriage plebiscite would be damaging to the mental health of gay and lesbian community, he wants it cancelled. I mean he’s a very serious figure, this isn’t a lobby group, this is somebody with expertise. Are you concerned by his warning?

KELLY O’DWYER:

I very much respect Professor Patrick McGorry and I had a lot to do with him because mental health is a very big issue in my electorate and it’s an issue that I follow pretty passionately as well, and we’ve had many conversations. I think we have to be clear not to misquote him on this particular issue. He has said that there are risks in a plebiscite going ahead but he’s also said that there are risks as well if this issue isn’t resolved and this issue continues to drag on until the next election.

PATRICIA KARVELAS:

I think his quote being quite clear that the bigger risk, he thinks, is on the plebiscite itself.

KELLY O’DWYER:

Well I’m not going to put words in his mouth, but what I would say is, in Ireland, when we did have a plebiscite in Ireland, there obviously were some mental health issues that people did have to deal with. You would understand that there would be given the sensitivity of some of the topics that are being raised. However, I do think that despite that, they were able to have a very, very successful plebiscite that united the country, for the most part debate was very respectful. I am very confident in Australia the result will be very similar, the debate will equally be very respectful and I have full confidence in my fellow Australians to be able to conduct that debate with dignity –

PATRICIA KARVELAS:

You do conceded there will be increases in mental health reporting people saying that are struggling?

KELLY O’DWYER:

I’m not an expert on this and I respect Professor Patrick McGorry and I respect his opinion but I think, as I said to you before, I think we should be a bit careful about putting words into his mouth there because he has also said equally that there are some serious issues if this issue isn’t resolved and it continues to go through to the next election. That also, too, will have mental health implications for many people in the LGBTI community.

PATRICIA KARVELAS:

Kelly O’Dwyer many thanks for joining us tonight.

KELLY O’DWYER:

Great pleasure Patricia.