Liberal Party runs protection for the banks on a Royal Commission for two years

CHRIS BOWEN, SHADOW TREASURER: Almost exactly two years ago here in this room, Bill Shorten, Mark Dreyfus and I announced a Labor Government would hold a Royal Commission into Australia’s financial services industry. We called on the Turnbull Government to join with us and to implement a Royal Commission into Australia’s financial services industry. Malcolm Turnbull and Scott Morrison went into overdrive to say that this wasn’t necessary, that it was a distraction, it was grandstanding. That we didn’t need a Royal Commission into Australia’s banks and financial services. Every single day that passes now is more of an indictment on their lack of judgment on Australia’s banking and financial services industry. Every time Australians hear about another report into one of our banks, one of our major insurance or financial services companies, they should question the wisdom of this Treasurer in particular who stood in the way of a Royal Commission and ran a protection racket for the last two years. Now we very much welcome the report of APRA into one bank, but really we should have received the final report into Australia's entire financial services industry a long time ago.

 

The APRA inquiry was launched into the CBA in August last year, that’s 18 months after Labor called for a Royal Commission into our banks and financial services. For two years, the Treasurer refused to implement this.

 

In fact, on the very day that APRA launched their inquiry into the Commonwealth Bank, the Treasurer was asked by Kieran Gilbert: “Does this nullify once and for all your view that calls for a Royal Commission, or is this just CBA specific and not industrywide as Labor would advocate?” The Treasurer said, on this day in which the APRA report was launched, “Labor's position is a political one, it’s not about fixing the problems in the banking system it’s about grandstanding by Bill Shorten”.

 

The Australian people don't need any more evidence that this is a Treasurer who gets the big calls wrong. He has no judgement when it comes to the big decisions and is not up to the job. Now here we are, not long after APRA has provided the final report, and the Government has finally called a Royal Commission into the banks and said it was regrettable as they did so.

 

Let's remember, this is also a Treasurer who has implied he was aware of this kind of behaviour. He said this kind of thing came as no surprise to the Government but they did nothing about it. Two particular lies that have been told by the Treasurer that I want to briefly deal with in this space as well. One this morning. Extraordinarily, either the Treasurer doesn't know what is happening in his own party and party room and Parliament, or he is misleading the Australian people about it. He said this morning that in relation to his bank executive accountability regime, that the Parliament wanted to delay it and they withstood the pressure. It was his Liberal Party members who asked him to delay the banking and accountability executive and accountability regime by 12 months.

 

The Labor Party suggested and moved in the Parliament that small institutions, credit unions, customer owned banks, small banks, receive an extra 12 months to prepare. The Treasurer agreed with that, but his own Liberal Party members revolted against him and Liberal Party Senators in the Senate Inquiry called for a full twelve month delay, so he might want to check his facts, or alternatively he might want to stop telling lies.

 

Secondly, the Treasurer continues the myth that somehow Labor's proposed Royal Commission was only into the big four banks, and that somehow he is holding a wider Royal Commission than the one we called for. Again, here in this room, on the day we announced Labor’s call for a Royal Commission, I said that we indicate that we would expect the Royal Commission to look at the financial services industry, not talking about broader corporate Australia but the financial services industry and that is more than just the big four banks, but financial services providers, financial institutions, banks, insurance companies, credit unions, friendly societies and then when asked about superannuation, I said, super funds are part of the financial industry as well.

 

So the Treasurer should stop making things up about Labor’s policies and start getting on with his job. He should admit that he has been getting it wrong for two years. Not just politically, not a political judgment, but he got it wrong two years ago.

 

One other matter before I go to questions. Of course today is exactly one week until the Federal Budget. Yesterday, the Treasurer gave his clearest signal yet that he has given up on the task of Budget repair and return to surplus. The Liberal Party has gone from talking about debt and deficit disaster and Budget emergency, to now not even mentioning a return to surplus, a healthy reason to surplus of 1 per cent of GDP which used to be a key part of the Government’s fiscal rules. It has been gradually downgraded from being a centrepiece of the Abbott Government’s fiscal rules in 2013/14, a solid commitment to reach a surplus of 1 per cent of GDP by 2023-24. The Treasurer couldn't even answer a question yesterday about surplus reaching 1 per cent of GDP. Now a surplus of a half a percent of GDP which is all that it is projected to get to under the Government’s own current figures is one open to the vagaries of international economics and changes in international economic circumstances.

 

The Labor Party will have plenty more to say about our return to surplus trajectory, but we have made the tough decisions to get the Budget back into surplus, we’ve made the tough decisions which the Government opposes to improve the Budget bottom line. The Treasurer is simply giving up on the task of a healthy, sustainable, long term Budget surplus.

 

Happy to take any questions on either matter or other matters that are on your mind.

 

JOURNALIST: Hasn’t Kelly O'Dwyer has already apologised for the delay on the Royal Commission, do you need a direct apology from Scott Morrison?

 

BOWEN: I’m going to give Kelly O'Dwyer some credit here, she is not the Treasurer. She didn’t make this decision. She struggled to defend the Government’s position on Insiders, but it wasn’t her decision to delay the Royal Commission. It’s was the Treasurer’s. The Treasurer sent her out to do the Government’s dirty work. Scott Morrison -- The Prime Minister made it clear. It was a joint decision between Malcolm Turnbull and Scott Morrison not to hold Royal Commission. Let's not send Kelly O'Dwyer out to take the rap, Scott Morrison should admit his personal error, not politically. But he should apologise to the victims of these bank scandals for not holding the Royal Commission, not having the judgement to do it so much earlier.

 

JOURNALIST: Do you think that the APRA report into CBA would have come out but for the pressure created by the Royal Commission?

 

BOWEN: Well, the cause for the Royal Commission. The Government was casting around for reasons to avoid a Royal Commission. I respect APRA, I respect their work, I respect their independence, but the heavy lifting has been left to APRA by the overnment. They wouldn't call the Royal Commission. Now we have the Royal Commission showing day after day just how necessary it was.

 

JOURNALIST: What does this APRA report tell you about the culture at the very top of CBA?

 

BOWEN: Well I think the report speaks for itself. I mean it is a damning report. I’m not going to add to what the report says, it is very clear it doesn't hold back and I think all of us, all Australians, put aside Government/Opposition, all Australians would expect the Commonwealth Bank to be implementing the letter and spirit of this report as one of Australia's piggies biggest companies.

JOURNALIST: We have already seen heads roll at AMP, would you expect directors of the CBA to be considering their positions?

 

BOWEN: Well again I saw the Treasurer today predicting that more directors are going to go, two directors have already announced their retirement. They have both served for a long time, 10 years I think in both cases, that would be a natural retirement, a natural turning over of directors. Other directors haven't been there that long, so these matters at the end of the day are a matter for the individual company. Of course Catherine Brenner made the right decision to go as chair of AMP, but individual directors have to reach their own conclusions and companies have to reach their own conclusions based on the facts, and if the Treasurer is implying that he knows more or the Commonwealth Bank has told him, he might want to explain those remarks.

 

JOURNALIST: So Labor is not prepared to call for the resignation of senior AMP directors over this?

 

BOWEN: At this point, I see no reason to call for the resignation of the chair of the CBA or others directors.

 

JOURNALIST: Is the system of enforceable undertaking initiated between financial institutions and regulators actually letting banks off the hook do you think?

 

BOWEN: An enforceable undertaking is a serious undertaking in fairness, it’s a key part of our regulatory infrastructure. I have no quarrel with enforceable undertakings. They are applied by our regulators, I think not lightly.

 

JOURNALIST: They are a negotiated outcome aren’t they?

 

BOWEN: Well they are certainly discussed with the institution but the regulators have other mechanisms available to them if they think that that’s necessary. So, an enforceable undertaking in and of itself, if we weren’t having a Royal Commission, I would be very critical of it. Now that we finally have the broad Royal Commission the Government dragging kicking and screaming to look at the broader picture. I think that, therefore, within that framework having an enforceable undertaking is a legitimate thing.

 

JOURNALIST: Scott Morrison’s refusal to guarantee Budget surpluses of at least 1 per cent of GDP despite the dramatic increase in revenues, what do you make of that given that the Coalition is supposed to be the party of surplus?

 

BOWEN: Absolutely, as I said it used to be the party of Budget repair, and fixing the alleged debt and deficit disaster and Budget emergency. Now we see the Treasurer throwing out the fiscal rules, their own Government’s fiscal rules which are meant to say that any improvement in the Budget bottom line will be reflected in the surplus not spent. Now he's saying “Well the world economy is better so we don’t need a medical levy increase”. Now he is saying we won’t get back, it appears, to Budget surplus of 1 per cent of GDP, he’s settling for half a percent of GDP which in a very uncertain global environment, strong at the moment but we have concerns about trade, we have… Anybody who says that the global economy is set for the next decade, that there is going to be no downturn or no problems I think is kidding themselves in terms of the certainly of those predictions and forecasts.

 

So I think Governments have to ensure long term healthy sustainable surpluses, hence the decisions we have taken; negative gearing reform, capital gains tax reform, dividend imputations reform. All decisions the Treasurer is not up to, not willing to embrace which would lead to a better Budget bottom line. And of course, the Government proceeding with giving away their corporate tax cut which, now we move into a new fiscal year, of course ticks from $65 billion to $80 billion in terms of its long term cost to the Australian Budget.

 

JOURNALIST: How do you square Scott Morrisons statement with the plan to ditch the Medicare levy increase?

 

BOWEN: Sorry, in what context?

 

JOURNALIST: The plan to ditch the increase in the Medicare levy and his statement now that a big surplus cannot be guaranteed.

 

BOWEN: Well, of course, he never should have proposing to increase the Medicare levy. He talks about personal income tax cuts but he was proposing a personal income tax rise on Australians earning no more than $21,000. Now that was the wrong policy answer but at the same time, he gives away $80 billion in corporate tax cuts, he refuses to embrace negative gearing reform, he refuses to do anything about the $8 billion a year that will be spent on dividend imputation refundability, he is presiding over a Budget which could be better, which should be fixed. He said it was for half a percent of GDP as a surplus goal. Well, we will have plenty more to say about our fiscal rules and our return to surplus trajectory but he should be aiming for better than that.

 

JOURNALIST: Just finally, is Labor the party of high taxes. That is how the Coalition is seeking to …

 

BOWEN: Well, again, this is the Treasurer who a few days ago was increasing taxes on Australians earning between $21,000 and $87,000. We have different priorities when it comes to corporate tax. We don’t believe that is a priority. We believe the tax concessions which benefit high incomes earners and which are no longer fit for purpose need to be closed down to make the tax system fairer and to improve the Budget. And we believe in Budget repair, proper Budget repair and we believe in funding important services particularly around education. So we will have plenty more to say about this but I very much welcome a debate about tax and Budget. I will debate the Treasurer anytime, anywhere. We will in the election campaign presumably he is willing to do so on more than one occasion. If he wants an election around tax, we want one too and the next election as Bill Shorten said yesterday, we want it to be a referendum on the Government's corporate tax cuts. We are against them, we don’t believe they should be a priority at the moment and the Government seems to think they are the answer to Australia's problems.

 

Okay, thanks very much.