ABC RN BREAKFAST
WEDNESDAY, 8 JUNE 2016
SUBJECT/S: Royal Commission into Financial Services; Labor’s 10 Year Plan for Australia’s Economy
FRAN KELLY: Legal action against yet another big bank over alleged rate-rigging has prompted fresh calls by the Opposition for a Royal Commission into the banks. The corporate regulator ASIC yesterday filed a civil claim alleging quote 'market manipulation and unconscionable conduct by the National Australia Bank'. It's the third of the big four to be sued for allegedly manipulating the bank bill swap rate which pushes up the cost of financial products to customers. Jim Chalmers is the Shadow Minister for Financial Services. Jim Chalmers, welcome to Breakfast.
JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: Good morning Fran, how are you?
KELLY: I'm good thank you. NAB, Westpac, the ANZ -- all now being sued by ASIC for alleged rate-rigging. The Commonwealth Bank remains under investigation. Doesn't this show ASIC is doing its job and we don't need a Royal Commission? All is as it should be, isn't it?
CHALMERS: Well, these are very serious revelations and very serious allegations, as you know Fran.
KELLY: They are.
CHALMERS: What we're saying is that the evidence is growing day-by-day that we do need to get to the bottom of all of these issues. That's why we need a Royal Commission. We need that in addition to the work that ASIC is doing and not instead of it. It beggars belief when you get stories like this so regularly that we have a Prime Minister who wants to side with the big banks against the interests of the Australian people--
KELLY: With respect though, with an investigation like this which is in the courts, it's narrow-cast, focused, in the courts, isn't ASIC going to achieve a result more quickly than a Royal Commission would into an event like this?
CHALMERS: Well ASIC can only ever look--
KELLY: It's going to be much more targeted.
CHALMERS: ASIC can only ever look at the application of the law. A Royal Commission will look at whether those laws are adequate. It's very clear from the revelations and allegations of the last year or two that whatever has been going on has been insufficient to stamp out some of this bad behaviour. Only--
KELLY: Well this bad behaviour was a few years ago. It's not now.
CHALMERS: Well there are other allegations and revelations in other parts of the financial system. I think if you asked most people in the Australian community whether they'd like to get to the bottom of these issues to see whether they're systemic, whether this bad behaviour is a cultural issue rather than a series of one-off issues, I think that they'd be very confused and very surprised to know that the Prime Minister doesn't just want to oppose a Royal Commission into these practices, but he wants to give them $7.4 billion tax cuts. The difference between Labor and Liberal in this election is we see these allegations and we want to give the banks a Royal Commission. Mr Turnbull sees these allegations and wants to give them a tax cut.
KELLY: Well that's a cheap shot really. I mean, you know, the banks aren't the only ones who ultimately will be getting a tax cut. It will be for all businesses, and it's as Mr Turnbull says, it's eight years down the track before any business the size of the major banks would get one. That aside--
CHALMERS: Well it's a factual point though--
KELLY: No I want to stick with your call for a Royal Commission into the banks. Because we really still don't know what Labor is talking about, roughly speaking. What would your terms of reference be? Would it be into all banks, or just the Big Four?
CHALMERS: It's into the whole financial system, Fran, as we said when we announced it. We have said that the best way to come up with the final terms of reference is with the full benefit of the resources of Government, including the Attorney-General's Department and access to the regulators. But in doing so, we have pointed to some areas that we're particularly concerned about. Whether it be the structure of some of these financial institutions, the business practices, the powers of the regulators, the adequacy of the laws, all of these things are very important that we get to the bottom of them. If we are to restore confidence in our financial system, and I'm someone who knows that we need to have a strong financial system in this country, it's key to the economy, then we need to get to the bottom of these issues and deal with them once and for all so that Australians can have confidence in the ir banks again.
KELLY: Okay, let's talk about the economy. Labor, we know, as you've mentioned there, is opposed to the tax cut proposed by Malcolm Turnbull for businesses, medium-sized and large businesses. You worked out that tax cut would be close to $7.4 billion, I think you just said there for the banks. But here's the Liberal Party's latest ad launched last night, featuring part of an interview with Bill Shorten back in 2012.
Any student of Australian business and economic history since the mid-80s knows that part of Australia's success was derived through the reduction of the company tax rate.BILL SHORTEN:
KELLY: So part of Australia's success derived from the reduction of the company tax rate. The Treasurer today will show new modelling suggesting every $1 cut in company tax will generate $2.39 in economic gain more broadly. Sounds like Bill Shorten agreed with that back in 2012, why don't you agree with it now?
CHALMERS: Well the Liberal Party voted against that tax cut, of course, back then a couple of years ago.
KELLY: Well that's beside the point, you thought it was a good idea then.
CHALMERS: And the Liberals thought it was a bad idea. My point really is, Fran, that this is about priorities. Since that quote that you just played, the Liberal Party has tripled the deficit from the 2014 Budget to the 2016 Budget. The deficit has tripled. Debt has blown out by a $100 billion also. What we say is that this is not the nation's priority right now. We don't need a company tax cut, $50 billion, paid for by raiding our hospitals and schools and family budgets. The country can't afford it. We've got higher priorities. And when Chris Bowen and Bill Shorten release our economic plan today, what the Australian people will see is a far more comprehensive approach to economic growth and job creation in this country. All the Liberal Party has is a slogan not a strategy beyond a $50 billion tax cut paid for by taking money from hospitals and schools. That's not an economic strategy. If we wa nt growth and job creation in this country, it needs to be people-powered. It needs to rely on getting our training and education systems up to scratch, building the infrastructure we need including the real NBN, it means getting the energy mix right -- all of these sorts of things, a far more comprehensive approach to the economy and to growth and jobs than the Liberals are proposing.
KELLY: At what cost to the economy? This ten-year economic plan that Bill Shorten and Chris Bowen will release, you mentioned there, states and I quote 'fiscal repair should be achieved over the medium-term and back-loaded so as not to hurt the economy'. Isn't that code for the budget deficit will get worse over the next four years before it starts to change under Labor?
CHALMERS: Well the Budget will be in deficit over the next four years under either the Coalition --
KELLY: Will the deficit get worse under Labor though?
CHALMERS: Coalition or Labor, that's the first point--
KELLY: Well my point was that it's going to get worse under you, the deterioration will be larger before you can fix it.
CHALMERS: I understand your point, Fran. The point I'm making is we are putting out ten year costings and four year costings. We've made it very clear as we've announced our responsible savings and our changes to revenue measures that we don't think we should spring them on people with little notice. That's what the point you just made about back-loading some of our changes. We want to make a structural improvement to the Budget. That means improving it over time and not damaging our economy in the near-term. And so we've been up-front about all of that--
KELLY: Well you haven't yet. We haven't really seen your figures yet and we haven't seen your savings either.
CHALMERS: Well we announced $71 billion worth of savings in the Budget Reply that Bill did in Budget Week.
KELLY: Well that's not going to be enough is it? That's still going to still leave a 'budget black hole' to quote the Government.
CHALMERS: Well for more than two years, Fran, we've been putting on the table a whole series of changes to the Budget, budget repair that's fair, not just supporting some of the responsible measures from the Government, also proposing some of our own.
KELLY: Yes, is there more to come? That's my point. Are you going to cut some of the Family Tax Benefits?
CHALMERS: Well we've still got three-and-a-half weeks left in this election campaign, as you know Fran. Our commitment is to put all of our numbers on the table earlier than the Liberal Party did at the last election. People will be under no doubt what a vote for Labor means in terms of the Budget when they vote.
KELLY: Jim Chalmers, thank you very much for joining us.
CHALMERS: Thanks Fran.
KELLY: Jim Chalmers is the Shadow Minister for Financial Services.