ABC 612 BRISBANE DRIVE
THURSDAY, 7 FEBRUARY 2019
SUBJECT/S: Banking Royal Commission
STEVE AUSTIN: Mr Chalmers is the Shadow Finance spokesman for the Labor Party and I spoke to him this afternoon and asked him what he thought of Commissioner Kenneth Haynes' report. This is what he told me.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: We've been pretty positive about the work of Commissioner Hayne, Steve, as you've probably noticed. We've done our best to contribute constructively to the process all along, not necessarily to quibble with any of the recommendations, but to say that we accept them all in principle, and we'll do what we can to implement them. In some cases, they're pretty complex and you've got to balance a whole heap of considerations. But in other instances they're a bit simpler. We've only had it for a few days. We've said in principle we support his work and his recommendations and we'll do what we can to responsibly and cautiously implement them.
AUSTIN: Prior to the delivery of the Royal Commission's findings, Labor was demanding that the Government implement all of the recommendations. Are you backing away from that now?
CHALMERS: I wouldn't say that, Steve. I think there is a difference between the approach we're taking and the approach the other guys are taking. We've said that we accept all of the recommendations in principle, but we'll work through how we'll implement them. The Government has said that they'll take action on the recommendations, but we've already counted a dozen or so different instances where they've walked away from the recommendations. So I think we are a bit more forward leaning in terms of trying to implement all of the recommendations and saying that we do support them in principle. The Government's been a bit choosier with what they'll pursue.
AUSTIN: There's been a lack of recommendations for criminal prosecutions. Now, given the unlawful action taken by a number of financial institutions and the shattering effect it had on Australian citizens, are you disappointed that Kenneth Hayne did not recommend immediate prosecutions of certain cases that were heard before the Commission?
CHALMERS: You're right that there's been some appalling behaviour and some of these rorts and rip-offs have been shocking, frankly. We knew that there were some bad behaviour in the banks, but some of the stuff that was uncovered during the process has just been absolutely appalling, absolutely unforgivable. I would like to see people are charged where possible, whether or not that's a consequence of Commissioner Hayne recommending it or he's referred it on to other bodies to have a look at it, so long as justice is done. In the end, that's the most important thing. And clearly, some of the issues that have been uncovered have been bad enough to warrant those sorts of investigations.
AUSTIN: He's only recommended I think, about what, 22, 23, matters for referral. That doesn't seem like that many given the wide spread, or the broad range of highly appalling actions taken by a range of banks and institutions.
CHALMERS: Yeah, but isn't that just an indication, Steve, of really how bad things have become when we consider 20 or 23 possible prosecutions to be a small number. Some of the stuff that was uncovered - and your listeners would have followed it closely I'm sure - was just appalling. We want to make sure that people get justice.
AUSTIN: I'm asking that, Jim Chalmers, because there's been some significant commentary that, for the last couple of days, the recommendations were weaker than they should have been and didn't go far enough. You don't believe that? Labor thinks they went far enough?
CHALMERS: I think our approach has just been to try to be constructive about them and see what we can implement, Steve, as I said at the start. I am conscious of that commentary that says that things could have gone further. Certainly, if you look at the share market, the market concluded they thought it was going to be more robust. But we're trying to be positive about it, Steve; glass half-full as always, and try to see what we can implement to make the banking system better, because it has been unacceptably bad in so many ways over the last little while. We owe it to your listeners and to the broader Australian community to make sure we can fix up what we can.
AUSTIN: You're listening to Jim Chalmers. Jim Chalmers is the Labor Member for the electorate of Rankin here in Brisbane. He's also the Shadow Finance person for the ALP. This is ABC Radio Brisbane. Steve Austin's my name. How is it that mortgage brokers - 25,000-odd across Australia are facing an uncertain future due to the recommendations coming from the Royal Commission, when the main focus what supposed to be on the banks, insurance and superannuation industries. Many listeners here in Brisbane saying, hang on I'm a mortgage broker, I'm a small business person, how is it that my future is under a cloud now?
CHALMERS: This is a pretty important part of what's being considered here, Steve. I know you had Peter White on the show yesterday and I met with him, as chance would have it, this morning and had a conversation about the mortgage broking industry. We think it is an important part of the system, and we think it's possible to implement what we can of Commissioner Hayne's recommendations while also being conscious of the fact that we don't want to do anything that diminishes competition. We want to recognise the work that the brokers do. We want to make sure that we proceed very cautiously and very carefully in this area, because as people have raised with you, as Peter raised with you and with me, there are good things about this industry too. We want to make sure that we can implement Hayne's recommendations without doing unnecessary damage.
AUSTIN: The effect of the recommendations in the Royal Commission though attacks the very income stream of mortgage brokers, particularly trailing commissions, and it's been suggested to me that if the recommendations are adopted by either side of politics, whoever wins the next federal election, it will end mortgage brokers' future and it'll mean the banks basically take control of mortgage broking again.
CHALMERS: We need to be conscious of those issues, Steve, I think particularly around competition. We need to make sure that we don't accidentally do something that lessens competition and empowers the big players. So I think that's a point that we all need to factor in. But we do accept, as Commissioner Hayne recommended, that there are issues around what's called conflicted remuneration. There are issues around the structure of how mortgage brokers are paid. And so what we've said, privately and publicly since the report was handed down on Monday afternoon, or made public on Monday afternoon, is we do understand we have to be very careful, very cautious. We need to be conscious of the competition aspects, and we need to be conscious of the role that mortgage brokers play in the economy.
AUSTIN: I'm intrigued to know more about this, because it's likely the Labor Party will be the next Federal Government. Mortgage brokers apparently in discussion with Labor. What are you prepared to do in relation to assuring them that a Labor Government won't wipe out mortgage brokers as an industry, or as small business business people.
CHALMERS: I say to them what I said to Peter this morning, what we've said privately and publicly: we understand that they're an important part of the system. We understand there are some issues around competition that we need to factor in, and I think most importantly, we'll be upfront with them. We do think, in principle, we want to implement all the recommendations of Hayne. We do think there are issues around conflicted remuneration around different parts of the system. But we will always listen to them respectfully. We'll always factor in their views, and we won't do anything in haste without considering all of these various factors around competition, their role in the economy. Many of your listeners would have had good experiences with mortgage brokers, all of those sorts of things. It's important that we factor all of that in. So we give them that assurance, that we'll do that. We'll listen to them and we'll proceed with care and caution.
AUSTIN: My guest is Labor's Shadow Finance spokesperson, Jim Chalmers. He's Labor's Member for the electorate of Rankin here in Brisbane. Steve Austin's my name. This is ABC Radio. One of the other more interesting recommendations in the Royal Commission, Jim Chalmers, was the recommendation that a scheme of farm debt mediation should be enacted, and that the Banking Association should change their code of conduct that ensure banks don't charge default interest on loans while they're affected by drought and other natural disasters. Both Agforce and other people have said to me that's not strong enough, that it needs to be made law. Where does Labor sit on this?
CHALMERS: My personal view, Steve, is that it seems like a step in the right direction. And again, we've said in principle that we support all of the recommendations of Hayne. So it is a step in the right direction in our view. How you implement it, how robust it is are matters for discussion and matters for consideration. But I think it is a good thing to get some sort of mediation in there. It's a very emotive, very stressful time for a lot of our farmers, and so if there are ways to get people around the table and get to an outcome that everyone's happy with, then we should pursue that.
AUSTIN: Alright, now you're a potential future Treasurer or Finance Minister in the next Federal Labor Government, assuming you win the election. How do you regard Australia's banking, insurance, superannuation, financial structure or institutions after this Royal Commission?
CHALMERS: First of all, we make no assumptions about the outcome of the election. It's very kind of you, Steve, to say that, but we've still got a ways to go yet. We don't take any votes for granted. But I've considered for some time, and one of the reasons we fought for this Royal Commission more than two years ago is because obviously there are a lot of things that are crook about the system. And we can have a first-world, first-rate financial system which doesn't rely on the kind of rorts and rip-offs that we've seen in the last little while. We need to clean it up. We need to give people confidence that the financial system's working for them and not against them.
AUSTIN: Has this Royal Commission achieved that? Has it done that?
CHALMERS: I think it's made a contribution to that. It's certainly shined a light in a lot of dark places. It's certainly made public a lot of things that the big banks in particular didn't want to be made public. So to that extent it's a good thing. I've never believed that the system should succeed the basis that all of the dodgy behaviour is kept secret. You've got to get it out, you've got to give people to opportunity to deal with it. And so in that respect, I think it's been a very, very useful exercise. And to keep faith with that exercise, the Labor Party's going to implement the recommendations. We agree with them in principle, and we'll do what we can to responsibly implement them all.
AUSTIN: Jim Chalmers is Labor's Shadow Finance spokesperson and the Member for Rankin here in Brisbane.