MONDAY, 19 AUGUST 2019
SUBJECT: Government dragging its feet on Banking Royal Commission recommendations.
DAVID SPEERS: I'm joined now by the Shadow Treasurer, Jim Chalmers. Very good afternoon to you Dr Chalmers, thanks for joining me. Look, I just laid out then the timeframe here. It has moved on, some of the reforms - it's had an election to deal with of course in the six months since the Royal Commission delivered its final report. What timeframe would you prefer to see from the Government?
JIM CHALMERS, SHADOW TREASURER: We think it's entirely possible, David, for the Government to move responsibly but in a far more timely way than has been set out today. The problem is that for the six months since the Royal Commission handed down its report the Government has done almost nothing. They've actually only implemented or taken action on four of the 76 recommendations, not the 15 that Josh Frydenberg would have you believe. I think for a lot of victims of banking misconduct around Australia and indeed the broader community, they would wonder why after six months of doing almost nothing, the Government now says that we have to wait at least another 15 months before the Royal Commission recommendations will be implemented.
SPEERS: So again, what timeframe would you prefer to see?
CHALMERS: We would have preferred to see the Government get cracking earlier and not wait six months, and only after pressure as you rightly point out from Labor but also from the media and the broader community. I mean, what we got today David was a timetable and they've had the Royal Commission for six months and now we get a timetable which won't see everything introduced to the Parliament for another 15 months. The point that we're making is that if the Government was serious and genuine about cracking down on some of the rorts and rip-offs which were uncovered in the Banking Royal Commission they wouldn't have sat on their hands for six months -
SPEERS: There's been an election and a new Parliament elected as you know in that time, so again when would you like it all done by? The end of this year - would that be an appropriate timeframe?
CHALMERS: Well every recommendation is different, David. For example, we had a proposal to implement the thing about the hawking of insurance products before the election. The Government now says, I think, that they need until the middle of next year to do it. That's an example of something which could happen far more quickly. Another example is the one about disciplinary action for financial advisers who do the wrong thing. That should be possible much quicker than by introducing it to the Parliament by the end of next year. The point that we're making David, is when a Government is not serious about implementing the Banking Royal Commission recommendations, and when they sit on their hands for six months, it's a bit rich for them now to pretend that they've got some action plan or some fast-tracking of legislation. They've done almost nothing; they've now got a plan to do very little for a long time.
SPEERS: Josh Frydenberg points out when Labor was in Government it took nearly two years to get moving on the recommendations after the inquiry into the FOFA reforms - Future of Financial Advice reforms. In other words, this sort of timeframe is pretty normal.
CHALMERS: What an extraordinary excuse that is, David, for a couple of reasons. That was a parliamentary committee report. The Liberal Party actually opposed the steps that we were taking on the Future of Financial Advice, so we had to navigate that as well. That's very very different to what's being talked about here. We're talking about a Royal Commission which the Liberal Party resisted for two years. They finally implemented it and now they say they want another two years to get all the recommendations in place. It is a world apart from what happened in the Future of Financial Advice -
SPEERS: So again, when should it all happen by? By the end of this year? I'm just trying to nail down when you think we should all be done by.
CHALMERS: It's possible for the recommendations of the Royal Commission to be completed and implemented before the end of next year. The Government has an opportunity to consult, the opportunity to draft legislation. The point that we're making is that they've done nothing for six months. That means that we are six months behind where we would otherwise be.
SPEERS: Okay, but you won't say when it should have always done by?
CHALMERS: It's entirely appropriate for the recommendations to be implemented in stages. It's not one piece of legislation. It's multiple pieces of legislation. But the Government would be at least six months quicker if they hadn't been dragged to this kicking and screaming after being sprung by Phil Coorey, the Financial Review and others who have written about this, and the Labor Party which has asked questions of the Government in Question Time. We're only getting this half-hearted action now because of that political pressure and that's because the Government is not serious about dealing with the rorts and rip-offs which were uncovered.
SPEERS: Can I just look at one or two of the recommendations specifically? The Government's accepted the bulk of them, but it's not going to end payments from banks to mortgage brokers as Commissioner Kenneth Hayne recommended. He obviously would prefer the customers to pay an upfront fee for using a mortgage broker. Can you clear up, where does Labor stand on this?
CHALMERS: We took a position to the election David, which would have seen our proposed changes implemented next year. That clearly - given the outcome of the election - is not going to happen so we'll take the time to look at what the Government proposes in the legislation of that particular recommendation they've got being introduced by the end of this year. Like all of our other policies as we've said for three months now, we've been very upfront about, we're reviewing our policies and we'll come to a considered view.
SPEERS: I appreciate that but should banks pay mortgage brokers, in principle?
CHALMERS: Well that's just the same question David, dressed up in another fashion -
CHALMERS: We took that to the election -
SPEERS: It's a pretty simple one. And what was the view talking to the election just remind us?
CHALMERS: We took a view to the election, David. We thought we had a superior way of implementing Commissioner Hayne's recommendation, and we had that starting in 2020. We lost the election. The next election won't be until 2022 -
SPEERS: Just remind us, what is Labor's position on whether banks should pay mortgage brokers?
CHALMERS: The position we took to the election was that there would be a flat upfront fee which would deal with some of the issues in mortgage broking. We also supported by the way the ACCC review which is the Government's current policy and that'll happen in three years’ time or something like that, so we supported an aspect of what the Government was proposing. We thought we had a superior way to implement the rest of it. We lost the election. We're going to miss that deadline. We'll take a fresh look at it, just like we'll take a fresh look at all of the policies we took to the election. We've got an opportunity to do that, have conversations about it and to announce our position in time to vote on the Government's legislation.
SPEERS: I've got to say, I mean you bagging the Government for taking so long to work out what they're going to do, and right now you don't know what Labor's position is on this recommendation.
CHALMERS: We haven't seen the legislation, David. The legislation will be in by the end of the year -
SPEERS: What's your position? You can have a position on the recommendation. This is a clear recommendation from Kenneth Hanye - banks shouldn't pay mortgage brokers - and you're not sure what Labor's position is on that?
CHALMERS: I'm saying I can't think of another way to tell you David, that we took a position to the election. We lost the election. We'll miss the deadline that we had in mind so it's not actually possible for us to take -
SPEERS: So, what's your position now?
CHALMERS: It's not actually possible for us to take the same position to the 2022 election which would see something implemented in 2020. We've got an opportunity now to look at the Government's legislation. We're not the Government - as much as that stings to repeat once again -
CHALMERS: Our responsibility is to look at what is proposed and we'll come to a view on it. That's not unreasonable, David.
SPEERS: And is that the same with all the recommendations from Kenneth Hayne?
CHALMERS: Of course it is. It's true of all of our policies, David. We've said for three months now - I've probably told you on multiple occasions at about this time on a weeknight or perhaps a bit earlier on a Sunday - that we're taking our time to review all the positions that we took to the election. It's only been three months since the election - it's almost three years to the next one unfortunately - so we'll take our time to come to a considered view. Part of that, entirely reasonably, is to look at the detail of the legislation which is proposed by the Government and come to a view on it consistent with our usual internal processes.
SPEERS: A couple of other ones quickly if I can. Are you generally worried that there's already been an overreaction to the Banking Royal Commission? That credit is now too hard to come by, it's too squeezed for some - particularly small-medium-sized businesses - too difficult to get credit. Do you see that at all?
CHALMERS: I think there are a whole series of issues impacting that part of the economy in particular. I think the most pressing problem we've got is a lack of demand which is a consequence of a lack of income growth as the Reserve Bank has said repeatedly. Obviously, finance is not flowing as freely as we would like. That's not just because of the Royal Commission. There are a whole range of issues at play there, and we shouldn't try and oversimplify it.
SPEERS: And final one: Scott Morrison's heading over to the G7. He'll be there as an observer and obviously meeting some of the leaders on the sidelines. A lot of the talk there will focus on the trade war between China and the United States, the uncertainty over Brexit still as well. You would have seen some talking about fears of a global recession coming. How worried are you about that, and how worried are you about the impact that might have here in Australia?
CHALMERS: Well there have been some concerning developments in the global economy, and I think it is a good opportunity for Australia to make its voice heard at the G7. I think it's very good of President Macron to invite Scott Morrison to go and be part of that meeting in France. It's a welcome opportunity and I hope the Prime Minister makes the most of it.
But I also hope that the Prime Minister - and the Treasurer for that matter - don't continue to pretend that all of our challenges in the Australian economy are imposed on us from overseas. We've got a range of home-grown challenges here which have been hanging around for much of the six-year life of this third-term Government: things like stagnant wages, the slowest growth in a decade, record high household debt, 1.8 million Australians looking for more work or for work. All of these sorts of issues - declining living standards - they've been around for a long time now. The Government's been in denial about that. Now they're searching for an opportunity to just pin everything either on the Labor Party or on global conditions. Many of our challenges are principally home-grown. They come from the fact that the Government doesn't have a plan to turn around an economy which is floundering on their watch because of their denial about the nature and magnitude of that challenge, so we hope -
SPEERS: When you say floundering, do you fear a recession here in Australia at the moment?
CHALMERS: Look I don't get into that kind of language, David, or play the prediction game but what I do think is that neglect of these big pressing domestic economic challenges around growth, productivity, wages, household debt, and living standards has left us in a far weaker position than we should be. It has left us dangerously exposed to global shocks in the global economy should things turn worse. That is because the Government for too long now - in pretending that they're doing a good job managing the economy and everything is hunky dory - they haven't done the necessary work or they haven't, you know, acknowledged that these big challenges are hurting people in the economy, and we are precariously placed to deal with either a global downturn or even something closer to home.
SPEERS: Jim Chalmers, Shadow Treasurer, thanks for joining us this afternoon. Appreciate that.
CHALMERS: Thank you David.