RN Drive with Patricia Karvelas 26/11/19

November 26, 2019


SUBJECTS: Angus Taylor; Westpac and Brian Hartzer’s Resignation; Low wages the ‘new normal’; Floundering economy under the Liberals; Newstart; Measured, proportionate and responsible stimulus.

PATRICIA KARVELAS, ABC RN DRIVE: Scott Morrison might be a new Prime Minister relatively, leading a new Government relatively, but there's a sense of deja vu as chaos engulfs the final Parliamentary sitting fortnight of the year. New South Wales police have announced they're investigating the Minister for Energy and Emissions Reduction Angus Taylor's office over his office's use of incorrect travel figures from a City of Sydney report. It was an attempt to embarrass Sydney Lord Mayor Clover Moore that backfired spectacularly. Labor spent Question Time calling on the Prime Minister to stand Angus Taylor aside but Scott Morrison is standing firm.

RECORDING OF SCOTT MORRISON, PRIME MINISTER: Based on the information provided to me by the Commissioner I consider there is no action required by me under clause 7.1 and 7.2. The New South Wales police should now be left to complete their inquiries, which will be considered upon their completion.

KARVELAS: Jim Chalmers is the Shadow Treasurer and he joins us on RN Drive tonight. Jim Chalmers, welcome.


KARVELAS: Scott Morrison says he made the decision not to stand Angus Taylor aside after a conversation with the New South Wales Police Commissioner. What's your response?

CHALMERS: The Prime Minister's running a protection racket for a Minister who should have stood aside already, and if he didn't stand aside himself, he should have been stood aside by the Prime Minister. In your introduction you called it a relatively new Government, but in reality it's a third-term Liberal Government in its seventh year now and the rot has already set in. If the Ministerial Standards meant anything at all whatsoever then Angus Taylor shouldn't be a Minister today.

KARVELAS: Well, a re-elected Government under a relatively new Prime Minister. The Prime Minister says New South Wales police have told him the investigation is based solely on Labor's referral. We often see these referrals come to nothing. What makes you think this will be any different?

CHALMERS: What a cop out from the Prime Minister to pretend that all of these serious issues which have been raised not in the first instance by us but by some good journalistic work and pressure from the community. These are serious issues and they shouldn't be so lightly dismissed. One of the things I've observed about Scott Morrison is just how arrogant he's become since the election. I think this is a real sign of that, this real sense of hubris that the rules don't apply to him and they don't apply to his Ministers. There have been Prime Ministers before him, Liberal Prime Ministers Abbott, Howard and others who have stuck by the Ministerial Standards. Scott Morrison thinks that he's above those Ministerial Standards and that's why we're getting this remarkably arrogant behaviour today.

KARVELAS: Well, he said that his Government and the Minister will fully cooperate with the police investigation. What else do you want?

CHALMERS: Ministers should be stood aside as other Ministers in the past have stood aside while there's been a police investigation. This strike force that the New South Wales police have set up is a very serious matter. It goes to the production of fraudulent documents to try and influence a public outcome, which is actually a very serious potential offence. It shouldn't be dismissed lightly and Angus Taylor should stand aside while it proceeds. Of course they'll cooperate with the investigation - they have no choice but to cooperate - but the thing that Prime Ministers with more character and higher standards than this guy should be doing is for Taylor to stand aside while the investigation is ongoing.

KARVELAS: The Government has mentioned the fact that in Victoria, under a Labor Government several MPs were under police investigation and no one was stood down during that period. Why are there two sets of rules for Labor and the Government?

CHALMERS: Because the relevant precedents are there. Senator Sinodinos stood aside while there was an ICAC inquiry into him and Tony Abbott said it was the right thing to do. Mal Brough stood aside during the Howard years. Susan Ley who's now back in the Cabinet stood aside while there was an investigation. This is the right and proper thing to do. There are Ministerial Standards at the Federal level which apply to Cabinet Ministers like Angus Taylor, or should apply, which the Prime Minister is deliberately flouting because since he won the election in May he thinks that these rules don't apply to him. That's the arrogance and the hubris that we're seeing growing with every passing day.

KARVELAS: There's six sitting days left for the year now. Where does Labor take this issue?

CHALMERS: I think it's got a long way to run. It's been developing for some time. We've given Angus Taylor so many opportunities to correct the misleading of the Parliament. He hasn't taken that. He's kept digging and doubled down on what is clearly a laughable defence. For as long as he keeps digging and the Prime Minister clings to him and ignores his own Ministerial Standards then this issue will have legs. Who knows where it's up to in six day’s time. It's a very serious thing which has unfolded in the Parliament today. It's not too late for the Prime Minister to stand him aside, and he should do so.

KARVELAS: The Prime Minister had a conversation with the New South Wales Police Commissioner. Do you think that was appropriate?

CHALMERS: I heard it in Question Time, and when he said it it didn't sound right to me. I'd have to check the relevant precedents and speak to people who know the law of this area. When he said that it did seem a bit strange to me that he would have a conversation like that but I'll leave that to others with a firmer understanding of the law as to whether it's appropriate or not.

KARVELAS: If you're just tuning in this is RN Drive. I'm Patricia Karvelas and my guest is the Shadow Treasurer, Jim Chalmers. 0418226576 is the text line if you want to text in on this issue or any others. Let's get to another huge story which really was the biggest story this morning until, of course, the other one emerged. The Westpac CEO has announced he's stepping down. The Chairman of the Board will also finish up early. Would you like to see senior management and the Board go too?

CHALMERS: That'll be part of the conversation as the legal process unfolds. I think it's a good thing that Brian Hartzer has resigned as CEO. I couldn't see another acceptable outcome when you consider the disgraceful behaviour of the Westpac Bank under his leadership. I think that was an important step but it's not the only step. There will be other investigations, the Westpac Bank has its own process, APRA no doubt, and the legal process. If the Commonwealth Bank in the same situation was a precedent there'll be an issue around financial settlement. All of those things are still to unfold. If there's anything we've learned from the last week or two it's that there are still surprises in the banking industry. This one being is a massive one, 23 million breaches of the law. We'll monitor things as they unfold and if others have to be held accountable for this disgraceful and indefensible behaviour then so be it.

KARVELAS: AUSTRAC is alleging systemic breaches at Westpac. Should the replacement CEO come from outside the bank, in your view?

CHALMERS: That's something they'll consider. They've got an interim CEO and as you rightly identified the Chair will be moving on a bit earlier than was planned. No doubt they'll be considering external candidates for the role. They've got the beginnings of a plan to address some of these systemic issues but I think a lot of people who saw those early announcements consider them to be insufficient. No doubt it'll be attractive to look around and see who is best placed to clean up what's gone on here so that people can have confidence again in a bank which is a really important financial institution in our economy.

KARVELAS: Should Westpac executives face criminal prosecution if it's determined that criminal laws have been breached?

CHALMERS: I have to be a bit careful there in making assumptions about criminality and the like. Obviously anyone who's done the wrong thing should be held accountable to the full extent of the law. I'm a bit uncomfortable going beyond that, Patricia, for obvious reasons around assuming criminality. We need to make sure that our laws are as tough as they can be so that we don't have a repeat of this kind of behaviour. This is why we wanted a Royal Commission for those two years that Scott Morrison resisted it and voted against it 26 times. It's why we don't want them dragging their feet on implementing the recommendations of the Royal Commission because we genuinely want Australians to have confidence in their banks. When we have remarkable stories like this then it diminishes confidence in the big banks which are a big part of the financial system and a big part of the economy and so we need to clean things up.

KARVELAS: CBA has paid a $700 million fine for similar breaches. Westpac's fine will be several billion dollars and NAB is now under investigation. Does that shock you?

CHALMERS: The extent of it has shocked me a bit. When the Commonwealth Bank was found to have engaged in indefensible practices and systems then that was news to me. It pays to be level-headed about this and to understand that when this bad behaviour happens we need to throw the book at people who've done the wrong thing and not be shocked or emotional about it, but understand that this is a serious breach, it's a massive breach and it should be punished to the full extent available to us.

KARVELAS: The Prime Minister says the infrastructure spending they're bringing forward coupled with drought assistance will boost growth without abandoning the surplus. Should the Government abandon the surplus?

CHALMERS: I don't think they need to, Patricia, and I don't think they will or they should because they've got at least a $7 billion dollar surplus already for the year that we're in - that's what they are forecasting – and $11 billion the year after. We think it's possible for them to do a measured, proportionate, responsible stimulus which doesn't jeopardise that surplus. We think that what little steps they've taken so far are an admission that the economy's weaker than they've been telling us. We think that it's possible for the Government to do more. In the last couple of weeks we've had rising unemployment, slowing wages growth, and today the Reserve Bank is saying that lower wage rises have become the "new normal" and consumer confidence fell again to a new four-year low. What we really need from the Government is a plan to boost the economy and they've largely vacated the field and left that all up to the Reserve Bank.

KARVELAS: You mentioned this already, but I spoke to the RBA Deputy Governor Guy Debelle earlier today. He gave a speech and I asked him some questions at the ACOSS conference. He says low wage growth is the "new normal". Tax cuts won't fix that. What will then?

CHALMERS: We think the tax cuts will help a bit but not enough. We think that the absence of a wages policy for more than six years is really biting. People feel with some justification that no matter how hard they work, they just can't seem to get ahead when they've got those rising costs of childcare and energy and all the rest of it. There is a substantial problem with wages in the economy which is feeding through to all of the other parts of the economy. Consumption is weak, growth is the slowest it's been for a decade, we've got the highest household debt we've ever had in Australia and all of these challenges are related. Tax cuts will help but not enough. We've been calling on the Government to review and responsibly increase Newstart, which is a point that Guy Debelle made in your conversation with him earlier today. The thing about increasing Newstart in the context of this very soft economy is that every dollar of that will be spent in the economy and in the shops. So many of your listeners when they're down at their local shops, in their local malls, they would see so many "for lease" signs around. Retail is really struggling and if we care about that and care about turning it around one of the levers we have at our disposal is to increase Newstart. The Government should be moving on that front.

KARVELAS: Jim Chalmers, thanks so much for coming on the show.

CHALMERS: Thank you, Patricia.