FRAN KELLY, PRESENTER: Chris Bowen welcome back to breakfast.

CHRIS BOWEN, SHADOW TREASURER: Always a pleasure Fran, good morning.

KELLY: Ill come to Senator Dastyari in a minute, but can we start with the banking Royal Commission. Youve criticised Malcolm Turnbull for the decision to hold the Royal Commission but you have to accept dont you, that circumstances changed in the Parliamentary realm. LNP Senator Barry OSullivan was going to get his Private Members Bill up. He had the numbers, An inquiry like this is perhaps better managed by a Government than a loose coalition of cross-party MPs. What do you think?

BOWEN: Well Fran, we havent criticised the decision to hold a Royal Commission, we welcome it. We welcome it. But weve been calling for it for 18 months and Ive made the point that if Malcolm Turnbull and Scott Morrison had accepted Labors suggestion and proposal 18 months ago, the Royal Commission would now be finishing, thered be interim recommendations and wed be implementing it.

KELLY: Sure. So youve made your political points. But do you still think this is a good idea weve got this Royal Commission?

BOWEN: Well we very much welcome the Royal Commission. Now a couple of points to make apart from the humiliation of Malcolm Turnbull and the vindication of Bill Shorten and Labors position. A few points to make Fran. Clearly the Government is not doing this for the right reasons, point one. Point two, the terms of reference are very disappointing. Now we would have been happy to sit down and engage with the Government in a bipartisan fashion and engage in the terms of reference to make this a proper bipartisan Royal Commission. The Governments refused to do that. And more importantly than that even, they havent consulted with victims groups or consumer groups. There is some evidence here that in typical partisan, juvenile, bickering fashion, the Government is using this as an opportunity to specifically attack industry funds.

KELLY: I will come to that, and sorry to interrupt you, but when you say a bipartisan Royal Commission, with respect history doesnt tell us that Royal Commissions are normally a bipartisan affair with bipartisan terms of reference do they?

BOWEN: I completely accept that
KELLY: Its up to the Government of the day.

BOWEN: Correct Fran, I completely accept that theres no necessity or convention for the Government to consult with the opposition but, as the ABA has said. It would be better if this was done in bipartisan fashion. They made it very clear yesterday, they want certainty, and in the position which is unusual that heres a Royal Commission the Labor Party has been calling for for 18 months, the Government has finally accepted, you would think that the Government would sit down with the opposition and say well lets make this work. As we are happy to do with the appointment of the Royal Commissioner or Royal Commissioners. Now if the Government makes a good appointment, a thoroughly credentialed, respected Australian, we will welcome it. If they appoint somebody who doesnt meet that criteria, we will criticise it very strongly.

KELLY: You have no control over the terms of reference though, Parliament doesnt have a chance to adjust that?

BOWEN: No, correct. That is correct. But we are entitled to point out the flaws in them Fran
KELLY: Sure. Can I go to some of those terms of reference because I dont understand some of them. Perhaps you can help. Theres a clause that says the Royal Commission is not required to inquire into macro-prudential policy regulation or oversight. Can you translate that for us? What does that mean this inquiry wont do?

BOWEN: Well that specifically means that it wont do something that Ive said and the Labor Party have said it should do, which is reflect on the regulatory framework that we have in our financial system, and is it fit for purpose and up to date. It has been blurred in recent years. We used to have, and this was a bipartisan achievement, we used to have a very clear line of accountability on financial regulation. Everybody was clear about what the Reserve Bank did, APRA did, ASIC did. That has changed. We now have APRA conducting the banking executive regime which many people think would be better done by ASIC. Thats one example. We now have macro-prudential regulation administered by APRA, which is in many senses monetary policy, or certainly more macro than prudential in that it is designed to effect the macro settings rather than the prudential settings.

KELLY: Sure but thats for the Government, thats not for the banks.

BOWEN: Well I pointed out previously that a proper Royal Commission would have an opportunity to reflect on what are very good regulators. But whether our regulatory architecture is right for the time considering the very high levels of household debt in Australia for example. Now the Government has specifically said they wont do that. The Royal Commission will not do that in the terms of reference. I think thats disappointing.

KELLY: Lets go to another thing the Royal Commission wont do. It wont guarantee people compensation. The people most effected by bad behaviour by the banks may get not a dollar out of this, and the Treasurer Scott Morrison says thats one of the great cruelties that the Labor Party has put on Australians, the idea that theres a cheque at the end of this when theres not.

BOWEN: Well I think Scott Morrison is trying to obviously walk both sides of the street here. Hes called the Royal Commission and now hes criticising his own Royal Commission.

KELLY: Well whether hes criticising or not, is it fair to say that theres going to be no compensation regime out of this?

BOWEN: Its a matter for the Royal Commissioner as to what they recommend Fran, going forward. I cant preempt that and neither can Scott Morrison, with respect. I mean again, I come back to my point, if wed had a Royal Commission over the last 18 months the Treasurer of the day would now be answering your questions about implementing those recommendations. Instead weve had 18 wasted months with ongoing uncertainty and the financial system as well as consumers have suffered from uncertainty.

KELLY: But is it possible to have the Royal Commission and that no one will accept any, or there may not even be a recommendation for compensation, so actually the banks will get off Scot free in a sense?

BOWEN: Well Fran, I am confident that a properly credentialled Royal Commissioner with proper terms of reference would make recommendations which could be accepted I would think by both sides of Parliament, by the financial services industry, by consumer groups. Now it is an open question about whether we will get there from this Government. What we have seen so far with these terms of reference is disappointing, but as I said, we would like to engage with the Government to ensure that this is a proper Royal Commission with bipartisan support which could then see the recommendations implemented, with bipartisan support. What we are seeing from the Government so far over the last 24 hours does not give us much hope for that.

KELLY: Just finally on this subject you mentioned already the notion of industry super funds being examined as part of this, some say that is payback. Isn't it fair enough for the superannuation industry to be a part of the Royal Commission into the financial services sector?

BOWEN: It is certainly fair enough for superannuation, they are part of the financial services industry, no question. But the question goes to motive. Now we have seen Peter Duttons comments we have seen backgrounding from the Government already saying this is payback to the Labor party. Now industry funds are part of the financial services sector, of course they would be covered by the terms of reference. We have made that clear previously, but where you've got terms of reference specifically designed to target them that is just partisan juvenile bickering. Now industry fans are well performing, they are have high returns to members. Now the Governments beef with them is that they happen to have union representation on them as well as employer representation. It is an ideological juvenile obsession of this Government. With all the scandals that we have seen in the financial services industry, what are they focused on? The fact that a high-performing part of the superannuation sector which has provided very good returns to its members happens to have some union representatives on the board as well as employer representatives. That's what drives this mob.

KELLY: Okay, you are listening to RN Breakfast it is a quarter to eight, our guest is the Shadow Treasurer Chris Bowen. Chris Bowen, Bill Shorten moved swiftly yesterday to strip Sam Dastyari of his role as Opposition Senate deputy with as a result of his relationship with the Chinese developer Huang Xiangmobut that can't be the end of this matter can it? There are still unanswered questions aren't there about Sam Dastyari and his involvement with Mr. Huang. Don't you want those questions investigated?

BOWEN: Fran, let's just take this back to first principle. First principle is, Sam Dastyari is a loyal and patriotic Australian despite the hyperbolic attack of Malcolm Turnbull in a desperate attempt to distract from his own Government falling apart. He is a loyal Australian who has made mistakes. He is not alone there Fran and he has paid a price for those mistakes now twice. Now he will be paying a price for those mistakes for some time. His career has suffered a very considerable setback. He accepts that as of course it is a reality. Now the fact of the matter is he has made mistakes, he has paid a price. That's what happens in politics. Put aside the hyperbolic attack the sort of smear of Malcolm Turnbull, Sam Dastyari is as I said: A loyal Australian. He has made some errors, he is paying a price for those. Bill Shorten has acted. He acted swiftly as you said unlike Malcolm Turnbull who allows Michaela Cash who trashed the Westminster system and misled Parliament to sit in the Cabinet today and who had two Cabinet members who were barred by the constitution of serving in Parliament let alone in the Cabinet. Malcolm Turnbull was too weak to act. Bill Shorten on the contrary has acted.

KELLY: There are mistakes and there are mistakes and what we need to know don't we still is the dimension of the mistake that Sam Dastyari made. The allegation is he directed Mr. Huang to move away from his mobile phone, to leave it inside while they talked outside so he could apparently tell him his phones were most likely being bugged and then have a conversation that no one could overhear. Now Senator Dastyari says he didn't leak intelligence information but do you consider what he did appropriate behaviour and shouldn't we find out more about this?

BOWEN: What he has said Fran is that he discussed nothing more in that conversation which by the way --

KELLY: Yes but how did he know they were being bugged and why did he tell a foreign national --

BOWEN: Fran with respect this interview will work better if you let me answer the questions youve asked to me. Sam Dastyari has said that he went to end the relationship, to say as common courtesy We can have no further contact. That was this conversation. He also has said he discussed nothing more than what was already been, as you might recall at the time, very readily traversed in the media. Some of the same media outlets which are very talking about this now were talking about that at the time and Sam Dastyari had no access to any information other than what he had read and had been speculated upon in the media and that's what he discussed. Now there are national security implications here Fran of having ASIOs methods and tactics trawled through the media. I think the Government should be concerned about that. They appear unconcerned about that, they are more concerned in political point scoring.

KELLY: One last question on this. Senator Dastyari made that speech contradicting Labor policy on the South China Sea one day after Huang Xiangmowithdrew a $400,000 donation to Labor because of Labors policy on the South China Sea. Was Senator Dastyari asked by somebody in the Labor hierarchy to go out and make that speech to do whatever it takes to secure that donation?

BOWEN: I very, very much doubt that and he has admitted that that was an error. He has paid the price with a second resignation.

KELLY: You doubt that? Have you asked questions about that?

BOWEN: Well Fran I do not believe that is the case, no. He made a mistake Fran, he made a mistake and he has paid the price.

KELLY: Chris Bowen, thank you very much for joining us.