TOM CONNELL, HOST:Chris Bowen thanks very much for your time this morning.
CHRIS BOWEN, SHADOW TREASURER:Good morning Tom.
CONNELL:What about you and this fiscal discipline rule, would Labor adopt it in Government?
BOWEN:Yes Jim Chalmers and I have already announced our fiscal approach, our fiscal rules. I did so several months ago. We are sticking to them. That is of course bigger budget surpluses cumulatively than the Government has announced over the forward estimates, substantially bigger over the decade, our spending more than offset and the majority of revenue raised by our measures over the decade used for budget repair and bigger surpluses. Very clear.
We've made those commitments and we've made the tough decisions to underpin them. By contrast on the other side, you've got the Treasurer and the Finance Minister just fundamentally disagreeing about what their fiscal approach is, what their fiscal rules are. And their actions do the talking. They are clearly politically desperate. They've thrown away the debt and deficit disaster and budget emergency and are just throwing money at their political problems.
CONNELL:Now we know that Labor says it will have a better budget bottom line, but just specifically to this rule, if you get into power obviously different spending decisions come up. Would you stick to any new decisions would be offset by savings, commensurate savings?
BOWEN:Yes we've already announced our approach Tom, as I've said. Our approach is more than just one fiscal rule, it's a multitude of fiscal rules to ensure that discipline. We've got considerable potential for international economic down tide. The world economy is very benign at the moment for Australia, it's going very well. But there's significant risk out there. Australia's household debt is very high. Confirmed during the week by the Bank of International Settlements as the second highest in the OECD. That provides, without being alarmist, for considerable risk in the Australian economy. So the time for fiscal discipline and rigour continues. Josh Frydenberg has thrown away the rule book in his first couple of weeks as Treasurer. Well I have a different approach. I believe in bigger budget surpluses and that requires those fiscal rules to be adhered to.
CONNELL:The Government seems pretty certain at this stage to switch the tax cuts to small and medium businesses, give them the whole lot for businesses with a turnover of up to $50 million. Do you consider matching any part of that?
BOWEN:Well Tom I've seen also speculation that the Government is considering an instant asset write off, an upfront deduction, immediate expensing. We've already announced the Australian Investment Guarantee. So if they want to play catch up with us on that, that's great. We've announced 20 per cent up front deductions for every business big or small. Multinational or Australian focused, providing they invest in Australia, providing the investment is coming. That's the condition of which Labor has attached to that. Now with this Government Tom, with due respect, policies change between 10am and lunch time, I'm not going to respond to every thought bubble, every bit of speculation. When we see a concrete policy announcement from the Government you will see a considered response from Labor and the economic team.
CONNELL:You say considered response. So that type of policy, if they're talking about increasing and getting an earlier tax cut for businesses of that size, that would be something that would be discussed by Labor?
BOWEN:Well of course. I mean we respond to Government policies as they're announced. But as I said they change from one hour to the next. I mean we've seen multiple energy policies. We were told that the big business company tax cut was absolutely integral, absolutely central to the Government's agenda. It's gone. Although I'm sure they will bring it back if they ever have the ability to do so. We will maintain a consistent position. Of course we will respond to Government announcements. But Government announcements Tom. Not thought bubbles, not speculation, not leaking, not backgrounding. Give us a concrete announcement and you'll get a response from me. But I hope they play catch up with Labor's superior Australian Investment Guarantee policy.
CONNELL:We will wait for any Government announcement. A lot of talk about the Banking Royal Commission of course, this interim report on Friday. Labor is saying extend it. The Government has said the Royal Commission can have more time if it wants it. That's fair enough isn't it?
BOWEN:Well we don't say this lightly Tom, we do think obviously the Royal Commission has been more than justified. Labor has called for it for more than two years. The Government rejected it and delayed it. But then they gave it a very tight time frame. Now the Royal Commissioner and his team, particularly the counsel assisting, but the entire team, have done a first class job, an outstanding job, with the amount of time they've been given. But there's been thousands of submissions made by victims of fraud and people with concerns about banking. Only a small handful have been heard. There's been entire states that have missed out on hearings. It is our view that the interim report that we saw on Friday does raise obviously very important and legitimate questions. But I think there was a wide expectation it would include interim or draft recommendations. Which could then be consulted upon, with the banks and the financial services sector and importantly with victims groups and consumer groups. If there are to be substantial changes made, we think with respect, it would be better if there were draft recommendations released to allow that consultation to continue. Now with the time frame the Government has given the Royal Commissioner, that will be very hard now. So we are suggesting that the time frame be extended to allow that further consideration, to allow draft recommendations. These are very big changes that might be recommended and we think some sunlight on those, some public airing of those through an exposure of the draft recommendations would be prudent and good policy.
CONNELL:Just on what we have already heard there though Chris Bowen, do we need tougher penalties actually being applied. For example, for the worst acts, should people be going to gaol as penalties do allow but they're not actually being applied in that way?
BOWEN:Well there's always a balance between ensuring that the existing law is rigourously enforced and assessing whether new laws or new crackdowns are necessary. Now the Royal Commissioner raised some of those questions. I think inevitably there's going to be some combination of response. That really underpins our call with respect to the Royal Commission for some draft recommendations to allow that public airing, that public viewing. Some people might say the recommendations don't go far enough. Others might say there's unintended consequences. Others might point to some of the implications that might not have been considered. I think this is all fair enough. I mean if we are contemplating significant changes, I do think a bit of sunlight on those draft recommendations would be good. I think the Royal Commissioner has been put in a difficult spot by the Government with the very tight time frame. So that's why we are making a constructive suggestion to extend the time frame and allow for draft recommendations to have some public consultation.
CONNELL:But just in terms of what has been aired so far, the issue being cited by a lot of people is fines. They seem to be something that are handed out the most. Realistically they are paid usually by the company or the shareholders.
BOWEN:Sure.
CONNELL:Is there anything you've seen so far, specific actions from people very high up that make you think gaol should have been something applied?
BOWEN:Well look this always needs to be carefully considered. And white collar crime of course should not be exempt in the law from gaol sentences. There are instances of course, like insider trading and the most serious operation of the breaches of competition law for example that do provide for some incarceration penalties and if that needs to be extended that is worthy of consideration. Absolutely. I wouldn't shy away from that. But I do think, as I keep saying, I do think this would benefit from some public airing, some public consideration.
CONNELL:Okay fair enough, but is there anything, you say you'd be open there to extended where people could go to gaol. Is there anything so far specifically -
BOWEN:Well I don't really want to speculate on hypotheticals Tom. I don't really want to speculate on hypotheticals. If we had draft recommendations out on Friday, perhaps we could have had an -
CONNELL:Sorry I'm just asking if anything in particular so far has made you think that that particular punishment should apply, specifically.
BOWEN:Well look we've seen very, very serious findings. I mean more than allegations. Very serious conclusions from the Royal Commission. The evidence spoke for itself. The Royal Commission was more than justified. I think it has justified itself in its first days. Most serious misconduct in many instances imaginable. Now it's not my place here in an interview with you to start meeting out gaol terms or gaol sentences. I think that these are things that could be properly aired through a draft recommendations process and there could be consideration. I mean I've engaged in corporate law reform in Government. I was the Minister for Competition Policy who made cartel conduct a criminal offence for example. But these do require very careful consideration. When I criminalised cartel conduct I had extensive rounds of consultation with the Law Council, with the Bar Council, with experts in the field, just to make sure we got it right. If you do go down this road you've got to do the same thing.
CONNELL:Is there an issue here as well of unintended consequences as a possibility? So many bad headlines awaiting banks anyway for all manner of things and the concern is access to credit. For example, a parent wanting to go guarantor for a loan, get their child into the housing market. A bank might say you know what in case this goes bad we are not going to give the loan. Is that an issue of unintended consequences?
BOWEN:Well again, I think thats why you need to have draft recommendations so people can provide that feedback. We would have an implementation task force that I would establish in Treasury. I would report every six months to Parliament on the progress of implementing the Royal Commissions recommendations but I do think that process would be enhanced if people had a chance to see the draft recommendations
CONNELL:But I guess more broadly on my main point is that a concern that needs to be considered?
BOWEN:Well of course you need to consider all these things. I mean the finance sector is very important to the functioning of our economy, access to credit is important to the functioning of our economy. Now we saw some instances in the Royal Commission where clearly inappropriate credit was provided but nobody would suggest that there needs to be a crackdown on legitimate credit and this is something the Royal Commission has to work through, this is something a Government implementing the recommendations would have to work through. Of course there is a balance to be struck there, absolutely.
CONNELL:Do you think banks are making too much money?
BOWEN:Well we want profitable banks. I mean nobody wants a bank which is not profitable but we want that profit to be based on good conduct, ethical conduct on, honest conduct. And I think this has been an extremely important process to get to that. We needed the public exposure through the Royal Commission as Bill Shorten and I said well over two years ago. It would have been much better if this was implemented now, it was over, we were implementing the recommendations. That was an option available to us, to the country if Bill Shorten and I had been listen to by Malcolm Turnbull and Scott Morrison two and a half years ago. Thats now not available to us so we just have to make the best of it because of their bad judgment, their poor judgment calls. But to come back to your original question, banks need to make money. We want a profitable banking sector but there is no excuse, there is no justification for poor conduct to get to that profit.
CONNELL:Yeah and obviously greed has been spoken about already within the Royal Commission, the incentives of banks but in terms of the amount. I mean is this a sort of return on equity when you have in mind when you look at other banks around the world? Too far past that?
BOWEN:Well I dont think thats necessarily the right metric to be looking at but the Royal Commissioner for example raised very legitimate issues which say very clearly the Finance Sector Union has been raising now for 25 years in relation to sales incentives for frontline staff for example.
Is it right that tellers and other customer facing staff have their salary determined by how many products they sell? Now the Finance Sector Union has been saying this is a problem for 25 years, they have been ignored by the banks and by the Liberals. Now they have made important submissions to the Royal Commission, the Royal Commission by the draft report or the interim report has taken those seriously for example and I think when you go into a bank branch or you talk to a bank employee you want somebody to help you with your problem, make your transaction efficiently.
You dont want to be sold a product you dont need. You dont want to be pushed into life insurance or a bigger mortgage or a bigger credit card, you just wanted to get your business done and that hasnt been happening in Australia. For 25 years theres been a sales culture, and emphasis on sales with not enough emphasis on whether the product is suitable to the individual. We saw a person with a self-acknowledged gambling problem giving evidence to the Royal Commission who was pushed: More credit, more credit, more credit. Obviously inappropriately and the people pushing that credit on him would have had sales incentives, would have had pressure on them to sell more products, to get rid of more credit off the banks books and thats of course inappropriate and I think the Royal Commission has highlighted that so its not so much the bottom line profit that I think we need to be focusing on, its how we get there. How does the bank make that profit? And if its through inappropriate incentives and poor remuneration structures that needs to be fixed.
CONNELL:It seems likely we will get something certainly in that area in terms of changes. Finally on this Hayne has also spoken about competition being limited. Do we need to look at getting the big four to have to spin off assets. We know there was a lot of the relaxing of the rules essentially during the GFC because of the concern. Do we need to look at for example, CommBank, we might have to sell Bank West, Westpac, sell St. George?
BOWEN:Well I think theres two separate issues here. Theres banking and wealth, retail banking and wealth and whether that needs separation. Thats something Im sure the Royal Commission I will examine him his final report. And then there is the broader issue of competition. Now I dont think its necessarily about divestment, its about getting the settings right to encourage competition. I spend a lot of time with the smaller banks and credit unions and customer owned banks working through their issues. They have made a series of the suggestions.
Theres prudential regulatory matters which I have discussed with the chairman of APRA to make sure that the smaller financial institutions arent disadvantaged because I do think as you correctly pointed out Australia got through the Global Financial Crisis very well. One thing that was a feature of that which couldnt be avoided at the time was the absorption of St. George and BankWest and that has meant a lessening of competition over the years and the more that we can have, better competition the more that the smaller banks and financial institutions or indeed new entrants or foreign banks or Fin Tech can provide competitive pressure to the big four I think Australia is the winner there. And of course thats something thats been examined through a Productivity Commission
CONNELL:Would divestment be an option there?
BOWEN:Well I dont think its necessarily about divestment. I mean the ACCC approved those mergers at the time but the Productivity Commission recently brought down a report on competition in banking Tom and had a series of recommendations, a series of findings, I think there is something to work with their.
As I said I have engaged closely with the smaller banks and credit unions and financial institutions about that. They would have my attention as Treasurer to ensure that we are not crinkling competition and all the competitive juices of banking and financial services are flowing appropriately because I do think we do have a very concentrated banking market, no doubt about that. The big four dominate the market quite heavily and there are good products available for others. I am not here to spruik for smaller banks or a financial institutions. They have a good products available and I think that competitive juice is something which is really important to the good functioning of the banking and financial services sector.
CONNELL:I wanted to bring you to the ABC finally. Now apart from all the other headlines they obviously want this $500 million for jet stream, the digitization of the ABC. Bring it into the future, its a lot of money obviously. Is this something you would consider?
BOWEN:Well weve said that we would restore the cuts that the Liberals, the Abbott-Turnbull-Morrison Government has imposed on the ABC so we would restore those cuts. Now this is a separate proposal. I have met with the ABC about it, theyve put their case of course needs to be considered in light of all other spending commitments and requests to Government and be prioritized and see whats the best return for the taxpayer.
So that is a separate process but I think what we have seen here Tom is a failure of culture at the hands of the Liberal government. I mean this was just extraordinary. I mean Im pretty hard to surprise these days in politics but when I saw the revelations about what Justin Milne had done I was shocked. And theres a culture here and the fact that the outgoing chairman didnt even acknowledge the error as he resigned I thought underpinned a very poor culture at the hands of this Government and the man appointed to buy this Government to chair the ABC. The fact that he thought this sort of communication with the Managing Director was somehow vaguely appropriate. We do need the Parliamentary inquiry to get to the bottom of exactly what other interference occurred, what the board knew and when they knew it. I think is a legitimate issue to be addressed. Whether other board members were aware of this highly inappropriate communication with the Managing Director from the Chairman just unquestionably black and white open and shut wrong on behalf of the chairman and that culture appears to have been allowed to continue under the Liberal Government.
CONNELL:Shadow Treasurer Chris Bowen, thanks very much for your time this morning.
BOWEN:Good on you Tom. Have a great day.
CHRIS BOWEN, SHADOW TREASURER:Good morning Tom.
CONNELL:What about you and this fiscal discipline rule, would Labor adopt it in Government?
BOWEN:Yes Jim Chalmers and I have already announced our fiscal approach, our fiscal rules. I did so several months ago. We are sticking to them. That is of course bigger budget surpluses cumulatively than the Government has announced over the forward estimates, substantially bigger over the decade, our spending more than offset and the majority of revenue raised by our measures over the decade used for budget repair and bigger surpluses. Very clear.
We've made those commitments and we've made the tough decisions to underpin them. By contrast on the other side, you've got the Treasurer and the Finance Minister just fundamentally disagreeing about what their fiscal approach is, what their fiscal rules are. And their actions do the talking. They are clearly politically desperate. They've thrown away the debt and deficit disaster and budget emergency and are just throwing money at their political problems.
CONNELL:Now we know that Labor says it will have a better budget bottom line, but just specifically to this rule, if you get into power obviously different spending decisions come up. Would you stick to any new decisions would be offset by savings, commensurate savings?
BOWEN:Yes we've already announced our approach Tom, as I've said. Our approach is more than just one fiscal rule, it's a multitude of fiscal rules to ensure that discipline. We've got considerable potential for international economic down tide. The world economy is very benign at the moment for Australia, it's going very well. But there's significant risk out there. Australia's household debt is very high. Confirmed during the week by the Bank of International Settlements as the second highest in the OECD. That provides, without being alarmist, for considerable risk in the Australian economy. So the time for fiscal discipline and rigour continues. Josh Frydenberg has thrown away the rule book in his first couple of weeks as Treasurer. Well I have a different approach. I believe in bigger budget surpluses and that requires those fiscal rules to be adhered to.
CONNELL:The Government seems pretty certain at this stage to switch the tax cuts to small and medium businesses, give them the whole lot for businesses with a turnover of up to $50 million. Do you consider matching any part of that?
BOWEN:Well Tom I've seen also speculation that the Government is considering an instant asset write off, an upfront deduction, immediate expensing. We've already announced the Australian Investment Guarantee. So if they want to play catch up with us on that, that's great. We've announced 20 per cent up front deductions for every business big or small. Multinational or Australian focused, providing they invest in Australia, providing the investment is coming. That's the condition of which Labor has attached to that. Now with this Government Tom, with due respect, policies change between 10am and lunch time, I'm not going to respond to every thought bubble, every bit of speculation. When we see a concrete policy announcement from the Government you will see a considered response from Labor and the economic team.
CONNELL:You say considered response. So that type of policy, if they're talking about increasing and getting an earlier tax cut for businesses of that size, that would be something that would be discussed by Labor?
BOWEN:Well of course. I mean we respond to Government policies as they're announced. But as I said they change from one hour to the next. I mean we've seen multiple energy policies. We were told that the big business company tax cut was absolutely integral, absolutely central to the Government's agenda. It's gone. Although I'm sure they will bring it back if they ever have the ability to do so. We will maintain a consistent position. Of course we will respond to Government announcements. But Government announcements Tom. Not thought bubbles, not speculation, not leaking, not backgrounding. Give us a concrete announcement and you'll get a response from me. But I hope they play catch up with Labor's superior Australian Investment Guarantee policy.
CONNELL:We will wait for any Government announcement. A lot of talk about the Banking Royal Commission of course, this interim report on Friday. Labor is saying extend it. The Government has said the Royal Commission can have more time if it wants it. That's fair enough isn't it?
BOWEN:Well we don't say this lightly Tom, we do think obviously the Royal Commission has been more than justified. Labor has called for it for more than two years. The Government rejected it and delayed it. But then they gave it a very tight time frame. Now the Royal Commissioner and his team, particularly the counsel assisting, but the entire team, have done a first class job, an outstanding job, with the amount of time they've been given. But there's been thousands of submissions made by victims of fraud and people with concerns about banking. Only a small handful have been heard. There's been entire states that have missed out on hearings. It is our view that the interim report that we saw on Friday does raise obviously very important and legitimate questions. But I think there was a wide expectation it would include interim or draft recommendations. Which could then be consulted upon, with the banks and the financial services sector and importantly with victims groups and consumer groups. If there are to be substantial changes made, we think with respect, it would be better if there were draft recommendations released to allow that consultation to continue. Now with the time frame the Government has given the Royal Commissioner, that will be very hard now. So we are suggesting that the time frame be extended to allow that further consideration, to allow draft recommendations. These are very big changes that might be recommended and we think some sunlight on those, some public airing of those through an exposure of the draft recommendations would be prudent and good policy.
CONNELL:Just on what we have already heard there though Chris Bowen, do we need tougher penalties actually being applied. For example, for the worst acts, should people be going to gaol as penalties do allow but they're not actually being applied in that way?
BOWEN:Well there's always a balance between ensuring that the existing law is rigourously enforced and assessing whether new laws or new crackdowns are necessary. Now the Royal Commissioner raised some of those questions. I think inevitably there's going to be some combination of response. That really underpins our call with respect to the Royal Commission for some draft recommendations to allow that public airing, that public viewing. Some people might say the recommendations don't go far enough. Others might say there's unintended consequences. Others might point to some of the implications that might not have been considered. I think this is all fair enough. I mean if we are contemplating significant changes, I do think a bit of sunlight on those draft recommendations would be good. I think the Royal Commissioner has been put in a difficult spot by the Government with the very tight time frame. So that's why we are making a constructive suggestion to extend the time frame and allow for draft recommendations to have some public consultation.
CONNELL:But just in terms of what has been aired so far, the issue being cited by a lot of people is fines. They seem to be something that are handed out the most. Realistically they are paid usually by the company or the shareholders.
BOWEN:Sure.
CONNELL:Is there anything you've seen so far, specific actions from people very high up that make you think gaol should have been something applied?
BOWEN:Well look this always needs to be carefully considered. And white collar crime of course should not be exempt in the law from gaol sentences. There are instances of course, like insider trading and the most serious operation of the breaches of competition law for example that do provide for some incarceration penalties and if that needs to be extended that is worthy of consideration. Absolutely. I wouldn't shy away from that. But I do think, as I keep saying, I do think this would benefit from some public airing, some public consideration.
CONNELL:Okay fair enough, but is there anything, you say you'd be open there to extended where people could go to gaol. Is there anything so far specifically -
BOWEN:Well I don't really want to speculate on hypotheticals Tom. I don't really want to speculate on hypotheticals. If we had draft recommendations out on Friday, perhaps we could have had an -
CONNELL:Sorry I'm just asking if anything in particular so far has made you think that that particular punishment should apply, specifically.
BOWEN:Well look we've seen very, very serious findings. I mean more than allegations. Very serious conclusions from the Royal Commission. The evidence spoke for itself. The Royal Commission was more than justified. I think it has justified itself in its first days. Most serious misconduct in many instances imaginable. Now it's not my place here in an interview with you to start meeting out gaol terms or gaol sentences. I think that these are things that could be properly aired through a draft recommendations process and there could be consideration. I mean I've engaged in corporate law reform in Government. I was the Minister for Competition Policy who made cartel conduct a criminal offence for example. But these do require very careful consideration. When I criminalised cartel conduct I had extensive rounds of consultation with the Law Council, with the Bar Council, with experts in the field, just to make sure we got it right. If you do go down this road you've got to do the same thing.
CONNELL:Is there an issue here as well of unintended consequences as a possibility? So many bad headlines awaiting banks anyway for all manner of things and the concern is access to credit. For example, a parent wanting to go guarantor for a loan, get their child into the housing market. A bank might say you know what in case this goes bad we are not going to give the loan. Is that an issue of unintended consequences?
BOWEN:Well again, I think thats why you need to have draft recommendations so people can provide that feedback. We would have an implementation task force that I would establish in Treasury. I would report every six months to Parliament on the progress of implementing the Royal Commissions recommendations but I do think that process would be enhanced if people had a chance to see the draft recommendations
CONNELL:But I guess more broadly on my main point is that a concern that needs to be considered?
BOWEN:Well of course you need to consider all these things. I mean the finance sector is very important to the functioning of our economy, access to credit is important to the functioning of our economy. Now we saw some instances in the Royal Commission where clearly inappropriate credit was provided but nobody would suggest that there needs to be a crackdown on legitimate credit and this is something the Royal Commission has to work through, this is something a Government implementing the recommendations would have to work through. Of course there is a balance to be struck there, absolutely.
CONNELL:Do you think banks are making too much money?
BOWEN:Well we want profitable banks. I mean nobody wants a bank which is not profitable but we want that profit to be based on good conduct, ethical conduct on, honest conduct. And I think this has been an extremely important process to get to that. We needed the public exposure through the Royal Commission as Bill Shorten and I said well over two years ago. It would have been much better if this was implemented now, it was over, we were implementing the recommendations. That was an option available to us, to the country if Bill Shorten and I had been listen to by Malcolm Turnbull and Scott Morrison two and a half years ago. Thats now not available to us so we just have to make the best of it because of their bad judgment, their poor judgment calls. But to come back to your original question, banks need to make money. We want a profitable banking sector but there is no excuse, there is no justification for poor conduct to get to that profit.
CONNELL:Yeah and obviously greed has been spoken about already within the Royal Commission, the incentives of banks but in terms of the amount. I mean is this a sort of return on equity when you have in mind when you look at other banks around the world? Too far past that?
BOWEN:Well I dont think thats necessarily the right metric to be looking at but the Royal Commissioner for example raised very legitimate issues which say very clearly the Finance Sector Union has been raising now for 25 years in relation to sales incentives for frontline staff for example.
Is it right that tellers and other customer facing staff have their salary determined by how many products they sell? Now the Finance Sector Union has been saying this is a problem for 25 years, they have been ignored by the banks and by the Liberals. Now they have made important submissions to the Royal Commission, the Royal Commission by the draft report or the interim report has taken those seriously for example and I think when you go into a bank branch or you talk to a bank employee you want somebody to help you with your problem, make your transaction efficiently.
You dont want to be sold a product you dont need. You dont want to be pushed into life insurance or a bigger mortgage or a bigger credit card, you just wanted to get your business done and that hasnt been happening in Australia. For 25 years theres been a sales culture, and emphasis on sales with not enough emphasis on whether the product is suitable to the individual. We saw a person with a self-acknowledged gambling problem giving evidence to the Royal Commission who was pushed: More credit, more credit, more credit. Obviously inappropriately and the people pushing that credit on him would have had sales incentives, would have had pressure on them to sell more products, to get rid of more credit off the banks books and thats of course inappropriate and I think the Royal Commission has highlighted that so its not so much the bottom line profit that I think we need to be focusing on, its how we get there. How does the bank make that profit? And if its through inappropriate incentives and poor remuneration structures that needs to be fixed.
CONNELL:It seems likely we will get something certainly in that area in terms of changes. Finally on this Hayne has also spoken about competition being limited. Do we need to look at getting the big four to have to spin off assets. We know there was a lot of the relaxing of the rules essentially during the GFC because of the concern. Do we need to look at for example, CommBank, we might have to sell Bank West, Westpac, sell St. George?
BOWEN:Well I think theres two separate issues here. Theres banking and wealth, retail banking and wealth and whether that needs separation. Thats something Im sure the Royal Commission I will examine him his final report. And then there is the broader issue of competition. Now I dont think its necessarily about divestment, its about getting the settings right to encourage competition. I spend a lot of time with the smaller banks and credit unions and customer owned banks working through their issues. They have made a series of the suggestions.
Theres prudential regulatory matters which I have discussed with the chairman of APRA to make sure that the smaller financial institutions arent disadvantaged because I do think as you correctly pointed out Australia got through the Global Financial Crisis very well. One thing that was a feature of that which couldnt be avoided at the time was the absorption of St. George and BankWest and that has meant a lessening of competition over the years and the more that we can have, better competition the more that the smaller banks and financial institutions or indeed new entrants or foreign banks or Fin Tech can provide competitive pressure to the big four I think Australia is the winner there. And of course thats something thats been examined through a Productivity Commission
CONNELL:Would divestment be an option there?
BOWEN:Well I dont think its necessarily about divestment. I mean the ACCC approved those mergers at the time but the Productivity Commission recently brought down a report on competition in banking Tom and had a series of recommendations, a series of findings, I think there is something to work with their.
As I said I have engaged closely with the smaller banks and credit unions and financial institutions about that. They would have my attention as Treasurer to ensure that we are not crinkling competition and all the competitive juices of banking and financial services are flowing appropriately because I do think we do have a very concentrated banking market, no doubt about that. The big four dominate the market quite heavily and there are good products available for others. I am not here to spruik for smaller banks or a financial institutions. They have a good products available and I think that competitive juice is something which is really important to the good functioning of the banking and financial services sector.
CONNELL:I wanted to bring you to the ABC finally. Now apart from all the other headlines they obviously want this $500 million for jet stream, the digitization of the ABC. Bring it into the future, its a lot of money obviously. Is this something you would consider?
BOWEN:Well weve said that we would restore the cuts that the Liberals, the Abbott-Turnbull-Morrison Government has imposed on the ABC so we would restore those cuts. Now this is a separate proposal. I have met with the ABC about it, theyve put their case of course needs to be considered in light of all other spending commitments and requests to Government and be prioritized and see whats the best return for the taxpayer.
So that is a separate process but I think what we have seen here Tom is a failure of culture at the hands of the Liberal government. I mean this was just extraordinary. I mean Im pretty hard to surprise these days in politics but when I saw the revelations about what Justin Milne had done I was shocked. And theres a culture here and the fact that the outgoing chairman didnt even acknowledge the error as he resigned I thought underpinned a very poor culture at the hands of this Government and the man appointed to buy this Government to chair the ABC. The fact that he thought this sort of communication with the Managing Director was somehow vaguely appropriate. We do need the Parliamentary inquiry to get to the bottom of exactly what other interference occurred, what the board knew and when they knew it. I think is a legitimate issue to be addressed. Whether other board members were aware of this highly inappropriate communication with the Managing Director from the Chairman just unquestionably black and white open and shut wrong on behalf of the chairman and that culture appears to have been allowed to continue under the Liberal Government.
CONNELL:Shadow Treasurer Chris Bowen, thanks very much for your time this morning.
BOWEN:Good on you Tom. Have a great day.
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