Ross Greenwood speaks to Kelly O’Dwyer, Minister for Revenue and Financial Services, about why the government has decided to enact a Royal Commission into Banks and Financial Services
Introduction: Why has the PM back-flipped on a Royal Commission into the banks?
Ross Greenwood: A Royal Commission now will be held. It will take 12 months. The terms of reference have already been written by the government. Will speak very shortly also with Dr. Martin Fay the chief executive of the Association of superannuation funds in Australia. I can tell you quietly that the super funds are seething at the fact that they have been drawn into this royal combination services. Kelly O’Dwyer was on the line right now. Kelly as always many things for your time.
Interview with: Kelly O’Dwyer, Minister for Revenue and Financial Services
Kelly O’Dwyer: Great pleasure Ross nice to be with you.
Ross Greenwood: I want to start not by asking you questions. I’m going to do this a little differently. I want to start by getting George Christensen, of course, a National’s member of the House of Representatives. A man who threatened across the floor over this particular issue. Here’s what he had to say today.
George: I just don’t understand why it took a number of National Party backbenchers to drag the prime minister kicking and screaming to this decision. We’ve got the decision. It’s a good decision.
Ross Greenwood: Could you just help George Christensen there. Not me necessarily Kelly. Just telling why is it that it took those Nationals to actually prompt the government to make that decision?
Kelly O’Dwyer: Let me say this Ross. The government, of course, has been dealing in a very real and practical sense with some of the misconduct issues that have been raised in the financial services by the banks and who need access to justice in a timely manner. Rather than waiting for the outcome of inquiry after inquiry, we have acted and we have put in place legislation that now is sitting in the Senate to establish a one-stop shop for consumer complaints. The strain financial complaints authority that will be an absolute game-changer for those people that will see small businesses for the first time.
Be able to access compensation of up to a million dollars if they’re found to have had a viable case. That’s going to be done because we got on. We’ve actually making changes in this space. We’ve strengthened the regulator, we’ve made sure that they are appropriately resourced by putting a levee in place so that there can never be any question that the conduct regulator ASIC is able to do its job in absolute for financial advisors. They’re just some of the many things that we have been doing in order to make sure that people can have confidence in the financial system. What has changed now? I’ll tell you what’s changed. Despite the fact that we know that we have the world’s best Prudential regulation and oversight of our financial system.
Ross Greenwood: That would suggest you don’t need a real Commission.
Kelly O’Dwyer: No. In terms of macro-prudential oversight, we recognized that the course of ongoing speculation and fear-mongering about the need for a commission of inquiry or a banking inquiry has got to the point where it is disruptive.
Ross Greenwood: You’ve done this because of popular opinion in Kelly not because it’s actually good policy but because this is something that you’ve heard the course and you’re actually responding to the course. Of course, you’ve been there for a while.
Kelly O’Dwyer: It’s got to it now. Let me just finish the sentence by financial system. That’s what’s been very clear as a result of the letter that you referred to in your opening remarks. That’s what’s been very clear when the treasurer had consultations with the chair of APRA and the governor of the Reserve Bank of Australia. The cabinet made a decision today to put together sober and sensible terms of reference for a Royal Commission into the banking superannuation of financial services.
Ross Greenwood: All right my next caller or my next comment comes from one Malcolm Turnbull. This is two days ago as a matter of fact here’s what he had to say.
Malcolm Turnbull: We have made it very clear that we are not going to establish a Royal Commission and the reason for that is simply because we want to get on with the job now.
Ross Greenwood: That was two days ago Kelly. It’s not a long time ago since he said there’s no Royal Commission.
Kelly O’Dwyer: Look, I’d refer you to my previous answer, Ross.
Ross Greenwood: I’ve been in that case I’ll move to Philip Braddock. Father of the house and he basically said last year that banks have got serious issues to address. Here’s what Philip Braddock had to say.
Philip Braddock: Look if we’re not able to get to the bottom of these issues in a parliamentary committee process maybe there has to be a Royal Commission. I don’t think the banks want that.
Ross Greenwood: I don’t think the banks want that. The banks didn’t want it but now the banks do want it. How does that work, Kelly?
Kelly O’Dwyer: Look you’ll have to address that question to the banks. What I would say is that we’ve had a situation now where people have been calling for a Royal Commission since Bill Shorten was the Financial Services Minister. Let’s not forget in his watch we saw the collapse of the storm, we saw trio collapse, we saw Great Southern happen and at the time the Labor government said there was absolutely no need for a Royal Commission. They’ve changed their tune in opposition political reasons for.
Ross Greenwood: Pretty clearly you’d have to say as you say now you responded to the course. The course is actually got traction the government actually responded.
Kelly O’Dwyer: Let me give that some context Ross because we always have to act in Australia’s national interest. That is a responsibility of a prudent government and we are a prudent government. We conducted a financial system inquiry on coming into government. This was resisted by the way by the Labor Party who said it wasn’t necessary. We did it and again confirmed that we have an internationally recognized system banking and financial system here with very strong regulation and oversight. What has changed is that we have seen the speculation and fear-mongering about a bank inquiry reach such a level that it is now.
Which is why we have taken the action today to put in place a Royal Commission and to make sure it is got sensible terms of reference. A timeline of 12 months so that you can make recommendations to government if they’re required to make any potential changes to the law. It will not delay the reforms that we have on foot reforms to do with whistleblower protections reforms to do with our one-stop shop for financial complaints and our superannuation reforms that will see more transparency and accountability for members and their money.
Ross Greenwood: My final comment or commentator on all of this. The final question is shall we say is somebody I think you’ll know this voice. You’ll know this name actually former Prime Minister John Howard.
John Howard: I would be staggered if the coalition proposed a banging Royal Commission that is rank.
Ross Greenwood: That doesn’t help really. Shall I say meld the government together with those conservative elements of the party?
Kelly O’Dwyer: Look I have the highest regard for John Howard. He was a fabulous prime minister.
Ross Greenwood: He was.
Kelly O’Dwyer: I’d say to you we have been very clear on why it is that we are doing this and doing this at this time.
Ross Greenwood: You’d reject it as being rank socialism.
Kelly O’Dwyer: I wouldn’t agree with that characterization. I think the government has put forward on advice and very sensible terms of reference. We received as I said advice from the chair of APRA and the governor of the Reserve Bank that was clear to the treasurer that said our international reputation was now being impacted by all of the ongoing speculation.
Ross Greenwood: I’d say Kelly O’Dwyer thank you so much to all of our calls and email us and people who have said notes in to put to you Kelly O’Dwyer.
Interviewed Sharid Jain, S&P Global Ratings titled ” What impact will a Royal Commission have on the banks? .”
Interviewed John Wacka Williams, Senator titled ” Why are the Nationals pushing so hard for a bank inquiry? .”