ABC Weekend Breakfast

22 April 2018




SUBJECT/S: Banking Royal Commission; Banks biggest beneficiaries of Turnbull’s tax handout; energy


JOHANNA NICHOLSON: Joining us now to discuss this further is Dr Jim Chalmers, the Shadow Minister for Finance. Dr Chalmers, thanks so much for your time.




NICHOLSON: Good. There has been a lot of discussion this week about why the Government didn't set up this Royal Commission into the banks earlier. Why didn't Labor set up the Royal Commission while they were in power?


CHALMERS: We have been calling for this Royal Commission for more than two years, Jo, as you know and when you listen to that interview by Kelly O'Dwyer this morning, I think a lot of Australians will conclude that this Government is from another planet. They've learnt absolutely nothing from all of the scandalous revelations that we've heard over the last little while at the Royal Commission. They still can't bring themselves to say that they were wrong to run a protection racket against that Royal Commission for so long and they still want to hand a $13 billion tax cut to the four big banks which are at the centre of these revelations about the rorts and rip-offs in the system.


NICHOLSON: So I ask you again. The Government says that part of the blame lies with Labor. When you were in power, you didn't do anything to introduce this Royal Commission. Does part of the blame lie with Labor?


CHALMERS: Of course not. That's a laughable claim, Jo. When we were in Government, we substantially cracked down on dodgy financial advice, for example; we introduced tough new laws which were well-supported and were doing a good job until the Government tried to water them down. So we've got a record that we're proud of. We have been campaigning for this Royal Commission for more than two years now. The Government has fiercely resisted that Royal Commission, such that every time we get a new revelation of a new rort and a new rip-off, a lot of Australians will be asking themselves, "Why didn't the Liberal Government want these matters to come to light?".


NICHOLSON: Is Kelly O'Dwyer right in saying that you shouldn't conflate the issue of bank behaviour with tax cuts, regardless of the morality of the banks? If the tax cuttings are needed, they should be delivered?


CHALMERS: I thought that was spectacularly out of touch, that kind of comment that Kelly O'Dwyer made. The one thing I would agree with Kelly on is when she said this morning that Australians should judge the Government on their record. Their record is to always side with the top end of town against the ordinary Australian. Their record is to fiercely resist this Royal Commission, and their record is to propose to give $13 billion to just four big banks at the centre of these rorts and rip-offs. So, yes, Australians should judge the Government on their record. We will keep holding them to account. They will keep standing up for the top end of town at the expense of middle Australia.


NICHOLSON: So would you like to see banks exempt from these tax cuts because of the behaviour we've seen exposed in the Royal Commission?


CHALMERS: We call on the Government to ditch the $65 billion tax cut. We call on them to ditch the unlegislated parts of the tax cut which are in the Parliament right now. We think there is never a good time to shower largesse on the companies and people who need it least. We don't think it is a good time to shower largesse on multinationals and millionaires, but especially when we've got record and growing debt in the Budget. So we would call on them to abandon the tax cuts that aren't legislated entirely, because their country has other priorities.


NICHOLSON: Is that because of the details that have been exposed in the Royal Commission, or do you think it's wrong to give these tax cuts to banks?


CHALMERS: We had that position before the revelations of the last week, Jo, as you know. We don't think that it's fair or affordable or wise to give a $65 billion tax cut to big multinationals and the big four banks. But I think especially it is important that the Australian people know that of that $65 billion, $13.2 billion of that is destined to boost the profits of just four big banks. And by the time the tax cut is properly up and running, every fourth dollar of benefit will flow to just those four big companies. I think the Australian people need to know that. They need to know that that's what Malcolm Turnbull, Scott Morrison, Mathias Cormann and Kelly O'Dwyer want to see, and Labor doesn't want to see that happen.


NICHOLSON: The Government announced this week it would increase penalties for corporate crime and misconduct. Do you support that action and would you like to see further action?


CHALMERS: Yes, we support people who have been caught doing the wrong thing, being penalised to the maximum extent. We do support the toughest possible penalties for people who have been caught out, ripping off their customers. And if Commissioner Hayne needs it, we would support the Royal Commission being given more time to finish the very good job that they're doing. And we also think that compensation should be part of the conversation as well. So, yes, we support the actions that were taken a couple of days ago by the Government, but we think that there are broader considerations, too, to make sure the Royal Commission can finish its job properly.


NICHOLSON: What about discussion this week around separating the powers of the banks and particularly in terms of financial advice, do you think there is too much of a conflict of interest to have banks dishing out financial advice to customers?


CHALMERS: Yeah, of course there is, Jo. It's good that you ask that, because that was the main thing that we did in Government when Labor separated the provision of advice from the selling of financial products - that was a very important step along the lines of what is being proposed now. We legislated that and the Government tried to water it down and we resisted it. It is entirely conceivable that we need to do more now in that space. Some of the revelations of the last week about financial advice were shocking indeed and so we will consider all of that as the Royal Commission wraps up and see what other steps may need to be taken.


NICHOLSON: On another issue this week, Jim Chalmers, states and territories have agreed to move on the detailed design phase for the National Energy Guarantee. Do you think that this National Energy Guarantee will get through in its current form? Do you support it in its current form?


CHALMERS: We've got very big concerns about the current form of the National Energy Guarantee. I think all that the states agreed to do was to do some more work on it, which is fine. I think that doesn't address, though, the main concern we have which is the Liberal Party is having a big internal brawl about it and for as long as they continue to brawl about it in the party room, power prices are going to go up and up. But the things that worries us about the current proposal - it might be a minor improvement on what they've put on the table before, but we are worried about the market power it gives to the three big retailers; worried there aren't ambitious enough targets for emissions reductions; and we are worried there aren't enough investment signals for renewable energy, in particular. So we would like to see the Government improve their policy. The states will have their discussions but we think more can be done for renewables, for example. And we won't sign up to anything at the end of the day which ties our hands on substantial Renewable Energy Target, which is to have 50 per cent renewables by 2030.


NICHOLSON: Energy Minister Josh Frydenberg has ruled out increasing the emission reduction targets. So if it doesn't move, will Labor not support it?


CHALMERS: I don't think Josh Frydenberg is actually in charge of energy policy in the Turnbull Government. I think they will have another barney in their party room, that's been their form. They have a whole range of views that are unresolved. So I don't think Josh can predict with any certainty what will happen here. The states will do their work, the Government will do their work, they will continue to brawl and power prices will continue to go up while there is that internal infighting.


NICHOLSON: You mentioned power prices. There are a number of issues when it comes to energy policy. There is reliability, there's the cost factor and then there's also the environmental concerns. What are Labor's priorities? Could you rank those three issues?


CHALMERS: They are equally important, Jo. What we want to see is some investment in the system. That requires a bit of certainty. That's why we do try to be a bit forward-leaning and try to come to some kind of acceptable agreement across the parties, when we can. We've said for some time now via Mark Butler and Bill Shorten and others, that ideally the country would have a bipartisan energy policy so we can have investment, reliability, down ward pressure on prices and downward pressure on emissions. And we're still willing to play that constructive role, and that's why we've said we've looked at the National Energy Guarantee as it's proposed. We've outlined our concerns. We've said the things that worry us most about the current proposal and we will continue to work through it.


NICHOLSON: Looking at energy policy over the last number of years, is uncertainty and division the last thing that this country needs on energy policy and will Labor play ball to ensure there is some certainty there?


CHALMERS: We are definitely prepared to play a very constructive role in this important national debate about energy policy. I think we've shown our bona fides on that front. We've been constructive as we can, as the various proposals have been put on the table. We've said very constructive things about the last couple of iterations of draft energy policy and we've pointed out where we would like to do better, particularly on emissions reduction and investment in renewable energy. So I think we've shown we are prepared to do that work, prepared to come together, not just for the sake of it. We need to make sure it is a good, robust, forward-looking policy and need to make sure it is not dictated and determined to the country by the sort of dinosaurs and knuckle-draggers in the Liberal Party room.


NICHOLSON: Jim Chalmers, we appreciate your time.


CHALMERS: Thank you, Jo.