ABC RN DRIVE
WEDNESDAY, 13 APRIL 2016
SUBJECT/S: Royal Commission into Financial Services Industry; ASIC Funding; Taxation; Road Safety Remuneration Tribunal; Trade with China
PATRICIA KARVELAS: It's six past six. With Prime Minister Malcolm Turnbull about to step on the plane to China for his first official trip, the Federal Opposition has today kept up its push for a banking Royal Commission and against company tax cuts. Jim Chalmers is the Shadow Minister for Financial Services and Superannuation, welcome back to RN Drive.
JIM CHALMERS, SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION: Thanks Patricia.
KARVELAS: First to a banking Royal Commission and whether it's necessary. Here's Bill Shorten talking about ASIC's resources earlier today:
SHORTEN: How can we just simply ask the regulator to investigate their own effectiveness? I've got a lot of time for ASIC, but they're doing a lot of work with very few resources--
KARVELAS: So if Labor already knows that ASIC is under-resourced, which you have said many times, why not just take the direct route and push for more resources and funding? And if the Government does talk to ASIC about its capabilities, as Scott Morrison will be doing this week -- he says he has done that today as well -- how is that asking ASIC to investigate its own effectiveness?
CHALMERS: Look, we have very good regulators, Patricia, but they have been starved of funds in the last little while, as Greg Medcraft himself said probably in this studio or in an ABC studio somewhere around the country this week, he said that those cuts to funding have compromised their ability to be pro-active. $120 million have been pulled out of ASIC by the Abbott and Turnbull Governments. The point that we're making is that while we have very good regulators, whatever has happened to date has been insufficient. So we need a Royal Commission because a Royal Commission will look at the broad systemic issues, which ASIC can't do. The Royal Commission can look at the powers and resources of the regulators, which the regulators themselves can't do for obvious reasons. That's why we need to go further than just these weasel words by Scott Morrison and Malcolm Turnbull about restoring some tiny fraction of the $120 million that they've pulled out.
KARVELAS: If Scott Morrison announces new powers, not just resources but powers, for ASIC and they've been recommended in that Murray Review -- they are recommendations that the Government is currently considering -- won't they take the political wind out of your sails?
CHALMERS: Scott Morrison is scrambling for a political outcome here. I mean, a week ago, Scott Morrison was saying that there were no problems here, then Malcolm Turnbull went to the Westpac lunch and said that there might be some problems, and then all of sudden they said 'well there might be some problems, but let's not do anything about it'. We announced our plan for a Royal Commission. We wanted to work with the Turnbull Government on some terms of reference so that it could be genuinely bipartisan and ever since then, we've had Scott Morrison in his usual way -- because he's a bit slow, he's not the sharpest tool in the shed when it comes to these sorts of things -- scrambling to come up with a political outcome. So every day we get these weasel words about things that they may or may not be contemplating. The facts are on the table: they cut ASIC's budget. Until very recently, they thought that nothing at all should be done and Labor, not for the first time when it comes to economic policy, is making the running.
KARVELAS: So if they do increase the powers and take on those recommendations and bring them forward, as that's been certainly something that's been talked about, will Labor back those changes immediately? Would you just back in those changes and also, on top of that, say that you want a Royal Commission?
CHALMERS: Well we'd have to see what the changes they are proposing are. It's very dangerous to try and commit to --
KARVELAS: Yeah but you know what the recommendations are.
CHALMERS: Well we don't know how the Government may or may not want to implement any of those recommendations. So it would be unwise to sign up to them now. Let's see what does or doesn't happen. But nothing that we've said about a Royal Commission would prevent any action on ASIC in the meantime.
KARVELAS: Labor is maintaining its argument that a Royal Commission can do things that ASIC cannot, but ASIC Chair Greg Medcraft -- and you actually already raised him, you say in an ABC Studio, that's right, with Fran Kelly on Breakfast -- has cast doubt on that. He says and I quote "we do have the power to request documents, to compel testimony, metadata access, undertake searches and most importantly, the ability to charge people". So what else specifically do we need a Royal Commission to do? Because as he says, that's a whole lot of powers that they have.
CHALMERS: Well quite often ASIC inquiries are about specific issues rather than systemic issues, so that's a key difference. Quite often ASIC does its work behind closed doors, whereas a Royal Commission has more substantial powers to call witnesses into a public hearing--
KARVELAS: Is that to, sort of, publicly shame the banks? Is that what you're trying to do?
CHALMERS: No, but I think the Australian people deserve to get to the bottom of this unethical behaviour and sometimes the best way to do that is in the most transparent way. Mark Dreyfus who is our Shadow Attorney-General has been a QC in Royal Commissions and his advice is very, very strong that the powers of a Royal Commission are more substantial than ASIC when it comes to the process of producing documents, calling witnesses and the like. But really the main point is you can't ask ASIC to do a thorough review of its own powers and its own resources. You can't ask ASIC to do anything than to go beyond the application of the current law and in individual cases. The Royal Commission, for any objective observer, is a far more powerful way to get to the bottom of these issues so we can sweep away the doubt and begin restoring confidence in our otherwise strong financial institutions.
KARVELAS: On RN Drive, my guest is Jim Chalmers. He is the Shadow Minister for Financial Services and Superannuation making the case, stridently, for a Royal Commission into the banks and the financial services industry. Again talking about this topic today. 0418 226 576 is our number. I'd love for you to join the conversation. Are you convinced by Labor's argument? Or would you be satisfied by beefing up ASIC and all the regulators and of course, more money going to them?
If we can just change the topic a little, still on obviously economic issues. Former Reserve Bank Governor, Bernie Fraser, another really left-leaning economist, you'd have to say, has published an open letter in the press today which says "to have world-class health, education and transport services, we need to collect the revenue to fund them." Do they have your support on that concept? More revenue is necessary?
CHALMERS: Firstly, I think it would be news to Bernie that he's some kind of lefty ideologue! I think I should challenge that point before we go any further. Bernie is one of the most respected economic figures that the country has ever produced.
KARVELAS: Alright. Bob Brown, Eva Cox, Robert Mann-- there's other signatories. Let's put apart him. But the rest?
CHALMERS: I think the point that the open letter was making, that there are other priorities right now than a company tax rate cut, is well-made. I think even for people who would ideally like to see, in a perfect world, a lower company rate in the medium-term, I think any objective observer would say we don't have the space in the budget, nor is it a high enough priority, to pursue that at the expense of properly funding opportunity in our schools, for example, or all the other things that we would like to do.
KARVELAS: You've also stayed silent today on personal income tax cuts. Is Labor working on an election policy there? Is that door still open?
CHALMERS: Well Bill was asked today largely, as you just asked me, about company taxes. And then they said 'what about personal income tax cuts'. I think it's fair enough for us to make the point that Scott Morrison and Malcolm Turnbull, not that long ago, were describing this as some big moral crusade to cut income taxes for people and to deal with bracket creep. And unfortunately, that moral crusade has gone the same way as Malcolm Turnbull's crusades on marriage equality, climate change, all of those things that he says he believes in and never follows through on. So I think it's fair enough for us to make the point that let's see what they do in the Budget. Because the Budget will be a test of all of these commitments that they have made and all of these things that they say that they care about and we'll evaluate whatever they come up with at the time. We don't have on the table right now a plan for income tax cuts. We've got a whole stack of tax policy out there -- more than any Opposition in the twenty or so years that I've been involved in politics. We've got way more out there, whether it be negative gearing, superannuation, multinationals -- all of these tax policies. And all we're really asking for is just one Government policy on tax or the economy. It's five minutes to midnight in an election year and it's unbelievable that the Government of the day, after more than two-and-a-half years still hasn't got a single concrete policy on the table to deal with tax.
KARVELAS: On the truckies dispute, here's the Prime Minister's take on the Road Safety Remuneration Tribunal which the Gillard Government set up.
TURNBULL: Our future, our economy, our prosperity depends on small and medium businesses. It depends on family businesses investing, taking a risk, mortgaging their home, buying a truck, investing, employing -- that is what drives this country forward. And what Labor has done here is try to put them out of business for the benefit of the big union.
KARVELAS: Given Labor is willing to delay the Tribunal's recent pay order, are you also willing to acknowledge that the Tribunal is having an economic impact on small businesses that perhaps wasn't foreseen at the time?
CHALMERS: Well the point we're making, Patricia, and the difference between us and Malcolm Turnbull is that we'd like to find a way through. And we think that there has to be an opportunity for all sides of this argument, really, to sit down and see where there might be able to be some compromises. Because it is an issue that has blown up--
KARVELAS: And it is a real issue isn't it, for many people who are now facing going out of business?
CHALMERS: Well the real issue for me is road safety.
KARVELAS: But isn't it also an issue that people are facing losing their businesses? Surely that is another pretty important issue?
CHALMERS: Well there are claims made on both sides of the argument. But fundamentally, I think it's important we don't lose sight of the fact that this is about road safety and it's about fair wages.
KARVELAS: The Government has an alternative way to make sure that road safety is still a priority. Why not consider that?
CHALMERS: Well they are so – you just heard in Malcolm Turnbull's grab that you played – they are so ideologically blinkered and so keen to make this about the Transport Workers Union that they're losing sight of what really matters -- the hundreds of people who have died on our roads--
KARVELAS: The same argument could be made for your side of politics, that you're so ideologically blinkered, that you set up this entire body also for union recruitment.
CHALMERS: Patricia, I couldn't disagree with that more. I fundamentally reject that --
KARVELAS: It has no link to union recruitment?
KARVELAS: It has boosted the union.
CHALMERS: There have been hundreds of deaths on our roads. There has been a link established between rates of pay and safety on the roads, including today on The Conversation website: a fact check of this argument, which comes down fundamentally on our side of the argument that if you pay people more, they're less likely to take risks, less likely to jeopardise lives. It's not about some 1980's cold war barney that Malcolm Turnbull, channelling his inner Tony Abbott, wants to make this about. It's about road safety and it's about wages.
KARVELAS: Jim Chalmers, before I let you go, the Prime Minister, Malcolm Turnbull, is about to jet off for his first official trip to China. You have trade in your shadow portfolio. Should the Prime Minister show some backbone and challenge China's leaders in the interest of Australian workers? Because that's what the CFMEU is calling for.
CHALMERS: Well this is a very important opportunity for Australia. It's not every day the Australian Prime Minister sits down with the Chinese President and the Chinese Prime Minister, so you need to make the most of it. It's got to be more than about sipping tea and smiling for the cameras. There are some very disturbing reports about trade restrictions in China at the moment. Some of our industries are very concerned about it. I can understand their concern because we want our products and services to have more market access and not less. Malcolm Turnbull has the opportunity to raise that issue with the Chinese leadership directly. He shouldn't squib it like he's squibbing the conversation with the Chinese about steel.
KARVELAS: Jim Chalmers, many thanks for your time.
CHALMERS: Thanks Patricia.
KARVELAS: That's Dr Jim Chalmers, the Shadow Minister for Financial Services and Superannuation, and the Shadow Assistant Minister for Trade.