SUBJECT/S: Labor calls on the Turnbull Liberal Government to hold a Royal Commission into misconduct in the banking and financial services industry; Arrium
THE HON BILL SHORTEN MP
LEADER OF THE OPPOSITION
MEMBER FOR MARIBYRNONG
THE HON CHRIS BOWEN MP
MEMBER FOR MCMAHON
THE HON MARK DREYFUS QC MP
SHADOW MINISTER FOR THE ARTS
MEMBER FOR ISAACS
JIM CHALMERS MP
SHADOW MINISTER FOR FINANCIAL SERVICES AND SUPERANNUATION
SHADOW MINISTER FOR SPORT
SHADOW ASSISTANT MINISTER FOR TRADE, INVESTMENT AND PRODUCTIVITY
MEMBER FOR RANKIN
FRIDAY, 8 APRIL 2016
SUBJECT/S: Labor calls on the Turnbull Liberal Government to hold a Royal Commission into misconduct in the banking and financial services industry; Arrium
BILL SHORTEN, LEADER OF THE OPPOSITION: Good afternoon everybody. A short time ago my shadow Cabinet agreed to call upon the Turnbull Government to hold a Royal Commission into misconduct in the banking and financial services industry in Australia. And if Mr Turnbull and the Liberal Government choose not to hold a Royal Commission, an incoming Labor Government will.
We wouldn't be making this decision today if we weren't convinced that it was absolutely necessary to hold this Royal Commission. It's an important decision; it's most certainly not made lightly. Australia has one of the strongest banking sectors in the world, and we want to keep it strong. But public confidence in the banking and financial services industry has taken hit after hit over the previous few years. Many Australians have suffered through the decisions of banks and financial institutions. Retirees who have lost their retirement savings, small businesses who have lost their livelihood, Australian families who have lost hundreds of thousands of dollars, life insurance beneficiaries denied justice and legitimate claims. There are literally tens of thousands of victims if not more.
And today I say enough is enough; this string of scandals has to stop. These are not isolated and one-off examples as Chris will outline in a moment. It points to systemic problems in our banking and financial services industry. Now we are prepared to work on this in a bipartisan way. There are MPs, Members of Parliament, from both sides of the political divide who have had enough of hard working members of their communities being ripped off and losing their money.
Every Australian deals with banks. Every Australian places their trust in banks and financial institutions. The decision that we announce today is about restoring confidence in our financial institutions. It is about taking action to rebuild that vital trust between Australian consumers and their banks. I'd now like to ask my Shadow Treasurer Chris Bowen to talk further about this decision.
CHRIS BOWEN, SHADOW TREASURER: Well thanks very much Bill. As Bill indicated, this is a serious decision taken by the Shadow Cabinet after much consideration. Not taken lightly, been considered by Bill, and the economic team and the Shadow Attorney-General for some time. But the time has come.
Labor wants Australia to have a profitable, robust, well-respected financial system. But one which is working in the best interests of all Australians. One which has the confidence of all Australians. And sadly that simply can't be said of our system as we speak.
After every financial scandal, we've been told this is an isolated incident. Well you can only have so many isolated incidents before it becomes a systemic problem, and the Royal Commission that we're announcing today will look at the systemic issues. Mr Turnbull was lecturing the banks earlier in the week. He's prepared to lecture; he's not prepared to lead. He was raising the issue of bank malpractice earlier in the week and his Treasurer as late as this morning said it was all a distraction and there was nothing to see here. Labor is very clear on our views.
This is a Government which has tried to unwind FIFO reforms which Bill and I implemented in Government which protect consumers from bad behaviour, not in their best interests. They've cut the ASIC budget, they've sacked people from the ATO and they've frozen the ACCC budget. We know where their priorities lie. Well our priorities lie in a financial system which protects and serves Australian consumers. Financial system does operate on a social licence and it does need to have the confidence of Australia's consumers.
Now, the Royal Commission that we're announcing today will have some key objectives. The Royal Commission will look at how widespread instances of illegal and unethical behaviour are in the financial services industry. How our Australia's financial services industry understand and give effect to their duty of care to their consumers, how the culture, ethical standards and business structures of Australia's financial institutions affect their behaviour of their employees and their operation in financial markets, and whether Australia's regulators are well equipped to identify and prevent illegal and unethical behaviour in a financial services sector, including comparable experience overseas and of course any other issues which come to light during the commission.
Now there have been a series of examinations of the financial services industry. Parliamentary inquires, various ASIC probes but the time has come for a Royal Commission with full powers that a Royal Commission has. Labor calls Royal Commissions for the right reasons. It's what we did in office on institutional abuse, it's what our predecessors did on issues likes black deaths in custody. It's what our colleagues in Victoria have done on domestic violence and those Royal Commissions have led to clear ways forward, clear findings, clear recommendations on serious issues before the nation.
And it's in that tradition that Bill and Shadow Cabinet have made this announcement today, it's in that tradition that we will implement this in office. Of course as Bill said if Mr Turnbull and Mr Morrison choose to go down this road they will do so with full bipartisan support of the Labor Opposition because we don't think it should wait and if it does takes an incoming Labor Government to do it we will.
SHORTEN: Thanks Chris. Are there questions?
JOURNALIST: Mr Shorten, you both said that this decision wasn't taken lightly. Is that because you understand it might cause a hit to confidence?
SHORTEN: No, it's not taken lightly because the use of a Royal Commission with its very strong powers is a decision not made very often by an executive. But after scandal after scandal, and with the importance of banking to the lives of every day Australians, something needs to give doesn't it?
The fact is that all Australians put their trust in banks. It could be your savings account or your credit card. It could be your mortgage loan or your business dealing. Families and small businesses in Australia expect the highest standard from our banks. A royal commission is an inquiry by the executive, it's an examination of what improvements can be made. What are the systemic failings? What can be done? What are the lessons which can be learnt to rebuild confidence? That's why we don't take this lightly. But in terms of the important stability of our bankling sector, I cannot believe that an argument which says that you ignore scandals in fact strengthens stability, on the contrary, our actions are motivated by our faith in the banking sector to learn, to improve and to form that very, and fulfil that very important social contract. Mr Turnbull on Wednesday gave a very important speech at Westpac about the importance of banks behaving in an ethical fashion, of having the best possible culture, the only problem is he didn't follow through with it. And again today, I reiterate our invitation to the Turnbull Government. It doesn't need an incoming Labor Government to have a royal commission into our banking and financial services sector. If Mr Turnbull will choose families and small businesses, the Australian banking consumer and be on their side, he could hold this investigation now and we would work with him.
JOURNALIST: Can you explain please how broad this inquiry will be? You're talking about banks and then you're saying the financial sector. Will it include companies listed on the Stock Exchange, will it include insurance companies, who will it cover?
BOWEN: Well, I outlined the five or so points which we would ask the royal commission to look at. We're not announcing terms of reference today, that's a matter which would appropriately be handled by us in Government, or as we've said by the current Government, with our cooperation. What we have indicated is that we would expect the Royal Commission to look at the financial services industry, not talking about broader corporate Australia, financial services industry, but that is more than just banks, certainly more than the big four. It relates to financial services providers, financial institutions, banks, insurance companies, credit unions, friendly societies, and you don't need to me to run through them, but it's targeted at the financial services industry because we've seen in the scandals which we've talked about and we've seen, and Bill and I experienced as the relevant Minister in Government, that these issues can arise at various points from the financial services industry, it's not just banks.
JOURNALIST: Super funds as well?
BOWEN: Super funds are part of the financial services industry.
JOURNALIST: Why now, why today? There was a report from the Senate over a year ago and you had a dissenting Labor Senator actually recommended a Royal Commission. We've had scandals that've emerged since then. You guys haven't acted, now today you've acted. Can you tell us what the trigger was for today? I understand you've been considering it for a while. But what is the actual trigger for today's announcement?
SHORTEN: Well, enough is enough. The fact of the matter is that there have been different inquiries, parliamentary inquiries that you've referred to, there's been the Cooper Inquiry, the St John Inquiry, the Murray Inquiry, but the point is that Australians still open their newspapers and we hear of new scandals. Things have not been getting better as we would hope, and again as I said in my opening question it's not something done lightly. A royal commission, as our Shadow Attorney General could explain to you, is a most serious decision. It has very strong investigative powers on behalf of the Government. But when you look at the allegations, the serious allegations about rate rigging, when you read the deplorable stories of people who have bought life insurance policies and then you find out that the institution that they buy them from and people working for it actively organising to deny people their claims, well enough is enough. We want to rebuild and restore the trust that Australians have in their banking and financial services institutions.
JOURNALIST: Is there an element of tit-for-tat though? The Coalition's run a Royal Commission into trade unions in which you yourself were cross examined. Is there an element of tit-for-tat, saying we're going to go your primary support base which is big business?
SHORTEN: No, this is a much bigger issue I suggest than some of those matters in terms of industrial relations. Labor sadly hasn't invented tens of thousands of financial victims. The reality is that we trust our banking sector with our savings, small businesses, retirees, people with life insurance policy. The problem is that this Government has selective hearing. When it comes to an issue of an electrician or a plumber on a CBD construction site and they're right into it, but when it comes to the banks while Mr Turnbull on one hand articulates the same problem we're articulating on the other hand he takes no action. I think it's remarkable that Mr Turnbull and Mr Morison spend six months entertaining how they could increase the GST to 15 per cent, they're Government spokespeople rushed out within 24 hours and said there'd be no royal commission. Mr Turnbull and the Government have to hear the concerns of the people of Australia and Labor will speak up for consumers.
JOURNALIST: How much will this cost?
BOWEN: The costing is $53 million, that's around $26 million a year. We envisage the inquiry to go for two financial years.
JOURNALIST: Will a Royal Commission have the powers to make the banks hand over commercial-in-confidence documents?
MARK DREYFUS, SHADOW ATTORNEY-GENERAL: Of course the purpose of having a Royal Commission is that the Royal Commissions Act gives to these executive inquiries the power to compel witnesses to attend, the power to compel the production of documents. Clearly there's room for argument by banks as to the terms on which the documents are produced but there is no doubt as to the compulsive powers that Royal Commissions have.
JOURNALIST: And that includes commercial-in-confidence documents?
DREYFUS: Necessarily. I mean, one would imagine that most documents that financial institutions and banks have could have some claim to commercial-in-confidence about them. But the starting point is the Royal Commission has the powers to compel production.
JOURNALIST: What do you have to say about the Treasurer's claims about calling you reckless for starting this Royal Commission?
SHORTEN: I think it's negligent to ignore the scandals. I actually think it lets people down by just simply playing politics and attacking the other political party. What motivates this, and you'll notice in my opening comments, all I asked was the Government to work with us. I made no negative comment about the Government in my opening because bluntly it's about putting people first. We understand that we have a very strong banking sector in Australia. It was Australian taxpayers who guaranteed the stability of our banks during the global financial crisis. Then time after time, media investigation after media investigation, victim after victim, the scandals keep emerging.
JOURNALIST: Do you think it's OK for political parties to accept campaign funds from banks?
SHORTEN: Well, the first thing which I think all political parties should do is have transparency about who's giving what where. And Brendan you'd be familiar with Federal Labor's position that donations over $1,000, they should be disclosed. I don't understand why the Liberal Party refuses to disclose donations.
JOURNALIST: Are you happy to get banking donations?
SHORTEN: Well, we don’t necessarily get a lot of them, to be fair. Sorry I'm just trying to answer your second question before I go to your third. Sure, we understand that people with businesses makes donation. What we want is transparency. Let's be clear, it's the Labor Party who's saying the Government should have a royal commission and if Mr Turnbull can't or won't have a royal commission into the banking and financial services sector, an incoming Labor Government will. Now this proposal, this decision of my Shadow Cabinet today, as I've said not taken lightly, has also been echoed by some members of Mr Turnbull's own party. We have an opportunity in this country to speak up for consumers, to help restore confidence and trust in our banking and financial service sector. We don't need to wait for an election to have this Royal Commission. We would sit down with the Government. The issue here is that people have been losing, they've been losing money, they’ve been getting ripped off and the scandals keep coming. Enough is enough.
JOURNALIST: Will this look at the issue of money going overseas to offshore tax havens at all?
BOWEN: That is a separate matter. That is a matter which is broader than banks. Obviously any behaviour -
JOURNALIST: Banks and financial services-
BOWEN: Well, any behaviour of banks and financial institutions is covered by this. But primarily that is a matter which is broader than just financial services institutions and we'll continue to very closely monitor of course the revelations coming out of the current release of documents. We've been very active and led the debate as we have in so many areas on the matter of tax evasion and transparency. We will continue to do so. But this is frankly a separate matter.
JOURNALIST: How can you say the estimated cost is $53 million over two years if you haven't done the terms of reference?
BOWEN: We have referred to it the Parliamentary Budget Office for advice on what a Royal Commission would cost. The terms of reference are detailed instructions which -
JOURNALIST: So you have sought that advice already?
BOWEN: Yes, from the Parliamentary Budget Office, of course - the normal methodical way we do things.
JOURNALIST: Can you elaborate a bit about why super funds need investigation?
BOWEN: Well, they are part of the financial services industry. We're not -
JOURNALIST: What's worrying you?
BOWEN: We're not in the business of saying you can look at that part of the financial services industry and not the other. Of course, the royal commissioners will look at the matter and decide which elements it may concentrate on. We are not in the business of saying this part of the financial services industry is exempt.
JOURNALIST: Just on the steel works, did you want to make it mandatory for Government projects to only use Australian steel?
SHORTEN: Thanks for raising the issue of the future of the Arrium steelworkers, the production of steel in this country and the need for a national steel plan. What Labor believes is that we should be a country who makes steel. We believe it is right that we strengthen our anti-dumping provisions so that Australian steelmakers have a level playing field to compete with imported product. When it comes to procurement decisions, we believe in maximising Australian steel in our projects. Of course, I have noticed the Government has immediately has sort of leapt out and said because of all of our global treaty arrangements that we can't do this. Anything that Labor suggests will be consistent with our international trade obligations. But it's about time that the Liberal Government stopped saying life is too hard. It's about time this Liberal Government said we will look at ways that we can help maximise the job security of Australian steel workers. Only Labor has plan to defend the Australian steel industry. Mr Turnbull's Liberals have already given up.
JOURNALIST: Mr Shorten, can I ask what you think about the Turnbull Government's infrastructure announcement this morning, here in Victoria, the $1.5 billion to Monash and things like that, no money for Melbourne Metro rail or little money for the Melbourne Metro rail?
SHORTEN: It speaks volumes for Mr Turnbull that he would announce an infrastructure plan in a 5 [star] hotel on the 35th floor. The truth of the matter is that all Mr Turnbull is doing is reversing some of the cuts that the Liberal Opposition promised Victorians in the 2013 election. And you are quite right - Mr Turnbull has again, like his predecessor Mr Abbott, ignored Melbourne Metro. I have lived in Melbourne my whole life. I understand the importance of building and improving our roads but if we want to improve productivity and resolve congestion on Melbourne's roads, then we need greater investment in public transport. Labor sees one of its key infrastructure priorities for Victoria after the next election as being working with the State Government to build Melbourne Metro.
JOURNALIST: Can you put a figure on how much you would be willing to contribute to Melbourne Metro?
SHORTEN: That would be in negotiation with the State Government. We have announced a $10 million investment facility to incentivise private sector investment along with grant funding from an incoming Labor Government.
JOURNALIST: Do you believe the Andrews Government should accept the offer? That they need to match the money that they have already got in the bank from Tony Abbott? So technically $3 billion?
SHORTEN: I think the Andrews Government has a good plan for the Western Distributor too. And poor old Western Suburbs and Geelong area seems to have been overlooked by Mr Turnbull in some of his most recent announcements. What the Andrews Government decides is up to them, but yet again, why is it that a Liberal Government in Canberra has such an aversion to funding urban public transport? We know that the way we make the Melbourne underground work better is by being able to have more track so we can have more carriages so more people can move through our cities through public transport.
JOURNALIST: Would you support the East West Link if there was $3 billion in Federal money?
SHORTEN: I support infrastructure which passes the test of Infrastructure Australia's benefit cost ratio. I think the time for short-term political decisions rushed out before an election in the hope to win a vote here or a vote there, I think that lets down the intelligence of Victorians and Australians and it certainly lets down the future. Labor wants to depoliticise infrastructure decisions so whatever we talk about in terms of our priorities, we want Infrastructure Australia, an independent body made up of experts, who run the ruler over to make sure it passes the benefit cost ratio. As we discovered about the East West Link, the previous Napthine Government hadn't done all the business studies, had they? They hadn't made it all stack up. Mr Abbott gave $1.5 billion of taxpayer money simply to sit on the balance sheet of the then former Liberal State Government, that was all about politics and not much about policy, congestion, productivity or the needs of Victorian motorists and public transport users.
Thank you everyone. Have a nice day.