8 February 2019
Transcript - #2019023, 2019

Doorstop interview, Parliament House, Canberra

Subjects: Population; border protection; Government response to the Final Report of the Royal Commission into Misconduct in the Banking; and Superannuation and Financial Services Industry.

JOSH FRYDENBERG:

Commonwealth and State Treasurers are meeting here in Canberra to discuss the shared responsibility of managing Australia’s population change. Australia’s population is growing at the fifth fastest rate of OECD countries, faster than it did in the 1980’s and 90’s, and significantly faster than expectations. Indeed, back in 2002, the Intergenerational Report expected that Australia would reach a population of 25,000,000 by 2040. We reached that number last year and Australia’s population will continue to grow. This is putting pressure on our infrastructure, whether it’s roads or public transport. It is putting pressure on health, education and other essential services. So, the states and the Commonwealth need to work closely together in managing population change. We need to have better data sharing arrangements, a better understanding of what the future skills needs will be. We need to be better understand how we can cooperate on important infrastructure projects, as well as having data  that gives information about population movements and demographic trends within states and between states.

So, today, I am looking forward to a very constructive discussion between the states and the Commonwealth as to how we can work more closely together on the issue of managing population change. This meeting does follow a meeting of COAG and leaders where there was an agreement that the Treasurers will follow through on their earlier discussions at the end of last year.

QUESTION:

What are you actually hoping to achieve by the end of today’s meeting?

JOSH FRYDENBERG:

Well, today is an important conversation of where we are hoping to get agreement to work more closely together. There is a lot of detail that needs to be worked through between our public services. But, at the end of the day, it’s the leadership that sits around the Treasurers table which will make a difference. And, if we all agree that we have a vested interest, as we do, in getting better outcomes with respect to managing population change, I think that will make all of the difference.

QUESTION:

New South Wales is about to go into an election period. They are expected to ask you for more infrastructure funding today. They do take a big intake of these migrants. Are you going to give them the infrastructure funding that they’re asking for?

JOSH FRYDENBERG:

Well, there is two points I will make. Firstly, today is not about a question of who pays for what. Today is a question of how we can work more closely and cooperate and coordinate more effectively together on managing population change. The other thing I would like to point out is that the Government has rolled out a $75 billion infrastructure spending series of announcements, including, particularly, for New South Wales. We have made major investments, obviously one of the big ones is going to be a second airport in Sydney. But also, the WestConnex and other projects that we have invested in since coming into Government from 2013/14 out to 21/22, New South Wales will get a greater share of that infrastructure funding pie than their actual population.

QUESTION:

Treasurer, the Royal Commission has claimed its first two scalps. Do you welcome this news?

JOSH FRYDENBERG:

Well, I’m not going to comment specifically on individuals or companies. Ken Henry did ring me last night to tell me of the decision that he had taken and that his company had taken. I do point out that Kenneth Hayne in the Royal Commission, has provided a scathing and clinical assessment of the conduct and culture within our financial institutions. We’ve seen a number of resignations through the course of the Royal Commission of senior leaders within our financial system. Ken Hayne made it very clear that the responsibility for the misconduct and the consequences of that misconduct fell firmly at the feet of senior leaders within those financial institutions, the boards and the senior executives. So, what matters most to the people of Australia from here, is that the culture within these banks change. That no longer are profits put before people, that the misconduct ends, because as a result of the misconduct we’ve not just seen broken businesses, we have seen broken lives.

QUESTION:

So, to help rectify that, why won’t you bring on more sitting days to implement these  recommendations?

JOSH FRYDENBERG:

Well, firstly, we have legislation before the Parliament that, actually, will be implementing Kenneth Hayne’s recommendations. For example, we are bringing civil penalties to directors of superannuation funds. Now, Kenneth Hayne recommends that we should extend those civil penalties also to trustees. So, we will be amending that legislation before the Parliament. I’m giving a direction to the Australian Financial Complaints Authority to ensure they can extend their remit to become that compensation scheme of last resort and hear cases going back a decade, consistent with the period examined by the Hayne Royal Commission. We’ve announced already that APRA will have a capability review led by Graeme Samuel. But, of the 76 recommendations, 40 require legislation and they require complex drafting as well as proper consultation with stakeholders. And, one of the key messages out of the Royal Commission was that the law is too complex. So, we don’t want to compound the  problem by rushing through legislation without sufficient consultation. Again, Labor is seeking to distract from the main game. The main game is what is their response to the Royal Commission? They’re interested in political stunts, not practical solutions. Labor have had the Royal Commission for longer than we have and they have not given a final response. They talk about, before the Royal Commission was handed over, that they were going to agree to every recommendation. Now, they’re talking about agreeing in principle. What is their position on mortgage brokers? What is their position on default once superannuation? These are the issues that the Australian people are  interested in, not the petty political games that the Labor Party have become famous for.

QUESTION:

Have you or the Government had any contact with NAB between when the Royal Commission was released and the resignations yesterday?

JOSH FRYDENBERG:

Well, I spoke to Ken Henry yesterday and he told me of his decision. But, ultimately, they have taken a decision as a board, as a company and as individuals, no doubt, following Ken Hayne’s comments.

QUESTION:

But before that phone call, had you spoken to anyone at NAB about this?

JOSH FRYDENBERG:

I spoke to Andrew Thorburn in recent days, where he told me he would be, obviously, responding to what was mentioned by Kenneth Hayne in that report.

QUESTION:

Did you make any suggestions as to what he and Ken Henry should do?

JOSH FRYDENBERG:

No, I didn’t and what I have said privately is absolutely what I have said publicly, which is that  it’s not for me, as Treasurer, to direct companies or individuals. For me, as Treasurer, I want to see better outcomes for consumers and that means the culture within organisations changing. So yes, I have spoken to Andrew Thorburn. Yes, I have spoken to Ken Henry. But, ultimately, those are decisions that boards and shareholders need to make. What we are focused on as a Government is putting in place the right accountability mechanisms, resourcing our regulators as necessary and ensuring that they are firmly aware of the task ahead and the changes that they, as regulators, need to make.

QUESTION:

Treasurer, speaking of political games and political stunts, can I take you back to the front page of The Australian and that alleged ASIO leak. Do you welcome the fact that the AFP is now investigating and the Home Affairs Department has referred this to them to look into?

JOSH FRYDENBERG:

I’ll allow those processes to take their normal course. But, what I will point out is the real  danger of the Labor Party’s position and some of the Independents position on this Bill. Because ultimately, we need

to ensure that offshore protection remains because it is very important as part of our suite of measures that have been effective in stopping the boats. The Labor Party, when they were last in Government, oversaw a complete disaster in this policy. Despite all of the promises on the eve of the election, and we are again hearing all of the promises from Labor. Despite all of those promises, we saw 50,000 unauthorised arrivals, over 1,000 people tragically lose their lives at sea, 8,000 children in detention, 2,000 of whom were in detention when we came to Government, none of whom are in detention today, and new detention centres popping up around the country. That was Labor’s horrific record and despite their obstinance, despite their objections, we as a Government have held  firm on this issue and we have held firm and the policy has worked. Now, again playing political stunts and appealing to the far left of their Party, they are going to water down our strong border protection policies that have worked, that have save lives and have got children out of detention.

QUESTION:

Could I just quickly ask you about your recommendation about people being stapled to one default superannuation. What do you think the implications are for industry super funds and if Labor accepts this recommendation, will it have to act against industry super funds?

JOSH FRYDENBERG:

Well, we have seen industry super funds signal their opposition to this policy and no doubt, what it would mean is that consumers will save billions of dollars in unnecessary fees on those duplicate accounts. They say that about one in three of the superannuation accounts today are unwanted. What it means is that people are paying insurance fees on these unwanted accounts, administrative fees, some $2.6 billion better off a year would be Australian consumers. If you’re a 21 year old young person entering the workforce today on $50,000, you will be
$50,000 better off in retirement as a result of getting rid of these duplicate accounts. So, this is a no-brainer as far as a policy recommendation from Kenneth Hayne is concerned. It mirrors what was said in the Productivity Commission on superannuation. Labor will try to dance around this issue. They will try to walk both sides of the street. They will take their instructions from their paymasters in the unions. But at the end of the day, the people who are benefiting from these duplicate accounts are the superannuation funds, be they industry or retail, they are not the Australian consumer. The Morrison Government, the Liberal and National Party Governments, we are focused on the consumer and driving better outcomes. That is what motivating our response to the Hayne Royal Commission, that is why  we’ve put out in detail our response. That is why the Australian people are now waiting belatedly, for the Labor Party’s response to the Hayne Royal Commission.