22 October 2018
Transcript - #2018049, 2018

Interview with Luke Grant, Wake up Australia, 2GB, 4BC and 2CC

Subjects: Wentworth by-election; tougher penalties for corporate & financial sector misconduct; and Australia’s embassy in Israel.

LUKE GRANT:

Treasurer, Josh Frydenberg.

JOSH FRYDENBERG:

Good to be with you, Luke.

LUKE GRANT:

Good, fantastic. Tell me about Wentworth. Lots of people, I guess earlier on Sunday thinking that given the way the vote was going, there was still a light there for Dave Sharma, but gee he's got a big road now to climb, doesn't he?

JOSH FRYDENBERG:

Well, it's turned out to be much closer than people thought on the night of the by-election. It looks to be only hundreds of votes in it as opposed to a bigger margin than that. We've got our fingers crossed for Dave, but you're right, he's got an uphill battle.

I think, given the events of eight weeks ago, he was always kicking against a ten goal breeze and he handled himself with dignity and distinction through the course of the campaign. The Labor Party was obviously in cahoots with Kerryn Phelps and they threw everything at that campaign.

That being said, whatever the result is and if we do lose it, we'll cop it on the chin and we will certainly heed the message from the people of Wentworth, which is that we need to continue to listen and deliver on the issues that matter to them rather than focus on internal debates as has been the case eight weeks ago.

LUKE GRANT:

Yeah. You had a good week other than that. I mean, the unemployment rate down to five, the tax cuts for small business five years earlier than what had originally been planned, yet the result is what it is. Is this about the Malcolm Turnbull removal as leader or was it about, as some were saying, the rue on climate change?

JOSH FRYDENBERG:

We were certainly punished predominately for what happened to Malcolm because the Liberal Party members or the Liberal Party voters were angry, but that being said, you know, Kerryn Phelps and others may seek to make it a result that was based on climate change or other matters, well in reality, I think the main issue was the events of eight weeks ago.

The economy is very strong, Luke, and your listeners need to know that this Australian economy does not run on autopilot, it's actually going well as a result of the policies and the tough decisions that we've taken.

Unemployment is at a six year low at five per cent, we have a budget that is coming back to balance a year earlier than expected in 2019-2020, we have a AAA credit rating that has seen Australia being reaffirmed for such a rating by the leading rating agencies and we've created over one million new jobs as promised and that is something to be very pleased about, let alone the company tax cuts for over three million small and medium-sized businesses across the country; it went through the Parliament last week.

So, it's a good economic plan, it's a good economic record, all of which could be put at risk by a return to the Labor Party and their tax and spend approach.

LUKE GRANT:

Yeah, couldn't agree with you more and again on the back of that, it seems almost implausible that you would lose a once safe seat. Is it not time for yourself as Deputy Leader and the Prime Minister as Leader to get what are perceived to be warring factions in a room and get them to pull their head in because the price of all of this is a Shorten Government.  

JOSH FRYDENBERG:  

I think it doesn't matter which political party you represent if you focus on internal debates, you can lose the trust of the public. But, if you focus on what matters to them, you can keep their trust. And we know that our responsibility is to deliver on the economic plan that we've laid out and we are doing that and I think it's really important for all my colleagues to focus on the job ahead.

We're back at work. The Prime Minister and I were meeting today, we'll be in the Parliament tomorrow and as you know, we've got a busy agenda of economic reform and as you said in the introduction, some important changes around the penalties for white collar criminals.  

LUKE GRANT:

Yeah, let's get to that now because there was one part I think, Josh, where it was CommInsure and they breached, I think, four times; the fine could've been $8 million, instead I think it was ASIC that imposed $300,000 or $400,000 fine and then ran their media release past the bank for approval or CommInsure for approval.

Can you convince us, with these changes, that that kind of thing can't happen again?

JOSH FRYDENBERG:

Well, certainly the Hayne Royal Commission's interim report was a pretty frank and scathing assessment of the culture within the financial services sector, how the big banks had put profits before people, but also the performance of our regulator which has come under criticism from the Royal Commissioner for preferring to negotiate rather than to litigate breaches of conduct.

And I think what we'll see now is a very significant change in approach from ASIC, and we have a new head of ASIC that we appointed, James Shipton, who has adopted this new approach. We've also put in place a new deputy chair with a particular focus on enforcement and his name is Daniel Crennan QC and we've beefed up the funding for ASIC.

But on top of all that, Luke, dramatically strengthening the criminal and civil penalties for corporate and financial sector misconduct. Just because you're wearing a suit to work, doesn't mean you escape jail. The reality is, under these new laws, people will face up to 10 years imprisonment for financial misconduct and the fines could run into hundreds of millions of dollars with a tenfold increase.  

We've made this announcement of new penalties which we'll be seeking to legislate through the Parliament where we'll be doubling the criminal penalties being faced by individuals and we'll be, in some cases, increasing tenfold the financial penalties on corporations which can see the fines run into hundreds of millions of dollars or more.  

LUKE GRANT:

Yeah, I think they're good things, it's a good start. Will you have time before the next federal election to introduce other measures to ensure we never go down this road again?   

JOSH FRYDENBERG:

Well, we're expecting the final report from the Royal Commissioner in February of next year and obviously we'll take the necessary action in response to this report.

I think what we've all been shocked by is some of the revelations from the Royal Commission including fees being charged to dead people, fees being charged for no service, thousands of people getting unsolicited products in breach of the regulations or the rules or the laws that have been in place.  

So, quite clearly I think there's going to be a new course of action on behalf of the companies and the individuals in the financial services sector.

LUKE GRANT:

Great stuff. A couple of quick ones before you go; the policy announcement regarding the embassy in Israel and moving it to Jerusalem, a lot of people have referred to that as a stunt to try and attract votes from the Jewish community in Wentworth. You denied that I heard with David Speers on Sky News. Can you repeat the reasons why that wasn't a stunt to our audience here?

JOSH FRYDENBERG:

Well, I think it's insulting to make that accusation because the reality is, Australia and Israel, next year, will be celebrating 70 years of diplomatic relations, we have a shared history, Israel is the only democracy in the Middle East and we continue to support each other in many different ways both on the strategic side as well as on the economic side, certainly, the people to people links are strong.

And Israel is an anomaly as far as it is one country where Australia has an embassy that is not in that nation's capital. Now, West Jerusalem is the place where Donald Trump has moved the United States embassy. West Jerusalem would always be the capital of Israel under any two-state solution.

So, what Scott Morrison has done is begun a process. No final decisions have been taken. There's going to be a process to consider the future location of the Australian embassy and the timing of his announcement was related to a decision that Australia had to take at the United Nations as to how to vote on a key resolution involving the Palestinians. And that decision brought into focus our policy in this area and that was the driver behind Scott Morrison's announcement.

LUKE GRANT:

Gotcha. And the final one is this. I heard the Prime Minister, when you and he were talking to the media on Sunday morning say that Dave Sharma himself contacted Malcolm Turnbull just to urge him to release a message of support.

Now, Dave Sharma, we understand was Malcolm Turnbull's preferred candidate as his replacement. I don't know if you want to comment on this, but I find it gobsmacking that it would appear the former Prime Minister's anger is running so deep that he wouldn't even support the candidate he favoured to replace him. Would you agree? 

JOSH FRYDENBERG:

Well look, I think he does support Dave Sharma and did support him in the campaign. Dave was an outstanding candidate and we know that he has represented Australia abroad and would make a great Member of Parliament.

That being said, we have all done our bit to ensure that Dave put his best foot forward. Right now, it looks like he's just behind in the count but we have our fingers crossed and we hope he does get over the line. 

LUKE GRANT:

All of you did your best except for the former Member it seems.

JOSH FRYDENBERG:

I'm not saying that. That's what you're saying.

LUKE GRANT:

Have a good day. Good to talk Josh.

JOSH FRYDENBERG:

All the very best. Bye.