Senator the Hon Mathias Cormann
Minister for Finance
Date: Wednesday, 16 July 2014
KIERAN GILBERT: The carbon tax has survived another day with more debate but no vote on its repeal in the Senate just yet. It is now expected to be scrapped today with Clive Palmer's support. If not today certainly by the end of the week. The Government did however get cross bench support for its changes to financial advice laws and with me to discuss those changes the Finance Minister Mathias Cormann. Minister thanks for your time.
MATHIAS CORMANN: Good to be here.
KIERAN GILBERT: First of all, seniors groups aren't happy. National Seniors Australia has called your deal with Clive Palmer a grubby deal, accusing you of treating older Australians with contempt.
MATHIAS CORMANN: That is just completely excessive and inappropriate language. It is just not true. What we did yesterday is provide certainty and benefits to consumers and small business financial advisers. We ensured that we restored a better balance between important consumer
protections while making sure that access to high quality advice is affordable, can be affordable for all.
KIERAN GILBERT: The Council of Australian Ageing say they are very disappointed that the, in particular, the catch all best interest test, which was part of Labor's law, getting rid of it, you haven't had a sufficient replacement for that and I suppose that concern particularly poignant in the wake of the Commonwealth Bank scandal.
MATHIAS CORMANN: There has been a lot of misinformation spread about this. There is absolutely no question. The requirement for financial advisers to act in the best interests of their clients remains in full. We haven't changed it. It is still in the Corporations Act as we speak. It will stay in the Corporations Act moving forward. The agreement that we've reached with the Palmer United Party yesterday and the Australian Motoring Enthusiasts' Party is that that requirement, that obligation on the financial adviser also needs to be specifically mentioned in the Statement of Advice that is provided to the client and signed by both the adviser and the client.
KIERAN GILBERT: Obviously the whole purpose of the change was to make the requirements on financial advisers less onerous.
MATHIAS CORMANN: Well no, the whole purpose of the change was to ensure that people across Australia saving for their retirement, managing financial risks through life could access more affordable, high quality advice they can trust. That is why we got rid of the unnecessary and costly red tape while keeping all of the important consumer protections that actually matter to consumers such as the ban on conflicted remuneration which stays. Such as the requirement for advisers to act in the best interest of their client, that also stays.
KIERAN GILBERT: But isn't the bonus, a bonus paid on a product that's sold, isn't that effectively a commission?
MATHIAS CORMANN: That is a complete furphy. What we have done in our regulations which came into effect on 1 July is ban, prohibited, any payment that is made solely because general advice is being provided in the context of a product sale. We have always been clear that we were not bringing back commissions or conflicted remuneration. We've put that even more beyond doubt in the regulations that we registered at the end of June. Don't take my word for it. None other than the ABC Fact Check assessed claims by Chris Bowen that we were bringing back commissions as scaremongering and inaccurate.
KIERAN GILBERT: You've been accused of reading from Clive Palmer's script. Mr Palmer was in the Senate last night watching you read from his proposed changes, this is the suggestion from Tony Burke this morning that you were reading Mr Palmer's script last night.
MATHIAS CORMANN: Tony Burke is just unhappy that the Labor Party has become completely irrelevant in the new Senate. They are just on the sideline jumping up and down, playing politics. In the meantime, I did what I always said I would do. I sat down with the cross bench and I briefed them on the changes that we were making and why. I found Mr Palmer very good to deal with. Very straight. He listened to the arguments on why we were doing what we are doing. He put forward some suggestions on how our improvements could be made even better. We considered those proposals and we thought they were sensible suggestions so we adopted them.
KIERAN GILBERT: He was straight about it, a bit unlike the carbon tax negotiations?
MATHIAS CORMANN: I have only had dealings with Mr Palmer specifically in relation to our improvements to financial advice laws and I found it ...interrupted
KIERAN GILBERT: Maybe you should lead the negotiations for everything.
MATHIAS CORMANN: I don't think that that's right. Every issue obviously has got its own complexities. But in relation to this issue, in relation to financial advice laws, Mr Palmer was very good to deal with. He was very straight and we thought that the suggestions that he was putting forward on behalf of the Palmer United Party and the Australian Motoring Enthusiasts' Party were sensible suggestions and we adopted them.
KIERAN GILBERT: The Financial System Inquiry, David Murray's inquiry raised concerns suggesting banks need to hold more capital against their mortgage lending. That has lead to some experts saying there to be changes to things like negative gearing. What do you say?
MATHIAS CORMANN: The important thing and David Murray has been very clear on this all day yesterday and through the media that he did in the evening. He has not put forward recommendations. What he has put forward is effectively a discussion paper with propositions that have been put to them. This now will generate more discussions, more submissions and now there's a call for submissions to the inquiry until 26 August and...interrupted
KIERAN GILBERT: He said mortgage lending is a source of potential risk to the economy what do you say to that?
MATHIAS CORMANN: He is putting forward a series of propositions that are now going to be properly assessed, properly scrutinised. At some point they will put a final report to the Government with recommendations, which the Government of course in the ordinary course of events will consider and provide a proper response to.
KIERAN GILBERT: Senator Cormann thanks for your time.
MATHIAS CORMANN: Always good to be here.