Senator the Hon Mathias Cormann
Minister for Finance
Date: Thursday, 20 November 2014
CHRIS UHLMANN: Mathias Cormann is the Finance Minister, good morning.
MATHIAS CORMANN: Good morning.
CHRIS UHLMANN: Mathias Cormann, what difference will changing back to the old financial laws make to consumers?
MATHIAS CORMANN: It will push up the cost of advice and it will lessen competition unless we are able to address what happened last night through legislative change between now and the end of June 2015.
CHRIS UHLMANN: But consumers might be prepared to pay more if they think that they are getting better protection?
MATHIAS CORMANN: That’s true, they might. What we have of course done is that we have kept all of the important consumer protections that matter. What we have sought to do is remove unnecessary and costly red tape which didn’t add consumer protections, but which added additional costs to the advice accessed by people across Australia who are saving for their retirement.
CHRIS UHLMANN: Don’t you have a perception problem here is that you are seen to be acting on the advice of the big banks and against consumers’ interests?
MATHIAS CORMANN: Well we are not acting on the advice of the big banks at all. I do readily concede that this is a highly technical area. It is an area in which there are vested commercial interests and vested political interests which if I may say so find it easy to mislead people. The truth of the matter is that our reforms ensured that the requirement for advisers to act in the best interests of their clients remained in full. Our reforms ensured that the ban on conflicted remuneration remained in place in full. But of course what we have done is to ensure that we cut the unnecessary red tape.
CHRIS UHLMANN: Even if we give you all of those sorts of things and say that is the way the system is working at the moment under your changes, the problem you’ve got though is a perception one isn’t it? It is always reported as being watering down of changes.
MATHIAS CORMANN: Well as I said, it is always very easy in these very technical areas for vested commercial interests and vested political interests to mislead people and that is certainly something that has been happening. We will continue to make our case as to why in our view it is very important to ensure that we have the balance right between strong levels of consumer protections on one hand but also making sure that our regulatory system is as efficient as possible so that we don’t impose excessive and unnecessary costs on those Australians who are saving for their retirement and are managing financial risks through life. Because at the end of the day whatever additional, unnecessary costs we impose on people across Australia, it comes directly out of their retirement savings. It essentially forces them into a situation where they will end up with less money in retirement than they should be able to have, or than they could have.
CHRIS UHLMANN: But the concern is that they might lose all their retirement savings.
MATHIAS CORMANN: Clearly we always have to make sure that we have a robust regulatory system in place and we do. In Australia we have one of the most robust regulatory systems in place in the world. But what I would say, though, is for example some of the changes that Bill Shorten made in Government just went too far. There is no consumer protection benefit from imposing changes for example in relation to fee disclosure, retrospectively forcing institutions across Australia to make significant system changes which don't make any improvements to consumer protections into the future, but which impose costs that ultimately will be borne by consumers. These are the sorts of things that we wanted to sensibly address.
CHRIS UHLMANN: Do you think there is any chance now that the Senate will ever pass your financial laws?
MATHIAS CORMANN: Well, let's see. The Senate over the past four months supported our reforms twice. Yesterday manifestly they didn't. We now have until 30 June, given the transition period that ASIC has put in place to continue the conversation and obviously the Government will continue to make the case as to why good public policy reform in this area is important in the public interest and in the consumers interests.
CHRIS UHLMANN: You don’t think it is time just to move on from now?
MATHIAS CORMANN: We have legislation in front of the Parliament, substantive legislation in front of the Senate. Two Senate inquiries have inquired into those laws and have recommended their passage. We will continue the conversation with cross bench Senators and let’s see where we end up.
CHRIS UHLMANN: It’s been a messy year for the Government though don’t you think? Even your supporters like commentator Andrew Bolt is now saying with your unpopular budget cuts and broken promises, that’s killing the Government.
MATHIAS CORMANN: The Government had a job to do. The Government inherited a Budget in a mess from our predecessors. We inherited a debt growth trajectory that was unsustainable. We have been focused on repairing the Budget mess we inherited and inevitably there were going to be measures in there that were not going to be universally popular in the first instance. We will continue to focus on doing the right thing by Australia and we will continue to focus on repairing the Budget. We are quite hopeful that over time people will accept that we're making the right judgments for the right reasons to protect living standards and build a stronger, more prosperous economy into the future.
CHRIS UHLMANN: What judgments do you think the Australian people make when the night before the election the Prime Minister says there will be no cuts to the ABC and SBS and then there are cuts afterwards?
MATHIAS CORMANN: There are no cuts. What is happening with the ABC...interrupted
CHRIS UHLMANN: Do you think that’s the way the people see it?
MATHIAS CORMANN: ..the ABC has been exempted from efficiency dividends for the last 20 years. Efficiency dividends which apply to every other department in government, every other agency of government that is funded by the taxpayer. We believe it's important that the ABC like every other taxpayer funded organisation operates efficiently...interrupted
CHRIS UHLMANN: That’s understood. We're talking about whether or not the Prime Minister told the truth. This is not slack that you would have cut Julia Gillard.
MATHIAS CORMANN: The Prime Minister absolutely told the truth. We are not making cuts. What we are making sure is what happens with the ABC is what happens with every other taxpayer funded organisation, that is to ensure that it operates as efficiently as possible and that is our responsibility. We need to ensure that taxpayers' money is treated with respect.
CHRIS UHLMANN: But looking at the principle, the Prime Minister’s word, is what you have just said, would you have accepted that out of the mouth of anyone in the Labor Party and what Julia Gillard said just before the election?
MATHIAS CORMANN: The Labor Party imposed efficiency dividends across Government as well. The Labor Party never said that making sure that the Health Department, the Education Department and other agencies across Government had to operate efficiently that that was cutting their funding. I have never heard Labor say that an efficiency dividend was tantamount to a cut.
CHRIS UHLMANN: Mathias Cormann, thank you.
MATHIAS CORMANN: Always good to talk to you.