Senator the Hon Mathias Cormann
Minister for Finance
MATT TAYLOR: Let’s bring in the Finance Minister Mathias Cormann, also in Canberra, joining us from inside Parliament House behind me. Finance Minister, thanks very much for speaking to us as always. What’s been the industry response so far to what the Government has adopted with respect to the Murray Inquiry or the FSI?
MATHIAS CORMANN: There has been a lot of consultation both in the lead up to the Murray Report itself and also since David Murray released his recommendations. There has been a lot of consultation by Government. So from our point of view the industry should be pretty well prepared for what we have announced today. We will let the industry talk for itself. I’m sure that different players in the industry will have something to say about different aspects of the response that we have released today. That is a matter for them.
MATT TAYLOR: Since the Murray Report was released back in December, this term ‘unquestionably strong capital’ has been I guess a little bit of a contentious point, because the banks already claim that they were unquestionably strong when it came to what they were holding in terms of capital requirements. You would obviously disagree with what they’d been saying, since this review came out in December?
MATHIAS CORMANN: In the end it is a matter of balance. We want our financial system to be efficient, to be resilient and to be fair. The financial system plays a central role as a facilitator in the economy. It has impacts on every aspect of people’s lives, from buying their home, planning their retirement, to supporting businesses to invest and to pursue growth opportunities moving forward. It is very important for our financial system to be internationally competitive. It is very important for it to be able to provide its services efficiently. But by the same token, it is also very important for the appropriate safeguards to be in place, to ensure the financial system is safe. That is why we felt, that after some time that there hadn’t been a significant strategic review of the financial system in Australia as a whole, that it was important to commission this Murray Inquiry. That was a commitment that we took to the last election. David Murray, his inquiry made a series of very sound recommendations. We have overwhelmingly accepted the recommendations, either in full or in part with some further work to be done in relation to some of them. This is really all part of making sure that our financial system is as efficient, as competitive, but also as resilient and as fair as possible.
ADAM BAKHTIAR: Mathias, this is Adam in Singapore. If the primary aim of the Murray review is to strengthen the financial system and as you just mentioned to make it more competitive and efficient, to the last two points, if that was indeed the aim, then why not sort of further deregulate the financial system by perhaps allowing more banks to compete with the major heavyweights?
MATHIAS CORMANN: What I have just said is that it is a matter of balance between the desire to ensure the system is as efficient and competitive as possible but also being safe. The judgement that we have made responding to the Murray Review recommendations is a balanced judgement, ensuring that the system is as efficient but also as resilient as possible and that there are appropriate prudential safeguards in place. The judgements that the Government has made are there for all to see. We have released them all today and as you would have been able to see, overwhelmingly we have agreed with nearly all of the recommendations that David Murray has made either in full or in part.
MATT TAYLOR: I want to talk to you about the other big piece of news that came out today which was the ban on merchant surcharges on those credit card transactions. Are you not worried that you might I guess get the retail sector offside with this news?
MATHIAS CORMANN: This is a matter of fairness and appropriate transparency around what is driving certain pricing decisions. If there is a pass on of an actual cost incurred that is appropriate. But beyond that, if a business wants to increase their prices then they should make a decision to charge the price for the good or the service they provide accordingly. To do that in the guise of imposing additional surcharges on the back of credit card transactions we didn’t believe was a fair and appropriate way of proceeding, which is why we have made the decision that we have. We are going to give responsibility to the Australian Consumer and Competition Commission to enforce that change into the future.
MATT TAYLOR: Alright, we are out of time, but as always we appreciate you stopping by to chat to us today. Mathias Cormann, the Finance Minister, thank you very much for chatting with us.
MATHIAS CORMANN: Always good to talk to you.