Senator the Hon. Mathias Cormann
Minister for Finance
Leader of the Government in the Senate
Senator for Western Australia
KIERAN GILBERT: Returning to our top story now on the Trump tariffs but also this NAB story in relation to Ernst and Young, EY and its consultants. Joining me is the Finance Minister and Leader of the Government in the Senate Mathias Cormann. Thanks for your time Finance Minister. Let’s start with this leak to the Sydney Morning Herald and The Age. What do you make of the information that has emerged in relation to NAB and its discussions with EY in relation to risk management and therefore the reports that were subsequently provided to regulator as a result?
MATHIAS CORMANN: That is a matter for NAB to explain throughout the day today. From our point of view the Royal Commission has taken place. It made 76 recommendations on how the regulatory system and related matters should be improved, addressed and dealt with. The Government is taking action on all of those 76 recommendations. It is incumbent on the banking sector and the financial sector in general to do its bit to restore public confidence. I suspect that a proper explanation today by NAB will be an important part of restoring confidence.
KIERAN GILBERT: Do you think there needs to be an explanation from EY as well given they provided the advice which was included in this report to APRA. And some of the concerns which were raised by Dr Henry at the time were not included. It seems this was not a full and complete report provided to the regulator.
MATHIAS CORMANN: I was not part of these processes at the time. We were not part of those processes. All those that were involved should explain themselves as part of restoring confidence. The main point is, the Royal Commission has completed its work. It made 76 recommendations across the board. The Government is taking action. The banks are taking action. It is incumbent on everyone to do what they can to restore public confidence.
KIERAN GILBERT: Labor wants the Parliamentary joint committee on corporations and financial services to look into the big four accounting firms now, in terms of their auditing practices. Would you support that?
MATHIAS CORMANN: Let us just consider these in an orderly fashion. I am not going to make ad hoc statements in relation to these matters. We will consider these things through our proper processes as we always do.
KIERAN GILBERT: The report also includes a statement from then chairman Ken Henry that he was confident that the bank was still selling products that would trigger compensation for customers in the future. This is months after the Royal Commissions had begun and the revelations emerging. This is quite a startling report isn’t it?
MATHIAS CORMANN: On the face of it that is a concerning comment, but there is an opportunity for Dr Henry and NAB to provide context around that if that is possible.
KIERAN GILBERT: I guess at the heart of this is, is relationship between the bank and the auditor too cosy?
MATHIAS CORMANN: Again, these are all matters that were explored in the course of the Royal Commission. What we need to look for today before jumping to any conclusions is the explanation in relation to these matters from those parties involved, giving them the opportunity to provide context if that is possible. In the first instance I think this is now a matter for relevant parties to explain what precisely has happened and why.
KIERAN GILBERT: Okay we look forward to those explanations from NAB and EY. Let’s look at some other broader pictures now. Donald Trump is slapping a further ten per cent on $300 billion worth of Chinese goods as of September 1. The deal maker, he continues to push hard on this doesn’t he?
MATHIAS CORMANN: This is a potentially concerning escalation of the trade dispute between two of the world’s major economies. From our point of view we do not believe it is in anybody’s interest for trade tensions to continue to escalate. We would much prefer if there was a resolution within the confines of our rules based system, a rules based system which we do accept is in need of urgent repair. There are certainly issues that quite legitimately ought to be addressed to ensure that it is fit for purpose for the circumstances we are facing in 2019 and beyond. But nevertheless, we do not believe that it is in anybody’s interest for trade tensions to continue to escalate with the negative consequences that would have for global trading and global economic growth.
KIERAN GILBERT: Donald Trump did say that the negotiations will resume over the coming weeks. But the prospects of a deal right now, they don’t look too good.
MATHIAS CORMANN: Let us see how it plays out. Certainly we would like to see a settled resolution, an agreed resolution and a sensible way forward that is in the global interest when it comes to facilitating continued strong global trading growth.
KIERAN GILBERT: I guess underpinning this is a hope on the markets and elsewhere that there will be a deal done eventually because of Donald Trump’s willingness and keenness to see the markets soaring. And they won’t if this whole thing collapses will they?
MATHIAS CORMANN: As I have said and as we have said consistently, increasing global trade tensions with two of the major economies around the world involved in this sort of dispute is not good for anyone. It is not good for the global economy. It is not good for Australia. It is not good for the US or China for that matter. We believe it is in everybody’s interest for these matters to be resolved. For there to be a pathway forward to reform our rules based trading system to ensure that it better deals with the position that emerging economies, large emerging economies are in today and their current economic structure and practices.
KIERAN GILBERT: Finance Minister is it fair to say that the Government is being pragmatic though in the sense of wanting to hedge your bets. Minister Birmingham is in China right now for the RCEP negotiations and wanting to pursue that regional cooperation. So pushing ahead with trying to reduce trade barriers in that sense, in a regional sense and with China particularly.
MATHIAS CORMANN: This is not a matter of hedging bets. This is consistent with our longstanding position as an open trading economy that we want to ensure that Australian exporting businesses have the best possible access to markets all around that world. That process that you referred to started back in 2012. It is fundamentally a process involving ASEAN countries and those with whom ASEAN countries have free trade agreements. It is another opportunity on top of all the other opportunities that we have pursued as a Government in recent times to protect our market access and to provide better access for our exporting businesses so that we can sell as many Australian products and services around the world as possible.
KIERAN GILBERT: So as Donald Trump has pulled out of the TPP, the Trans Pacific Partnership deal and China is embracing this arrangement. Is there a situation ironically where China could be filling that vacuum of leadership when it comes to free trade?
MATHIAS CORMANN: Again this RCEP process is not a new process. It started back in 2012. It is centred around ASEAN countries and the countries with whom ASEAN has free trade agreements. From an Australian point of view, it has always been our approach to pursue ambitious free trade agreements with as many economies around the world as possible. During our period, we have entered into free trade agreements with China, South Korea, Japan, Indonesia. We have been instrumental in landing the Trans Pacific Partnership with 11 partners. We are pursuing this opportunity as well. We are focused on the European Union. We will be pursuing a free trade agreement with the United Kingdom if and when Brexit is implemented. So our approach from an Australian point of view has always been entirely consistent and that is to promote open markets and free trade and to get the best possible access for our exporting businesses to markets all around the world.
KIERAN GILBERT: The Fed in the US cut rates this week. Our dollar fell as a result. Any reflections on that? I think the RBA would be pleased with that in terms of its impact on our exporters?
MATHIAS CORMANN: Kieran, I am not a commentator on monetary policy by our own Reserve Bank let alone on the decisions of the Federal Reserve in the United States. Central banks make their decisions independently based on their assessment of the economic data and information. From our point of view we will continue to make the decisions we need to make to put Australia in the strongest possible and most competitive possible position to ensure that our economy continues to grow and we can create more jobs.
KIERAN GILBERT: Your colleagues Senator Reynolds and Senator Payne will be meeting with Secretary of State Pompeo and the new Defense Secretary this weekend amid reports the US, well not reports, we’ve heard Secretary Pompeo confirm that they have requested of Australian support in terms of pressure on Iran in the Persian Gulf to free up the movement of trading ships and vessels. Is this something the Government is keen to support?
MATHIAS CORMANN: As the Defence Minister Senator Reynolds said yesterday no decisions have been made. These sorts of matters involve a lot of consultation with allies and relevant stakeholders. As you say there are meetings happening this weekend involving the US and Australia and our foreign and defence ministers. No doubt this will be one of the matters that will be discussed. From an Australian point of view no decision has been made.
KIERAN GILBERT: Finally, on this individual that Labor wants to have his visa blocked. You were very critical of the language used by this person. Are you sympathetic to their concerns?
MATHIAS CORMANN: No I am not. I was absolutely critical of what he was quoted as saying. I indeed find some of his comments objectionable and unacceptable. But I do not think as a country committed to freedom of speech that we want to put ourselves in a position where we ban everyone and anyone on the basis of objectionable and offensive speech. There are clear legal provisions in our migration act which govern the circumstances in which somebody who is a non-citizen can be banned from entering Australia and these laws of course ought to be applied. But just because somebody has controversial views should never be a sufficient reason to ban them from coming to Australia. My view is that if you want to be as effective as possible in defeating unacceptable views and bad opinions you have to engage in the debate. Just engaging in debate with people who agree with you at all times does not actually help you defeat these sorts of bad, unacceptable opinions.
KIERAN GILBERT: Sometimes the irony of that and engaging in this particular debate, Labor has actually created more awareness of this Raheem Kassam than otherwise would have been known of the individual.
MATHIAS CORMANN: Kristina Keneally is desperate to put attention on herself. She was quite happy in the process to put the spotlight and make this character with objectionable past comments more famous than he otherwise would have been. This is all about Kristina Keneally wanting to get into the spotlight and using whatever means she has at her fingertips.
KIERAN GILBERT: Finance Minister, we appreciate your time. We will see you next week.
MATHIAS CORMANN: Always good to talk to you.