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Transcript of interview with Michael Brissenden: ABC AM: 12 April 2016: Labor's plan to fund health & education - and balance the Budget; Labor's proposal for a Royal Commission into the financial services industry; the Commonwealth Government's triple-A credit rating



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THE HON CHRIS BOWEN MP SHADOW TREASUER MEMBER FOR MCMAHON

E&OE TRANSCRIPT RADIO INTERVIEW ABC AM WITH MICHAEL BRISSENDEN TUESDAY, 12 APRIL 2016

SUBJECTS: Labor’s plan to fund health & education - and balance the Budget; Labor’s proposal for a Royal Commission into the financial services industry; the Commonwealth Government’s triple-A credit rating.

MICHAEL BRISSENDEN, PRESENTER: Chris Bowen, good morning.

CHRIS BOWEN, SHADOW TREASURER: Good morning, Michael.

BRISSENDEN: Did you or your office receive a briefing on this modelling? And was it as reported in July last year well before you put out your policy?

BOWEN: Well, Michael, let's run through this. I've met Tony Bongiorno on one or two occasions.

On one of those occasions he made it clear to me that he is a supporter of the current negative gearing regime on behalf of his clients and he had sent them some subsequent conversations with my office.

That is entirely usual and reasonable.

The first time I was aware that he had actually paid for this report and had commissioned it himself and had not commissioned it on behalf of some other client was when I read it in the newspaper this morning.

But this is not a report into Labor's policy, Michael, this is the point. As BIS Shrapnel have themselves admitted publically, they modelled a policy which is not Labor's policy.

The only person who has fallen for this report which is flawed is the Treasurer - hook, line and sinker.

BRISSENDEN: Okay, but were you told that it was their opinion that your, that a change to negative gearing such as the one that you were going to propose would push down house prices, increase rents and have an adverse effect on the economy?

BOWEN: Well it's no surprise that somebody who supports the current negative gearing policy would make those arguments.

But it's not, what the work the BIS Shrapnel did, which they themselves have admitted is flawed because it is not Labor's policy, it models something completely different.

And the Treasurer didn't bother to check his facts before he raced out in the most ill-conceived manner and endorsed this report.

Well I'm more thorough, my office is more thorough. This report does not stand analysis, it's not Labor's policy, and so that is unsurprising.

BRISSENDEN: So when you got this advice you disregarded it because you didn't think it was relevant; is that right?

BOWEN: Well it's not relevant to Labor's policy. If somebody makes an argument to you about your policy and then when you question them it's clear they are not actually talking about a policy that you're considering implementing, and then later on, much later on that appears in the media, that is not relevant to Labor's policy, as BIS Shrapnel themselves have had to concede.

The report is riddled with errors and it does not model Labor's policy. That was the case the day it was released, that was the case when you questioned the Treasurer on it as I recall your interview, and it's the case today. Nothing has changed.

BRISSENDEN: But isn't it true the modelling, the basis of the modelling is essentially about the sort of changes that you had proposed to negative gearing?

BOWEN: Well, Michael, if you look at the experts who've looked at this, I mean John Daley said it didn't pass the giggle test, the chief executive of the Grattan Institute.

Saul Eslake has pointed out it is thoroughly flawed, it models something completely different, it contains basic errors of fact.

That was the case then. That is the case today.

BRISSENDEN: Okay, and you didn't know at the time that the BIS Shrapnel report came out that the Bongiorno and Partners opinion was drawn from that report?

BOWEN: Well I was aware that Bongiorno had done work, I was aware that Tony Bongiorno and his firm had done work on it and I was aware obviously that they had been promoting that widely around Parliament House.

BRISSENDEN: Right, but when you claim -

BOWEN: Who paid for that work and on whose behalf it had been done I was unaware and remain - and, you know, I read in the paper this morning that it was done by Bongiorno and Partners of their own volition.

They obviously have a lot of clients who do negative gearing, they have an interest in that. They are entitled in a democracy to do that.

They are not entitled to try and say that therefore because they have that opinion the Labor Party can't act in the national interest, introduce a reform which improves housing affordability and boost the budget bottom line.

And I am more than happy to defend our policy against any alleged modelling or analysis.

The Treasurer can't because he doesn't have any policies.

BRISSENDEN: Okay, so when you claimed the BIS report was commissioned by anonymous vested interests, you didn't know at that stage that -

BOWEN: Well it was -

BRISSENDEN: That Bongiorno and Partners was behind it.

BOWEN: Yeah well that's only been confirmed this morning in the media. But BIS Shrapnel themselves said that it was commissioned by an anonymous client who did not want to be named.

It's not my job to run PR for somebody like BIS Shrapnel. Obviously Tony Bongiorno and Bongiorno Partners have been out there promoting this view for some time.

I read in the paper they've had this view since 1983. That is singularly unsurprising.

BRISSENDEN: Okay, let's turn to the banks Royal Commission which Labor is calling for.

Now Scott Morrison has indicated he will boost resources to the banking regulators. Isn't that enough?

BOWEN: He may restore some of the cuts his Government has made.

I mean this Government, the Abbott/Turnbull Government has cut ASIC to the bone and now they expect applause when they flag that they may at some stage increase some of that funding, restore some of that funding.

They've cut the ATO, they've cut ASIC.

Now of course the Treasurer is wrong in fact, wrong in fact, when he says ASIC has more powers than a Royal Commission.

ASIC can only investigate matters referred to it by whistle blowers.

The Royal Commission would look at the powers of ASIC, the regulator, so the regulatory framework.

It would look at whistle blower protection and the terms of whether there should be any improvements to whistle blower protection.

None of these things ASIC can look at. ASIC investigates individual cases; it does not investigate structural and systemic issues.

It certainly doesn't investigate whether the law of the land is adequate. It investigates whether the law of the land is being followed.

BRISSENDEN: Okay, let's put some of these bodies together: ASIC, APRA (Australian Prudential Regulation Authority) and the ACCC (Australian Competition and Consumer Commission).

Now the independent Ethics Centre says a Royal Commission isn't warranted because all of those three would have all the powers of such an inquiry between them - don't you agree?

BOWEN: No. When you look at the course, the Council of Financial Regulators, of course ASIC is not the only regulator, that is true.

But the only thorough body which can have representation of whistle blowers, representation of consumer groups, representation of the banks themselves, have a thorough and systemic examination of the issues that have come up in scandal after scandal and examine whether there is any necessary changes to be made is a Royal Commission.

BRISSENDEN: How can we take you seriously on this though when, as the Government points out time and time again, Labor voted against a motion for a Royal Commission into the financial services sector?

BOWEN: Well some in the Government do; others in the Government strongly support

our call for a royal commission.

BRISSENDEN: Well certainly the Government leadership does.

BOWEN: Well in a captain's call I've seen it described, Michael, by Government's own members.

Yeah look last year there was a Senate resolution or a Senate motion calling for a royal commission. Labor at that time was still considering its position. I mean we'll announce our position when we choose; not when the Greens move a motion.

Calling for a Royal Commission is a big call. It's not something done lightly. We have a thorough process of examination, thought and reflection and since then of course we've seen more scandals and issues arise.

BRISSENDEN: Okay, so it wasn't good enough then but it is now?

BOWEN: Well our position had not yet at that point been settled. That is a matter of fact.

The Shadow Cabinet this week decided that the evidence was there to support a call for a Royal Commission and to implement one in office.

I mean political parties aren't a snap shot in time. Just because we weren't ready to vote for the Greens' motion last year doesn't mean that we are therefore bound to maintain that position forever.

Now there's an election coming up, we'll seek a mandate to implement a royal commission.

BRISSENDEN: Okay, now there's a budget coming up as well and as you're aware, you're obviously aware there is increased talk about the AAA credit rating.

That's a very sensitive matter, politicians are careful when talking about it obviously, but should the Government be on alert about a possible downgrade?

BOWEN: Well you're right we have to be sensible and careful about our comments and that's always the approach I take on this matter and other matters as the alternative treasurer.

But to answer your question, yes, keeping the AAA credit rating is a key priority for any government, it should be certainly.

It was earned under Labor, the three AAA credit ratings for the first time under the Rudd government, it was earned under Labor, it should be protected.

Losing the AAA credit rating would have substantial implications. The cost to

government, our interest cost would increase, it would have flow-on effects, it would lead to a re-evaluation at least of the credit ratings of Australian companies, and it would be deleterious to confidence in the economy so it should be protected.

BRISSENDEN: Okay, and if it's taken away it won't just be the sole responsibility of this Government will it? It will be about because of policies taken over a number of years including under the Gillard and Rudd Governments.

BOWEN: Well if it's taken away under this Government, this Government will have been in office for more than two and a half years, it would have talked the big talk.

Again, to go back to our original discussions, is the Government squibbing on negative gearing, squibbing on high income super, some of the fastest growing and most unsustainable areas of the budget?

If they are serious they'll adopt Labor's policies.

BRISSENDEN: Okay, Chris Bowen, we'll leave it there. Thanks very much for joining us.

BOWEN: Good to talk Michael, anytime.

BRISSENDEN: That's the Shadow Treasurer Chris Bowen.

ENDS

MEDIA CONTACT: JAMES CULLEN 0409 719 879

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