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Transcript of interview with Marius Benson: ABC Newsradio: 25 July 2017: Royal Commission into financial services sector; tax reform; inequality; Marius' looming retirement

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SUBJECTS: Royal Commission into financial services sector; tax reform; inequality; Marius’ looming retirement.

MARIUS BENSON, PRESENTER: Chris Bowen, good morning.

CHRIS BOWEN, SHADOW TREASURER: Good morning to you Marius.

BENSON: Now you already have, Labor has, a planned Royal Commission into the banks. You’re intending to widen this to take in financial regulators as well?

BOWEN: Well what we are doing Marius is saying today that it is prudent and timely that our Royal Commission into the banking and financial services industry also looks at our financial architecture. There have been a lot of changes, even over the past twelve months, I would sum them up in three categories briefly.

Firstly, the continued rise in household debt, which means it’s even more important we get our financial architecture right, we have very high household debt by international standards. Secondly, there’s been an ad hoc nature of changes to regulation. Things have been added in quite an uncoordinated fashion over the last twelve months in particular, and I think it’s time to stocktake. Thirdly, just the pace of technological change. Which is a very good thing, fintech is a very good thing and very welcome, but it does mean that we need to make sure our financial regulation architecture is keeping up. I’ll be flagging today that these are things that the Banking Royal Commission will look at, as well as, of course, a particularly strong focus on bad culture and behaviour in the banking industry and what needs to be done to stop those scandals occurring in the future.

BENSON: Just talking about that household debt, we are just about world beaters in household debt. How can that be effected by changes to the financial architecture?

BOWEN: Well the point I’m making is that, firstly you’re right, the Government’s primary responsibility would be to ensure for example that our tax system is fit for

purpose and not encouraging household debt, through negative gearing for example, which our policy does. But secondly I make the point that makes it even more important that our financial and prudential regulation is international best practice. Our regulators do a great job, APRA in particular, when it comes to prudential regulation. But we need to make sure that the architecture is 100 per cent fit for purpose going forward. It’s only been a few years since the Murray Inquiry but even since then, things have changed rapidly, including continued rises in household debt, and as I said, the ad hoc nature of the changes that have been made, for example, APRA has been given some responsibilities which many people would have thought would probably might be better placed with ASIC. These are things that the Royal Commission can properly and prudently look at.

BENSON: But are you arguing that the Royal Commission can make recommendations about changes to the way that the financial system is regulated in Australia, and that would affect household debt?

BOWEN: No, what I’m arguing is that the high level of household debt in Australia makes it even more important that we have timely reviews about financial regulation architecture both prudential and in relation to behaviour, in relation to ASIC. Because while I’m always very careful and measured in the way I describe risks, there are risks with such high household debt we have in Australia. The Government appears willing to acknowledge the problem, I do acknowledge the problem that household debt in Australia does mean that we need to have particularly sharp focus on ensuring that our regulation is international best practice.

BENSON: On inequality which Bill Shorten has pointed to as the central theme between now and the next election, Labor talks a good game, but is it fair to say you don’t deliver? I mean the Hawke-Keating Government was held as the Labor ‘Gold Standard’ and the wealth gap on analysis I’ve read, accelerated under their watch.

BOWEN: Well we can argue about the history Marius, more than happy to, the Hawke-Keating Government improved very important social standards as they were opening up the economy. They were introducing Medicare, improving the aged pension, increasing school retention rates, introducing superannuation, all very important parts of the Hawke-Keating reform agenda. But to today, I think the fact that the Government denies there’s a problem with inequality doesn’t mean there isn’t one. What Bill Shorten, Labor and I have done is point out that reducing inequality and promoting economic growth are not mutually exclusive.

On the contrary they go hand in hand together. And you can’t just talk about inequality Marius, you need to deal with it, and the policies we are putting forward, including policies Bill and I will announce in coming days, are designed not only to improve the Budget very importantly, but also to ensure that our tax system in appropriately progressive and that there aren’t loopholes and concessions in the tax system which primarily benefit high income earners which are disadvantaging low and middle incoming earners at the same time.

BENSON: Chris Bowen, many thanks.

BOWEN: Marius this is your last week on air before you retire after 42 years as a

journalist, and I just want to say you’re an utter professional. It’s been a pleasure to be interviewed by you over the years and all the very best for your retirement, I’m sure all your listeners would join me in wishing you a very well earned break.

BENSON: Gee I don’t know if I want an endorsement from a politician, but many thanks anyway Chris.

BOWEN: Well you’ve got one now Marius whether you like it or not, all the best for the future.

BENSON: Thanks very much.

BOWEN: Cheers Marius.