Transcript - Sky News AM Agenda




SUBJECT/S: Banking Royal Commission, Budget  

KIERAN GILBERT: This is AM Agenda. With me now is the former Labor Treasurer Wayne Swan. Mr Swan, thanks very much for your time.

Chris Bowen says it’s a stunt from Malcom Turnbull but isn’t he just saying that Bill Shorten needs to be good to his word? You said you would back the cuts during the election now you should vote for them.

WAYNE SWAN: Well, I’ve only seen the article in The Australian this morning and it seems to me an extraordinary way to sit down and negotiate something with the opposition to deliver an ultimatum on the front page of a national newspaper without any discussion and then at the end of the article to say well we’re not going to put all of the savings up. The superannuation package is not going to be part of that, so already he’s playing the political game and I think demonstrating that he is not serious about long-term reform based on consensus.

GILBERT: Do you think though that people want to see that sort of consensus – that voters are over the partisanship?

SWAN: Well, I think that what voters want to see is reform which is in the overall interest of the nation. I mean what we are getting out of the Liberal Party is this continuation of the Abbott agenda, the trickle-down agenda, the agenda which simply says we’ll have tax cuts for wealthy and large and powerful corporates.  We’ll have lower wages for everybody else, and we’ll attack the social safety net.

That’s not reform, that’s simply wealth concentration. That’s not wealth creation. So until we see some sort of balance in the national agenda, and a real debate about what’s required to fire investment, to bring the jobs and to lift the wages of average working people, we are not going to get any agreement at all because all we’ve seen here from Malcolm Turnbull is a continuation of the Abbott/BCA agenda.

GILBERT: Do you accept though, that Budget does need to be repaired? Governor Stevens says we are kidding ourselves if we think the tough decisions don’t need to be made.

SWAN: Well, we took some tough decisions to the recent election – they are available for the Government but for ideological reasons they are refusing to consider those vital measures, particularly the negative gearing measures, because you see the Government hasn’t changed a bit. It’s the same Government of Tony Abbott when it comes to their economic agenda, which is there for the top end of town and hostile to the interests of working people and also, I think, very hostile I think to the long-term growth prospects of the country.

Governor Stevens also made the very sensible point that we should be using this period of low interest rates to substantially invest in infrastructure which brings a return to the country to expand our economic capacity. Malcolm Turnbull didn’t do that through the campaign, his alternative was to give big corporates a $50 billion tax cut, which pushes up tax rates for everybody else and it most certainly won’t drive the investment and jobs that they claim.

GILBERT: But he does make the point that this is the most fragile time for the global economy since the GFC, made more pertinent I guess from yesterday’s BHP Billiton result of $8.3 billion loss for the full year result. Doesn’t his prescription of company tax cuts actually resonate given the circumstances internationally?

SWAN: No, it doesn’t. It certainly doesn’t. This is the Trumpification of Australian business and the Tea Partyisation of the Liberal Party of Australia. The advice from the IMF is not to race out and give a massive corporate tax cut – that won’t drive investment that will just increase the profits of already very profitable companies that aren’t making the needed investments. The advice of the IMF, the advice of Governor Stephens, is to invest in infrastructure – economic capacity enhancing infrastructure.

But of course, the Liberals aren’t doing that. If Malcom Turnbull was serious he’d drop his corporate tax cut, come to the party and talk to the Labor Party about a nation building infrastructure investment program, which will produce income and jobs for the future of the country for decades to come, but he’s not serious because he’s caught by this Tea Party ideology.

GILBERT: Mr Turnbull’s warning today as well that protectionism is gaining a foothold internationally and we’ve also seen in the recent election here various protectionist candidates having some success. He points out this is because voters feel disenfranchised. If they do, isn't it both sides of politics to blame on that front?

SWAN: Well, I don’t believe so. I mean, I believe that the approach of the Liberal Party in recent years is one where they offer a so called reform program which simply leaves the great bulk of the people out of the growth agenda. They’re refusing to invest in an agenda which will produce the jobs and the living standards.

See wages at the moment are in real terms going backwards. So you have the spectre of the head of the Commonwealth Bank getting a $12 billion [correction: $12 million] pay packet when the return on equity of that company is amongst the highest in the world whilst at the same time taking a decision to crimp on an interest rate cut and weaken the Australian economy and basically take money away from his customers and hand it to himself and the shareholders. They’re the sort of double standards that people are fed up with and that's why people feel disenfranchised when they see that sort of corporate behaviour endorsed by the Government of the day.

GILBERT:  The $12 million pay packet was a bit rich no doubt about that ...

SWAN: Just a little!

GILBERT: … particularly in the context of the recent decision not to pass on the rate cut but is a royal commission going to tell us anything we don't know? From what you know of the banks is there really anything that a royal commission would provide that a parliamentary inquiry won't?

SWAN: Absolutely! Kieren, right around the world there is a very sophisticated debate about ethics in the finance industry and standards, particularly standards of corporate behaviour. We're not having that here and the Government doesn't want to have it and a royal commission is a way to get to the bottom of this because it’s just not the legal framework. It's also the ethical behaviour of our business leadership and the people who sit on the company boards who in the case of the banks have presided over some very shocking examples of unethical behaviour, illegal behaviour, which has ripped off large numbers of customers. So I think a banking royal commission is the best thing we can do for the future of the finance industry in this country which is a very important industry, a very big employer of people in our country and an essential part of our future.

But every decade or so you actually have to go down and do a deep dive just to see what is really wrong. So this sideshow that some of the backbenchers in the Liberal Party are calling for – a tribunal – is just a sort of a band-aid, it’s got nothing to do with what we need to do in finance. If we have to save the finance sector from itself, a royal commission is a very good way to do it.

GILBERT: I've just received a news release from the Treasurer, Mr Morrison, who says well this is in response to Moody's affirming Australia's AAA credit rating – welcoming the decision. He says the "factors cited by Moody's to support their rating affirmation were Moody's expectation that Australia's demonstrated economic resilience will endure that the stronger fiscal metrics that Australia has compared to similarly rated peers they expect that to continue to remain consistent with a AAA rating over the medium term". Do you welcome that news from Moody's today?

SWAN: Well, certainly I hope so. I was the first Treasurer in our country’s history to have AAA ratings from the three major rating agencies but Mr Morrison and Mr Hockey have done a very good job at putting that at risk and I would suggest the most fundamental thing that they could do in the short term to if you like solidify that rating would be to cancel the proposed $50 billion worth of unfunded corporate tax cuts.

GILBERT: And well also to reign in the spending more broadly surely?

SWAN: Sure.

GILBERT: And so Labor should ...

SWAN: There are hard decisions that have to be made but people are not going to cop the very selective savings that this Government continues to put up which are not broadly or fairly shared and are not necessarily the best economic options for the time that we are in.

You see at the moment, as I said before, wage growth is really slow, some people are going backwards. We've got to be really careful here about how we make our savings, and this is why the decision of the banks to profiteer on the rate cut is so regrettable because effectively they neutered part of the stimulus that the Reserve Bank was trying to put into the system. Now we know that monetary policy is basically reached its end point.

What we now need to see is the deployment of balanced fiscal policy to drive long term investment, to drive jobs and I'm not sure from what I've seen so far of the savings that they've put out whether that all of those also fit with that objective of job creation on the one hand and good fiscal consolidation on the other.

GILBERT: Former Labor Treasurer Wayne Swan, thanks very much for your time this morning, we'll speak to you soon.