Competition is about the “power of the customer” in a market, the federal treasurer has said, adding that that’s what he wants to “boost” in the banking sector.
Treasurer Scott Morrison was speaking at a Bloomberg event in Sydney on 30 June when he made the comments.
Arguing that the banking and financial system was not a “free market nirvana” sector, he noted that “over time” large businesses (such as banks) which depend on a regulatory environment can “get very good at seeing those regulations worked to their advantage”.
Mr Morrison warned that, as such, “the balance between those businesses and customers can get out of whack”.
“The actions I’ve been taking … whether it’s in the energy sector or whether it’s [the bank levy] in the banking sector are really about trying to restore greater competitive pressures in these markets by increasing the power of the customer.
“Fundamentally, competition is about the power of the customer in a market and that is the thing we’re seeking to boost.”
Further, he cautioned that “complexity and inertia” in highly regulated sectors could often be consumers’ “worst nightmare” and added that the finance and energy sectors are “based on regulation”.
“The strong customer is the guarantee of a strong market and so I see that as a completely pro-market point of view.
“Let’s not kid ourselves; these sectors are based on regulation. They are highly regulated sectors for very good reasons and, over time, you need to recalibrate that regulation to ensure the customer is at the centre of the universe.”
‘We’ve taken action’ on CBA
Responding to a question about his expectations on the Australian Prudential Regulation Authority’s (APRA) inquiry into CBA, Mr Morrison called the anti-money laundering compliance breakdown a “very serious set of issues”.
“It’s important that the regulator just goes and does its job, which is what it’s doing.... [With] the executive accountability regime, the increased resources for ASIC, the increased powers, right across the board ... we’ve taken action.
“We don’t need another three-year lawyers picnic; what we need is just taking action now, which is what the government is doing through all the appropriate channels, and APRA has been one of those.”
He called for APRA to be allowed to “do that job” and for the banking sector to also “get on with their job”.
According to the treasurer, banks have “confidence to build and it is a tough gig but that is their business to manage”.
“I think it is important to underscore … that we have a strong and resilient banking system. It is one of the key strengths of our national economy and it has been for decades and that is now under threat ... by the events that we have seen.”