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Treasurer warns of ‘suffocating’ the economy with ‘unnecessary’ regulation

Treasurer warns of ‘suffocating’ the economy with ‘unnecessary’ regulation

Treasurer Scott Morrison has said that the government response to the royal commission will need to be careful not to “create a self-fulfilling problem” by creating “unnecessary regulation” that “suffocates the economy”.

Noting recent comments made by real estate developer Harry Triguboff regarding the implications that tighter credit conditions (brought in off the back of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry) could have on a cooling property market, Mr Morrison conceded that the government does “have to watch that very carefully”.

When asked by Sky News on Wednesday (6 June) whether credit policy tightening was coming “at the wrong time for some of the housing markets like Sydney and Melbourne”, Mr Morrison highlighted that the 2018–19 budget had identified a similar risk.

The budget’s economic outlook suggested that there was a “risk that household spending may be affected by any unanticipated financial conditions, possibly as a consequence of the royal commission”.

Mr Morrison told Sky News: “We do have to watch that very carefully.

“The commission will take its course, but the response to it is what is really going to be the issue.

“We have got to be careful that we don’t create a self-fulfilling problem here.”

Emphasising that credit is “important” to the economy, the Treasurer said that Australian banks are “the strongest in the world” and are a “big financial asset”.

“We don’t want to go and undermine that by creating unnecessary regulation which basically constricts and suffocates the economy,” the Treasurer said.

While the Treasurer said that he did not want to “pre-judge” the outcomes of the royal commission, he suggested that government agencies had already begun taking action where it was needed.

Mr Morrison told Sky News: “[I]f we had just waited for the commission to finish its work before we started any of this, well, that wouldn’t have been a government focused on the real issues. 

“We were focused on the real issues, always have been [and] will continue to be. And I think that’s why Australians can have confidence in the way that we have been holding the financial and banking system to account.”

Ongoing action against banks endorse federal agencies

In conversation with Sky News, the Treasurer elaborated that while the scandals that have been affecting the major banks recently included “very serious charges”, he believes the government agencies were on the front foot.

For example, Mr Morrison said that the recent allegations of cartel conduct at ANZ, Citigroup and Deutsche Bank were issues that the government “take[s] very seriously”.

“I’m not going to make any reflections upon that other than to say that the government’s regulatory agencies are out there doing their job and they’ll take matters forward as they have,” Mr Morrison said.

“Whether it was the BBSW issue that was taken with the banks, whether it’s these criminal matters, whether it’s the matters with CBA with AUSTRAC — under this government, we’ve had very focused, very determined regulators doing their job.”

Touching on the recent news that the Commonwealth Bank of Australia (CBA) had agreed to pay a $700 million penalty for money laundering offences, set to be the largest civil penalty in Australia’s corporate history, Mr Morrison said: “We’ve always said that, from day one, we’ve been focused on taking the action you need to take.

“Whether it’s the steps that we’ve taken with AUSTRAC and what followed with APRA and the Laker review [into CBA’s governance, culture and accountability]... it all goes back to accountability.

“So, whether it’s the Banking Executive Accountability Regime, the increase in the penalties we’ve announced that came off the enforcement task force, the resources we’ve put into ASIC, the actions you’ve seen from AUSTRAC, as well as the ACCC as the competition watchdog and working in this competition space, this is the environment and the support we give to our agencies now.

“The cases… [will] be considered before the courts, but I don’t think anyone can say that, under this government, there has been any sort of light touch from our regulators.”

Government “will not tolerate wrongdoing in the financial services sector”

Likewise, Prime Minister Malcolm Turnbull said this week that the record-breaking CBA penalty demonstrates the strength of federal agencies, adding that the government will “not tolerate wrongdoing in the financial services sector”.

Speaking at a media event at Strathmore Farm, the Prime Minister and member for Wentworth praised the federal agencies for their work in the matter.

Mr Turnbull said that the “huge, huge fine”, which is yet to be approved by the courts, would be “the largest fine of this kind ever in our history”. 

He continued: “Let me [add] a couple of points: Firstly, it demonstrates that our federal agencies are on the job. This was detected by AUSTRAC. They identified it, they pursued it. They took the Commonwealth Bank to court and they’ve reached this agreement on this enormous penalty.

“Secondly, I just want to say once again that we will not tolerate wrongdoing in the financial services sector. Where it has occurred, we will ensure those who are responsible are held to account and we’ll do everything we can, including… [in] the Banking Executive Accountability Regime, to ensure it does not happen again.”

[Related: Morrison says $700m CBA fine will pay RC ‘bills’]

Treasurer warns of ‘suffocating’ the economy with ‘unnecessary’ regulation
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