SUBJECTS: Banking Royal Commission; My Health Record; Dividend imputation.

RICHARD GLOVER, PRESENTER: Monday Political Forum. Tanya Plibersek is Deputy Labor leader and Member for Sydney. Dr John Hewson is former Liberal leader now Professor with the Crawford School of Economics at the ANU and Zali Steggall, independent candidate for the seat of Warringah, yes, that's Tony Abbott's seat and a former Olympic star skier, of course and they join us in the studio. Good afternoon. 
GLOVER: Now the final report of the Hayne Royal Commission into banking has been released. Obviously, the banks have been involved in an enormous amount of unconscionable conduct. But is there a danger that if we regulate too hard, clamp down too much on risk that it might torpedo the economy in a way that's been feared by people such as Woolworth's boss Roger Corbett. In other words have as the Royal Commissioner and the Government in its response kind of got the balance right? John Hewson?
JOHN HEWSON: Well, yes, the answer is yes. Through this process the banks have actually started to pull back seriously, pull back on credit, which has not been a good thing for the economy. And I heard of one of the friends of our family today with a million dollar overdraft being called, given a hundred days to find a new bank, you know and not really in default, this sort of thing. I think it's the banks have pulled back quite decisively and of course you had a big transition from those who had fixed interest mortgages to principal and interest mortgages, that transition is happening. So I think the effects on the economy will be negative.
GLOVER: OK, but I mean, is there a danger in that change in mortgages, for instance, that the housing market is already under a little bit of a pullback at the moment, that it might snowball that pullback in a way that ends up a problem?
HEWSON: It might yes, it's hard to tell but I think there's quite a substantial correction going on in the housing market and most of the predictions are that it'll be probably of historic significance in terms of the size of it. It's already back to near what it was, I think, in the early 90s and those terms yes, I think you've got to be concerned because, look, household debt is one of the highest in the world, 120 per cent of GDP, nearly 200 per cent of household disposable income savings have been run down as we saw in the last national accounts, people are struggling to meet the costs of living, the key costs of living that impact on people like housing like, you know, childcare, like education, health costs and so on, they've been running away and in those circumstances, you know, I think you've seen it happen, consumer spending is pulled back, discretionary spending particularly is pulled back and those circumstances if the banks are also tightening credit, so there's not new money coming into the housing market you would have quite a significant correction. 
GLOVER: OK, and in there now, I mean no one no one enjoys more than me than bashing the banks, but is there a danger that if we caused them to dial down risk too much we could be, you know cutting off our nose to spite our face?
HEWSON: There's an element of that but I think on the other side, I doubt that the banks are really going to learn very much from this. I mean this is a question of bank culture and the culture is set at board level and it's the board that appoints the CEO. It's the board that signs off on the strategy which is to maximise return to shareholders at the expense of clients basically and it's the board that sets in place of remuneration structures that make that happen. So we've seen the extremes to which some people have gone in the banking community to meet those sort of objectives. Now that culture has got to change at board level and you can regulate as much as you like as far as I think, but the bottom line is if that culture doesn't change we're not going to in the medium to longer term sense get much out of this.
GLOVER: All right. Tanya Plibersek, I know it was Labor with the help of a couple of Nats who dragged the Government kicking and screaming to this Royal Commission, but do you give them this, that in their response they have, you know, agreed to all of the recommendations and they seem to now be pretty keen on it. 
PLIBERSEK: Well Richard, I don't know if you know something I don't but, in fact, I don't think the
Government has agreed to all of the recommendations. There's certainly some around mortgage brokers that they don't seem to have agreed to. I think it's important to say this is the Royal Commission that never would have happened if the Liberals had their way. Scott Morrison voted against this 26 times and it's been a very important process because we've seen all of the examples of, at best, unethical, at worst, criminal behaviour and they deserve to be exposed. Your question to John about does this mean that the economy will slow down because banks won't be lending, I think is a very important one. I just don't think we can accept that the price of having enough money in the economy for people to borrow to buy a home or borrow to start a business, that the price of that is allowing banks to continue with unethical behaviour. We have to find a balance where we properly apply the laws that already exist in this area, and that we make sure that our legal frameworks are robust, but that, of course, people can continue to borrow for the important things that banks lend money for.
GLOVER: I mean the good thing is and we seem to have had this indication pretty strongly from Josh Frydenberg is terrible situations like the young man with Down Syndrome where he's cold called and sold a problem and we all heard the tape and listening to the tape was -
PLIBERSEK: Heartbreaking.
GLOVER: - just heartbreaking because you could tell he was trying to get off the phone and didn't want any part of it, didn't understand it and there's this guy just like a terrier trying to get him to sign up.
PLIBERSEK: Remote Aboriginal communities being targeted, fees for no service to dead people, people losing their life savings, losing their businesses, losing their homes. I mean, these are impacts that are life-shattering that have been uncovered by this Royal Commission.
GLOVER: But that cold calling is going to be ruled out by the sound of things. 
PLIBERSEK: Well, we're very happy to support in principle the recommendations that have been made by the Royal Commission. We've only just received it so I can't give you a detailed answer to all-
GLOVER: But you'd put in all 76?
PLIBERSEK: But, yes, in principle we will accept the recommendations. There are questions around implementation, like John's shaking his head now because I think you think it's a little, you think it's a little bit of an ask to be confident that we can rule out this sort of behaviour John?
HEWSON: I am and I worry that it's one thing to say I'm going to act on the recommendations. It's quite another to actually put it into effect through the Parliament or either by legislation or regulation. And so we're going to have a long period of uncertainty, I think, as we see the government progressively, whoever is in government, developing a response.
GLOVER: Well, you also disagree sometimes there's some things you can't quite put into legislation. If you're talking about changing a culture of greed.
HEWSON: The culture is not going to be covered by this. 
HEWSON: I think some people will be surprised at the issue, I haven't read the report either, just summaries of it, but I'm surprised that this whole idea of, sort of, a global sort of a multi or mega financial institution that does banking and investment banking, stockbroking and insurance and funds management and so on, is all you know, they're all different businesses, they are all different cultures, all different risks and I'm surprised that that financial conglomerate mentality is allowed to sort of persist, that there have been issues raised and -
GLOVER: Yeah and that has been proved one of the problems in this vertical integration-
HEWSON: Cross selling.
GLOVER: - I go to the wealth arm to get good neutral advice and oh, surprise surprise, I'm required, it's suggested, that I invest my money with a thing run by the same bank who owns the wealth insurance company.
HEWSON: And you need insurance. 
HEWSON: Your house needs to be insured and your car needs to be and so on so forth and that cross-selling has been part of the problem. You incentivise people to maximise profit. Don't be surprised where they go in the system. And particularly when the regulations are weak and poorly enforced. 
GLOVER: This is Zali Steggall. Are you feeling both from the Royal Commission and the Government's response to the Royal Commission that we're getting the balance right here?
ZALI STEGGALL:  Well, look it's hard to say, I mean the 76 recommendations have literally only been made public since four o'clock, so it's a little limited, we've been limited in time in being able to really digest them. It's pleasing to hear that there's an intention to implement them. I'm concerned to hear that there's delays in relation to certain ones of those recommendations because again, there has to be that protection of the customer and the client. I think the conduct that was identified during the Royal Commission was just shocking to everybody and it highlighted, I think, the desire from the Australian public for better transparency, better disclosure of what is happening. The fact that it took so long for the Royal Commission to occur is of great concern, I think to a huge amount of, the number of the Australian public. 
GLOVER: You'd give that point to Labor would you that they were the ones who really dragged the Government over the line on this? 
STEGGALL: Well, it certainly took some time and it's concerning to hear that it took 26 'no' votes before it finally came to happen. I think it highlights for a lot of the Australian public that lack of transparency and disclosure behind, I guess, big business interest. There's no doubt that there is a legislative and a regulatory framework already in place. I think the question is was it insufficient or was it simply not applied strongly enough? And again it's with an analysis of those recommendations that we can get the feel for how much more regulation is need(ed) as opposed to a more stringent enforcement of them.
GLOVER: Tanya it is true that ASIC and APRA have had a bit of criticism and justifiable criticism?
PLIBERSEK: Yes and they've had some big budget cuts in recent years too, so you you need to have the proper legal frameworks. You need to properly enforce them. I think there's been quite a lot of staff movement between regulators and the banking sector and I think that that hasn't always been a very healthy cross fertilisation and but we're committed, of course, not just to having the proper legal frameworks but having enough money to go after the people who are doing the wrong thing and you need to probably resource the regulators and also when you're talking about criminal prosecutions, also the prosecutors.
GLOVER: Hmmm. But just before we move on from this it sounds, John Hewson, as if you're saying your one disappointment in the report is he hasn't explicitly ruled out vertical integration of these financial sector companies.
HEWSON: Well, I thought he might have done a bit more in terms of saying something about what a bank license really means and what banks should be expected to do. I mean banks in this country are in a very privileged position and they are given a license to operate and they've abused that -
GLOVER: And a guarantee, and a guarantee?
HEWSON: - that physical license and social licence they've abused and the price we've paid as a community is very significant and that's all come out in part at least in the Royal Commission. So I'm surprised that there wasn't some thinking about the structure of banking in the regulatory structures around banking. They may be in parts of the report as I say, I haven't seen but I suspect, I suspect not.
GLOVER: But if a few of them have already got rid of their wealth arm.
HEWSON: Well they are, and I think one of the key points that Tanya just made is that, you know, that there are recommendations there for referrals of bad behaviour for civil law criminal prosecutions.
GLOVER: No names in the report but the suggestion of behaviour.
HEWSON: No but it's pretty clear if you've paid attention to it who they've got in mind. Some people will feel particularly named even though they weren't named but having said that, I mean, this is good too. I mean you've gotten, it's not just a question of having the rules. It's a question of enforcing the rules and imposing penalties. I mean, I was surprised when the Commonwealth Bank breached the Austrac rules 53,700 times. They agreed, they agreed-
GLOVER: This is the money laundering rules yes?
HEWSON: -on a penalty of $700 million where the actual penalty per transaction would have run into billions. 
GLOVER: Yeah yeah.
HEWSON: So now look, I think people look at that sort of thing and say 'Oh yeah, OK.'
GLOVER: All right. OK. 
HEWSON: Yeah looking after it.
GLOVER: 14 to six, sorry.
PLIBERSEK: Well, I just want, you don't want bad behaviour be just the price of doing business. And and if the penalties aren't properly enforced, people factor that in as the cost of doing business.
GLOVER: Yeah. 14 to six is the time, the Monday Political Forum. Tanya Plibersek is here, Deputy Labor leader, so is Dr John Hewson, the former Liberal leader, now at the ANU, and Zali Steggall who's the independent candidate for the seat of Warringah. Now last Friday was the deadline to opt out of the My Health Website in which all our medical records are collected and made available to health professionals. Over 1 million Australians have opted out but the rest of us are now in the system. Should we be worried or is the idea of an accessible health record a good idea. Tanya Plibersek? I ask this partly because I have so many people that have expressed worry to me today, they're 'Oh I missed out, I meant to do it and I'm now I'm now in'. Are we right to be so anxious about this thing? 
PLIBERSEK: Ah no. Look I think this is a fantastic project that has some really serious implementation flaws at the moment. The principle of having one place that all of your medical records are stored - your blood tests, your x-rays, the discharge notice you got when you left hospital after that surgery you had three years ago, your GP being able to talk very easily to your specialists. Make sure that they're not both prescribing medicines that interact poorly or that one doesn't cut your dose while the other ones increasing your dose. That is a great resource for our health system. It will absolutely save lives. It will absolutely save money. So many tests are done for the second or third time because people have lost the results the first time including hospitals losing results. So it's a great idea, but we need to give people confidence that their data will be kept confidential and under their control and I think the Government has really failed to do that.
GLOVER: But people seem to, I mean, I'll ask people why you so nervous about? What is the big problem about, I don't know, your physiotherapist knowing that you've also got a, you know, a problem with skin cancer. That's a good thing if she knows that.
PLIBERSEK: Well you can set those, you can set limits on who knows what in your medical record so you can go in there and you can say I only want these specialists to know about these issues. You can keep matters private. You can take records off if you wish to and everybody that accesses your health record will have that interaction with your health record tracked. So if you were my physiotherapist and you looked up my health record without my knowledge or permission-
GLOVER: You'd at least know.
PLIBERSEK: I would know that. I could ask you why you done that and if you'd done it in an unauthorised way, there are serious penalties for doing that. But when governments don't reassure people about the privacy provisions around this, when they don't give them enough confidence that their privacy will be protected, and remember, this is the government that stuffed up the census. They stuffed up NAPLAN online. They stuffed up the pension robo debt, so they've got a record of very poor implementation of these sort of projects. It makes people nervous.
GLOVER: But sure, health insurance companies will somehow get, well if health insurance companies get hold of this, it's all over for all of us, isn't it? I mean, the whole system would collapse if really you did have health insurers knowing that I had a pre-existing condition that I hadn't disclosed. 
PLIBERSEK: Well, if you've got a pre-existing condition you're in trouble anyway, you won't get your proper health insurance. But the the point is that the Government needs to reassure people that they have lifted the standards of privacy around this because now that it's an opt-out system you want to have higher privacy safeguards. They need more time to allow people to digest the information, but me, I've got one I've had one for a long time. My kids have got them. I think it's really handy to be able to look up the last time one of the kids had a tetanus shot when they scratched themselves in the playground. 
GLOVER: Well, there's, Tanya Plibersek has voted with her own feet. What about you Zali?
STEGGALL: Look I must say as a mum of a number of kids and it is a hard juggle always to keep track-
GLOVER: What do you mean the mum of a number of kids? Can't you remember the number?
STEGGALL: I know a few of them are adults now so they can be responsible for their own health records. But look, there's no doubt that having that in one central place I think has great advantages from a health care point of view and a health services and making sure treatment is streamlined and all information is available to the treating practitioners. I am concerned from, from the safety and the confidentiality of the information. This is highly, highly confidential information that really, the systems in place for, the protection of that kind of data really need to be-
GLOVER: But what have you decided for yourself? 
STEGGALL: I have left mine in place. I didn't opt out. So mine is there as well. Look it's an interesting factor, for example, from a family law point of view health records and things like that certainly come into play from an evidentiary aspect. So it will be interesting how that then sits with evidentiary rules and-
GLOVER: Give me an example of how that might work?
STEGGALL: Oh well when it comes to people's effects on parental capacity and whether there's been any substance abuses and treatments or in other areas of laws when it comes to health records and illnesses, that sort of evidence will become an issue.
GLOVER: This parent isn't looking after this child well because you, according to the record, she's developed diseases three times over. 
STEGGALL: Well it also, you know, shopping around for doctors and shopping around for, ah, there's all sorts of areas where it's open to abuse. Hopefully a streamlined system means that it actually, different practitioners can become aware of other treatments a patient is receiving and so that would avoid that duplication. But there's just, I think, from this Australia public's point of view always a concern over the privacy aspect and how well that's protected there, you know, and not all Australians are internet savvy and so this does represent something that can be quite concerning.
GLOVER: John, are we are we being anxious about nothing in what should be a really good system to help our health? 
HEWSON: Oh, look, it's one of those things where the principle is fine. It's the implementation that causes people problems and I think it does, is still a fair way to go and convincing people as to the security of that data and in a world where we hear of cyber security threats daily and where the potential for that behaviour is enormous globally, I think people are genuinely worried. Over time though I think they'll start to understand the benefits of the system and it'll be on those who run the system to demonstrate over time, governments of either persuasion, to convince people that this is basically a sensible thing to have done. It's to your benefit, it's to the overall benefit of the health of the Australian community and you know.
GLOVER: What decision have you made yourself?
HEWSON: Oh we're still in too.
GLOVER: Still in.
HEWSON: But I take Tanya's point about looking up vaccinations. We had a debate last night as to whether our daughter was due for another one. We have no idea.
PLIBERSEK: And the thing is, Zali has talked about records being subpoenaed. Written records can be subpoenaed and John's talked about the security of records. We found medical records in dumps that have been dumped from doctors surgeries. So yes, of course we have be careful, but the idea that this is somehow a step more dangerous, I just don't agree with this. I think we need to reassure people about the privacy. We need to work harder, for example, for victims of domestic violence to make sure that if they are fleeing an abusive relationship the ex can't log into the kid’s record and find the new address. 
GLOVER: Yep yep.
PLIBERSEK: There are problems like that that have to be addressed but overall it's going to be great. 
GLOVER: It is six minutes to six. The Monday Political Forum. Tanya Plibersek, John Hewson and Zali Steggall. Now, Chris Bowen has doubled down on Labor's policy to no longer return excess franking credits to shareholders, inviting those who oppose a policy to vote against his party. He said to Fran Kelly the other day. Some self-funded retirees say their modest income of say $50 or $60,000 a year would be $5000 lower under the plan. Has Labor been a little courageous on this issue in the "Yes, Minister" definition of that term. Zali Steggall?
STEGGALL: I don't think I'd say courageous. I would say divisive. I think they are unfairly picking on a sector of the Australian public. I think clearly the system was established to encourage investment into the Australian share market and a huge number of self-funded retirees, in particular with self-managed super funds, have followed the guidelines have followed the recommendation and set up their investment strategies in that way. What we're now seeing is really a moving of the goalposts and I think an unfair proposal that will have a huge impact on a significant proportion of the Australian self-funded retirees. 
GLOVER: It's a pretty big bill though, isn't it? Something like $5 billion dollars a year? This is now costing us. It's much more than the bill was when Mr. Howard and Mr. Costello first introduced this idea. 
STEGGALL: Well, but you also have to look at what's the amount of investment as a result of that bill. And so the reason why there is a big bill is because in fact, so many retirees have geared their self-managed super funds towards that style of investment. So I just think it's a very divisive approach and it's making one sector pay a very high price.
GLOVER: Tanya Plibersek, this is a classic painful political issue isn't it for Labor, that the only people understand this complex area, the only people who understand it are the people are going to suffer from it. 
PLIBERSEK: I think a lot of people are a bit perplexed about the fuss because 96 per cent of Australians don't use this. They don't benefit from it. They don't use it.
GLOVER: 4 per cent can swing an election though.
PLIBERSEK: And the other thing is, this was originally set up to cost a few hundred million dollars when it's originally set up. As you said, this is well over $5 billion dollars a year now. In fact the last year we've got full figures for, $5.9 billion dollars. That year, the Commonwealth Government spent $5.2 billion dollars on public schools. Total public school bill less than what we spend on this one tax concession for a very small minority of Australians and the vast majority of the benefit goes to people with very high balances in their self-managed super funds.
GLOVER: OK. Lots of it goes to people with $50,000 incomes. 
PLIBERSEK: But Richard like you're talking about people who've get $5,000 or $10,000 from this right? If you have $5,000 a year from this you've got about a quarter of a million dollars in shares in your portfolio. So you own your own home. You might have cash investments. You might own investment properties. That's your share portfolio alone is a quarter million dollars if you get $5,000 back from this, approximately. So the benefits are disproportionately going to the highest, higher-income end of the retirees. Pensioners are unaffected. Charities are unaffected. And we just can't afford it anymore.
GLOVER: What about the retrospectivity argument? Generally governments don't do something that's retrospective. There's an argument that people have made these decisions about where to put their money, Telstra shares, etc. because of the system that was, they were invited to enter into.
PLIBERSEK: All right, two things. We are the only country in the world that gives a cash tax rebate to people who aren't paying tax and secondly, we're giving people plenty of notice about this. The Liberals when they last went into government said "no cuts to pensions". They threw, they cut the pension for 300,000 Australians, threw 100,000 people off the pension, tried to increase the pension age to 70. We're giving people plenty of notice. We are, we cannot continue to be the only country in the world that gives a cash tax rebate to people have don't pay tax. 
GLOVER: Let me squeeze in John Hewson. What do you think of this?
HEWSON: Well, look, it's the old, it emphasises the problem of making an ad hoc change to one particular section of the Tax Act that was put in place in different circumstances and has now been abused. I mean, I think the initial estimate of cost was about half a billion and now it's five or six billion dollars a year and people have restructured their affairs as Zali said to actually take advantage of it. Originally it was to be introduced as a sweetener for the fact that the Government was going to tax trusts, so in Howard Government era they didn't tax trusts but they gave a sweetener. So there's a lot of inequality in that whole process. I am, I suspected it's easy to exaggerate it and run a scare campaign on its impact. You talk about their income, $50,000 income, but that's taxable income. Doesn't look at their assets and their a lot of other income that they've received that was non-taxable, perhaps a distribution from their super fund and so on. So in those circumstances, it's easy to run a scare campaign and I suspect, look, as part of broad-based reform you’d do it. Doing it in an isolated way is difficult. I suspect that in government, the Labor party will grandfather it and she's saying no no-
PLIBERSEK: I'm shaking my head. 
HEWSON: I suspect there's a chance they will grandfather it and but, you know, it's a very difficult issue to win. As you said before, Richard, the small percentage of people who actually understand any of this-
GLOVER: Are the only ones that qualify.
HEWSON: And Morrison's having a go at pensioners, it's pretty easy.
GLOVER: All right. Out of time, but thank you very much to Tanya Plibersek, Dr John Hewson and Zali Steggall. Thank you so much.
HEWSON: Thank you.