Royal Commission an opportunity

By Ben McAlary

Former Treasurer Joe Hockey has urged the Financial Services Council and its members to view the Royal Commission into banking and financial services, not as a threat, but as an opportunity.

Addressing an audience of industry professionals at the final FSC BT Political Series event of the year, Mr Hockey said he had seen his “fair share of Royal Commissions” referring to his own experience of appearing before the Royal Commission into the collapse of HIH Insurance, alongside his former colleague and current Prime Minister Malcolm Turnbull.

“My advice is don’t see it as a threat but an opportunity… use it as a vehicle for self-analysis and make positive recommendations that at the end of the day will benefit the Australian people,” he said.

“Australia has the best financial system in the world. We have the most consumer friendly banking system in the world. But that doesn’t mean we don’t have problems and issues that can’t be addressed.

“Everything depends on the quality of the submissions. My gratuitous advice is: 'have a good look at yourselves, ask if there is anything you can do better and then put it in the submission’.”

Shared values

Now Australia’s Ambassador to the US, the Hon Joe Hockey didn’t take long to emphasise our long and strategic history with the world’s largest economy. 

“We are the only country to stand side by side with America in all major conflicts over the past 100 years. Our relationship is deep and enduring and it is based on the values of respect and honesty.”

The themes of respect and honesty were reiterated throughout the address which even included reference to 'that’ phone call.

“Donald Trump respects Malcolm Turnbull and (our) PM has some influence.”      

Mr Hockey also entertained the audience with a history lesson in how Australia’s relationship with America began in World War I where we trained together under General Monash: “We realised that we liked one another and had shared values.”

Today we continue to like one another, so much so that Australia spends, “$20 million a day on US military equipment.”  

The haves and have nots

Quoting US academic and author Joan Williams, who framed the current class divide in the US as one between the professional elite and the working class, the Ambassador revealed the extent of the education divide, “70% of Americans have less than $1,000 in household savings, while 30% of Americans have negative net worth.” 

“It is the elitism of media outlets and popular figures that is driving the working-class American nuts.” 

The solution, according to the Ambassador, has already begun and lies in further investment in innovation and capital, of which America is already leading the world.

“Eight of the top nine most innovative companies in the world are American, while 30% of the world’s R&D expenditure comes from America,” he continued. 

“Since Trump was elected to the oval office he has cut regulation, unemployment has dropped and wages are starting to grow. For the first time this century the majority of Americans agree that the country is heading in the right direction.” 

Disruption 

Continuing on Trump, Mr Hockey positioned him not as a leader but rather a governor.

“Fundamentally, the US President doesn’t lead, the country is just too big. Instead he governs.

“He (Trump) was elected to disrupt the system. Americans from 'the bush’ elected him because they were unhappy about how the country was being run. Trump is putting his people first.”  

Relationship with China

In a Q&A with FSC CEO Sally Loane, Mr Hockey was asked about Australia’s relationship with the US in the context of China and how strategically important our Asia-Pacific role is perceived on the other side of the Pacific.

“China closely monitors our relationship with America, just as America watches our relationship with China. China doesn’t want the US to exit the Indo-Pacific region at all, while America looks to Australia to ensure the prosperity of China.” 

“Our long-term business partner is the US, we trust them, they are loyal, we are friends, and mates. On the other hand, China is our client, we have a great relationship with them but they are not our business partner. At the end of the day our relationship with China is commercial.”