Speaking at the FSC Leaders Summit in Sydney yesterday, the former federal treasurer and current chairman of the Future Fund said the big four banks may have underestimated the importance of fostering strong ties with government.
“Sometimes I wonder whether those running the banks know how important government is for their business,” Mr Costello said. “[The bank levy] shows how badly the banks are connected in Canberra. CEOs ought to do a post-mortem.”
At the same time, Mr Costello expressed sympathy for the regulatory burden faced by the financial services industry, describing banks as “a bit like regulated assets”.
The former deputy leader of the Liberal Party criticised the federal government’s tax proposal, arguing that the banking sector already pays a disproportionately large tax contribution to the “government’s coffers” and that the action will spur “copycat” policy responses like that of the South Australian Labor government.
“Follow-up raids will be distortionary,” the former treasurer warned.
Asked by FSC chief executive Sally Loane how banks can respond to waning consumer confidence, Mr Costello said the distrust was not endemic to banks but symptomatic of a wider cultural malaise.
“The Western world is currently in the grip of populism – that is one of the explanations,” he said. “All institutions are under pressure – the church, government and all big business. And in Australia, big business is the banks.”
He rejected the federal opposition’s ongoing calls for a royal commission, saying inquiries of this kind are only necessary where there is suspicion of “schematic illegality”.
Mr Costello also indicated support for the FSC position on default superannuation funds, arguing that a “system that actually engaged consumers”, especially Millennials, by requiring them to choose a fund would be superior to the status quo.
