Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

I move:

That this bill be now read a second time.

We need a royal commission into the big banks, and the best way to make this happen is to vote for this bill, because we will either then get a royal commission, when the government realises that there is support both in the Senate and in this House for a royal commission into the big banks, or we will get the next best thing, which is a parliamentary commission of inquiry that will have the power to do what a royal commission can.

This bill is very similar in its terms to that moved by my colleague the member for Kennedy and seconded by the member for Denison. There is a broad-based support for this approach in this chamber. There is a broad-based support for this in the Senate. That is why this bill that the Greens have drafted was co-sponsored and moved by a broad cross-section of the Senate. Too many people have lost too much money. There have been homes that have been lost, there have been farms that have been lost, and there have been lives that have been wrecked. At its core, the problem is that within the banks there is a conflict in their business model. Part of their business model takes people's money and invests it, but the other part of their business model is about making as much money as they possibly can. Those two often come into conflict.

This parliament has tried its best to inquire into what is going on in the big banks and whether we can fix it. There have been Senate inquiries. The House economics committee has looked into this. Each time, what we find is that the CEOs of the banks front up to parliament and wring their hands and say, 'We're sorry that we've done the wrong thing.' But we find out that back at the ranch—when they leave parliament and go back to running their businesses—nothing, fundamentally, changes. We found out that no-one lost their job, even though people were fleeced and lost enormous amounts of money and lives were ruined. There were no substantive changes to the people who were running this, suggesting that the slap on the wrist that they were getting when they appeared in front of the parliament was not reflected when they turned up back at the banks.

We are also finding that this parliament itself, through its committees, does not have the power to find out what is going on behind closed doors—to ask for the documents and to get in and do the investigations that are required in a way that a royal commission or a parliamentary commission of inquiry would. The Senate has tried its best. The House of Representatives economics committee was always a sideshow to cover up for the growing clamour for the royal commission. That has tried its best. And what is clear is that these parliamentary committees are not enough. That is why the Greens have been pushing, for some time, for a properly constituted parliamentary commission. That is also why, I suspect, the member for Kennedy has moved, together with others, for the parliament to now say, 'If we are not going to have a royal commission, let's do the next best thing.'

We now have an opportunity, and I to say to members in this place—not only to my colleagues on the cross bench but to members on the government back bench—this is a bill that just passed through the Senate with many people from many different political persuasions throwing their weight behind it, because it is what the Australian people want. This is probably your best chance of making it happen, because if a loud and clear message is sent from this place that there is support not only in the Senate but in this chamber as well, then the government will have to act. If the government will not act, then the parliament will do the job for it. So for all those members who have spoken up before and have said to their constituents, 'We hear your legitimate concerns about what is happening to your farms, about what is happening to your businesses and about what is happening to your livelihoods,' now is the chance to do something about it. This is going to be one of the most significant votes that happens over this coming fortnight. This is a real opportunity to stand up and make sure a clear signal is sent.

The arguments as to why we need this bill have been well and truly canvassed in the Senate by my Greens colleagues, including Senator Peter Whish-Wilson, as well as by all of the other members of the crossbench and the opposition who spoke in favour of it there. I do not intend to repeat all of them here and now, other than to ask: why would the Prime Minister have tasked the House of Representatives Standing Committee on Economics with inquiring into the banks unless he knew there was a problem? Why would the Prime Minister have said, 'We're going to create a tribunal,' unless the government knew there was a problem? Why is it that, time and time again, when you go the Australian people and ask, 'Do you think the big banks, which are getting a big prop-up from the government and getting support because they are treated as too big to fail, are treating you fairly,' the answer is always no? When you ask, 'Do you think it is right that the big banks at their core are able to make money off you and to sell you financial products that might be in their interests but might not be in your interests,' everyone, to a person, says, 'Yes, there is a problem.'

We have sat and watched the banks make world-leading, record profits. Just before this we were debating a bill to impose a levy on the big four banks. Why would we be putting a levy on the big four banks? It is because everyone, from the IMF to the Greens and everyone in between, has said that in this country we have a situation where the big four banks enjoy a very, very cosy relationship with the government. We have an unstated four-pillars policy in this country. As a result, the big four banks are able to go offshore and borrow as much as they like, knowing that they will get it at cheaper rates than their smaller colleagues simply because the lenders know the government is going to stand behind them. And the government have acknowledged that, in part, because they have brought in a bill for a bank levy.

What we saw during the global financial crisis was not the government saying—and it was the previous government at that stage—'Now is the chance to inquire into the practices of the big four banks, now is potentially a chance to crack down on them, now is potentially a chance to ask them to give a fair return to the Australian people.' No, during the GFC the big four banks were backed to the hilt. They were encouraged and, in fact, allowed to swallow up some of their smaller colleagues, and they came out of the GFC with a greater market share than when they went into it, thanks to government help.

So, not only have the people of Australia been paying record amounts in fees and been slugged with high mortgages as housing prices continue to grow and you have to borrow more and more, and not only is household debt increasing, but governments of both persuasions over the last decade have helped the big four banks consolidate.

It is time now that this parliament stood up in the interests of not the big banks but the public. Now is the opportunity for this parliament to say, ' Let's have a look into the banks. Let's have a look at whether or not there is a problem with the wealth creation arms of the banks existing in the same portion as their deposit arms. Let's look at whether or not that drives an inherent conflict that means many people get fleeced and are going to continue to get fleeced until it is fixed. Let's have a look at whether or not the implicit support and the explicit support that I just referred to that has been given to the big four banks that have allowed them to make world-leading, record profits has given the public good bang for its buck.'

What the IMF has said about that is that it is a drain on the public purse, it is also allowing the big four banks to obtain a competitive advantage over their smaller rivals and it is encouraging risky behaviour. When the big four banks know that they have the public and the government to fall back on whenever times get tough, then they are being encouraged to engage in risky behaviour. That is why in other places, when you look around the world, some of the responses to the GFC, to report after report of people getting fleeced and to these wealth management arms that grow within these banks—to the point where they even, potentially, contributed to the global financial crisis itself—were pretty radical.

For example, they have said, 'Maybe we have to split the investment and wealth creation arms away from the deposit-taking arms.' You have no choice now in modern Australian society other than to have a bank account. It provides these banks with a steady stream of people's money. Other countries, when they have inquired into it, have said that perhaps there is a good case for splitting the wealth creation arms from the deposit-taking arms. It is a move towards saying that banks ought to be treated a bit like an essential service. Given that you have no choice other than to have your money deposited in a bank account, whether it is a salary, welfare or any other form of payment if you are an independent contractor, perhaps all of that should be segmented and separated from the wealth creation arms.

In places like the UK they have gone further down that road than we have here. The IMF has also said that there are other ways you could deal with the fact that the big four banks are running rampant and are systemically important but, in effect, are taking the public for mugs. One of them might be to ask them to pay a contribution towards the implicit subsidy they receive, acknowledging that they are too big to fail. Maybe at the end of a royal commission, the royal commission would say, 'Yes, we have a four pillars policy in this country; let's call a spade a spade; but let's make sure that those big four banks pay an appropriate return to the public purse.' Not the comparatively small bank levy that the government has proposed, which is worth supporting but is much smaller than what the IMF has recommended. If we did what the IMF has recommended, you would find there would be an extra $2 billion to $3 billion a year coming into government revenue. We would not need to say to universities that they have to be cut by $2.8 billion just to make the budget balance. We would not have to say to people that they have to pay more to go to the doctor just to try and balance the budget. It would be much, much fairer way of balancing the budget. That is something that might come out of a royal commission.

What might also come out of a royal commission is an examination of whether it is right that bank staff get rewarded, not so much by an hourly rate for their work, but are tied so much to incentive payments and these so-called balanced scorecards that ultimately boil down to how many products they have sold. Maybe a royal commission would say that that is not actually good for the customer. What happens time after time is that you go to a bank or you call them up on the phone, and how long is it before someone says to you, 'Have you thought about your insurance?' It is not 'Is there anything else I can help you with today?'—it is 'What about your superannuation? Can I talk to you about that? Can I talk to about switching over your income that might be sitting in some other deposit account earning money—can I get you over into something else?' What we hear from the admissions that have been made to the House Economics Committee and elsewhere is that this is systemic. It is not just the senior staff, who manage to get away without a slap on the wrist. Their CEO fronts up and apologises, then goes back the ranch and the executives in charge continue to be allowed to run the show. It is not just them. This impacts at a branch level. Every one of us knows it. Every time we have tried to have a teller or someone on the end of the phone upsell us, not only is it annoying, but we know that the staff themselves are suffering because they get hauled in front of these regular meetings and performance views where they suffer if they have not met their targets.

What we have heard from bank manager after bank manager, and from staff and their unions, is that although it might supposedly be a balanced scorecard, what counts at the end of the day is how much you have sold. It is that conflict of interest that goes right the way from the teller and the person who answers the phone right up to the CEO, that encourages them to make money at the expense of everyday Australians. It is that conflict at its core that needs to be probed by a royal commission. What we have done so far is examine them the best we can, but it is flogging them with a wet lettuce, because they know that they get to go back afterwards and continue making money in exactly the same way.

One of the most worrying things I have seen in recent times is that when you plot household income against household debt you see debt is going through the roof in this country. Households are being put under increasing pressure. With house prices going up you have to write bigger and bigger mortgages and people are getting under increasing pressure and are finding it harder to make ends meet.

You would think it is time for government to step in and ask how we right this wrong, but what we have is a system where the big four banks make money out of it. The big four banks make money out of households and individuals in this country going into record levels of debt. The CEOs' bonuses are based on how big a mortgage book they can write, so we are putting people under further and further pressure and creating this bubble that is about to burst. The system collapse at some point and we need a the royal commission to get to the bottom of it and work out how we can fix this so that we do not have an economy that is based purely on speculation and we do not have banks lending not to productive businesses but just to property, because that is the cheapest way of making a buck. It is saying that it does not matter if people lose their homes or their livelihoods. That is why we need a royal commission and, if not that, a parliamentary commission of inquiry. Now is the chance for people to vote for it.

See this speech in context