Wednesday, 31 August 2016
Banking and Financial Services
I welcome the Prime Minister’s recognition of problems within the sector—
but the member for Leichhardt went on:
but an apology from the Big Banks and a commitment not to do it again in the future is not enough.
I believe we need to go further—we need a full Royal Commission into the profit-driven and immoral activities of the Big Banks …
He said that ruling out a royal commission was a captain's call. We also had the member for Cowper say:
I think it is definitely something that should be considered.
Whilst I do not often quote this gentleman, I will on this occasion. The member for Dawson tweeted:
We need a royal commission into the banks. Their treatment of farmers is appalling.
And, of course, there is Senator Williams, who I respect greatly:
The more I go along in this job, the more I see the evidence and the clear evidence in the actual weighting of a royal commission, because there's so much wrongdoing going on we need to get to the bottom of it.
No less than eight members of this cowardly government have previously called for a royal commission, and I am confident that there are many more who now support this move.
What is the case for the royal commission? We just cannot leave it to ASIC, despite what the government said. We need a royal commission. Let me go through the scandal. Whilst one does not presume to be a predictor of the future, let me describe the last few scandals and let's have a guess if it will happen again. The journalists and whistleblowers expose the scandal and there is a public outcry that follows. Maybe even some of the brave hearts opposite are outraged, with their crocodile tears. But then it is characterised as an isolated incident—mid-tier rogue sort of gunmen going off on their own—and not the conduct of the whole bank. There are heartfelt promises that it will never happen again. Perhaps there might even be a special inquiry by ASIC, APRA or a government-appointed panel. And do you know what happens a few months later, Mr Speaker? We do it all again because the banks do not respect the government. They are not worried by the government's calls for action because they know that with this mob in power nothing will ever happen.
What we need is real action. Australians are sick and tired of the scandals being investigated after the harm and the damage is done. They are sick of the phoney apologies and they are sick of the speeding fines that this government issues to the banks. We need public scrutiny. The systemic problems of a royal commission require public scrutiny. Since 2009 at least 111 bankers, planners and advisers have been quietly sacked from their companies or reported to ASIC for misconduct. That is more than one a month. Australians do not know what led to these sackings or what any internal investigations uncovered afterwards.
As Chris Bowen and I have said, Labor has some clear initial objectives for this royal commission. We want to know the following: (1) how widespread instances of illegal and unethical behaviour are within Australia's financial services industry—how widespread; (2) how do Australia's financial services institutions treat their duty of care to their customers; (3) how do the culture, ethical standards and business structures of Australian financial services institutions affect the behaviour of these institutions; (4) whether Australia's regulators are really equipped to identify and prevent illegal and unethical behaviour; and (5) the comparable international experience with similar financial services industry misconduct and best practice responses to those incidents. And, of course, the commission would need to consider other events that may come to light in the course of investigating the above.
Simply put, the case for supporting this resolution, and a royal commission into the banks, is that illegal and unethical behaviour within the industry is about culture. Consumer protection and duty of care is about customers. Culture, ethical standards and business structures impact on behaviour. It is about incentives. It is about the powers of the regulator policing the sector.
These problems are too big for business as usual. And, in many ways, the government has accepted that there is a problem. Remember their ever-evolving and deteriorating position: when we called for it before, Mr Turnbull went down, spoke to Westpac, said there are problems but then did nothing. That is business as usual for this chap and this government. So we have the Westpac lecture and nothing happens. Then, before the election, they say, 'Well, we don't need a banking royal commission. The regulator's got all the power it needs.' Then, after the election, all of a sudden we discover that there is an even bigger problem, and maybe we do not have the regulator.
What solution do these desperate people on the other side, running a protection racket for banks, come up with? They say, 'Let's set up a Liberal-controlled House of Representatives committee, with less power—
Mr Coleman interjecting—
With all respect to the member for Banks, they are the government for banks, so there was very little concern there. The point about it—and now we have had a few of the breakaways in the coalition say, 'Actually, there's such a problem going on that we will skip the royal commission. We'll set up a whole new court to deal with the problems.' You get a sense here that the government will do anything and everything, say anything and everything, to avoid a royal commission into banks.
Now, I would like the government just to subside today and give in but they will not. This is one of those curious events in Australian politics: we have won the argument, and only the government is too dumb to realise that they are backing a loser by opposing the royal commission. What we have found in the search though—and this is the good news about the government—is that the great search in the last 12 months found one thing that this Prime Minister stands for. And it has not been easy; we know that he holds a position for at least a day and a half and either his backbench rebel or work out that it is an incompetent bungling, or we make the case and he retreats. But full points to the member for Wentworth: there is one thing that he stands for—and I admire you for at least standing for something, because that is not the normal practice! You are willing to fight, fight and fight for the banks.
Mr Pyne interjecting—
Sure, I can talk through the Chair: it does not change the truth of what I am saying!
What we have found is that there is one thing he will stand for: the banks. You have to love the form of this government. Only the government could think that it is a good idea to give a multi-billion dollar tax cut to the big banks—that was in the Governor-General's address. Fantastic! NAB, Westpac, CommBank, ANZ: they were rapt with the last election result. Come in, spinner: $7.4 billion tax cut. Malcolm Turnbull: best friend the banks will ever have in this place, I have no doubt.