Clare O'Neil (Hotham, Australian Labor Party, Shadow Minister for Justice) Share this | Hansard source

I want to start by congratulating the member for Gellibrand on the comments he has just made. This member of parliament has taken time out of his incredibly busy schedule to actually sit through some of the hearings in the royal commission. I must say, I wish more of those on the other side of chamber were taking an interest in the goings-on of this royal commission.

A huge amount is going on in Australian politics at the moment. We have High Court decisions and a budget, but the thing that people stop me in the street to talk about is the royal commission. I don't think there is a full appreciation across this parliament of the depth of anger and dismay that exists amongst Australians, as the culture of unbelievable greed and corporate misconduct is being revealed in this royal commission. The member for Gellibrand, who is going to these hearings, understands what is going on and the way it's affecting our constituents. I congratulate him on his passionate speech and the interest he's taking in this issue.

Perhaps unsurprisingly, I will be returning to the subject of the royal commission, but I want to make a few comments briefly about the substance of the bill before us today, the Treasury Laws Amendment (ASIC Governance) Bill 2018. As you've heard from previous speakers on the Labor side of parliament, we are very happy to support this bill. The bill amends the ASIC Act to provide the Governor-General with the opportunity to appoint a second deputy chairperson of ASIC. We note the government has announced its intention to appoint Mr David Brennan QC to this role. Labor supports the addition of a second deputy chairperson to ASIC. We believe this is important to assist ASIC's operation as an efficient and effective regulator. It will also provide a bit more flexibility to the organisation in how it divides work between its different chairpersons and deputy chairpersons.

I think it is an opportune time for us to be looking at governance reforms to ASIC, because the evidence that has been presented to the royal commission, if nothing else, shows us that there is a crucial and dire need in this country for strong and effective regulation of our corporate sector. ASIC plays a crucial role there. ASIC has a new directions power to strengthen its oversight of the new one-stop shop dispute resolution body, the Australian Financial Complaints Authority. We also note that the government has proposed that ASIC be responsible for the management of expected additional disclosures, following reforms to whistleblowing laws, and for administering the new Asia Region Funds Passport regime.

As I said, it is crucial that, at a time like this, we look at those opportunities to improve how ASIC is working. I don't think I'm alone in this chamber in believing there will be more substantial reforms down the road to how ASIC is functioning. If anything, it's a little bit disappointing that only a pretty minimalist approach is being taken with the reform before us. It is a good, straightforward reform coming through the parliament, but through the royal commission we are seeing an organisation buckling under the incredible extent of this culture of greed and corporate wrongdoing in financial services. The very sad reality for us as parliamentarians is that ASIC has not been approaching these difficulties from a position of strength. The truth is that, since the Abbott government was elected, very significant cuts have been made to ASIC. The government moved to restore some funding to ASIC, but that was only after this push to support a royal commission into financial misconduct came from within the community and the Labor Party. Those on the other side of the House spent 601 days running a protection racket for the banks against the royal commission. They had to be seen to do something about the problem that was so evident to just about every other Australian, and I think giving some additional funding to ASIC was somewhat of a sop to make it look like there was some attitude of practical activism to try to deal with this problem.

Coming back to the banking royal commission, I will speak about the amendment put by the member for Kingsford Smith. When I returned to Canberra this week, it was abundantly clear to me, having talked to my constituents out in the community, that the level of unspeakable anger about what is happening in our banking sector is not understood across the chamber. Labor members of parliament today are lining up to speak about the bill before us because, I know, they want to address the intense feelings their constituents have about the royal commission. One of the things that are very distinctive about the royal commission into financial misconduct is that in a sense all Australians are victims of it. We have victims at the lower end: people like me and many of my colleagues here who have been paying fees for things that shouldn't have had fees attached to them, and all the other bits and pieces that have gone on for ordinary Australians, right up to people who have had catastrophic financial impacts—people who have lost their homes. In the royal commission we heard about one extraordinary situation where a very well-educated woman was given advice that she should roll over her super into a self-managed super fund. That single move would have cost her half a million dollars. As I walk the streets in my community I've got people coming up to me trying to tell me their stories. I'm very proud to say that Labor is 100 per cent behind this royal commission. We need to give this royal commission the time and resources it needs to get to the bottom of these incredibly deep-seated difficulties and deep-seated problems of culture within financial services.

I want to share some of the examples that I have read about and heard about through the royal commission that I see as most egregious and most emblematic of some of the deep-seated problems within this sector. I am quoting from an article by Dan Ziffer which was reported in ABC news. It's a report on some of the first public hearings of the banking royal commission. These are some of the things that came out just in those first few days: cash envelopes filled with bribes, problem gamblers getting credit extensions, and a bank manager transferring $35,000 directly to foreign scammers.

I want to spend a bit of time talking about the National Australia Bank, because—my goodness!—they are one of the organisations that has come into focus, shall we say, in the royal commission. During the hearings on some of the issues facing the National Australia Bank we heard about staff being involved in an alleged bribery ring covering multiple branches; forged documents; fake pay slips and Medicare cards; and bribes being paid in cash to secure loans as staff responded to an incentive program to sign up new customers. I am quoting from an article from Gareth Hutchens in The Guardian. I want to pause on this incentive program that was created by the National Australia Bank to sign up new customers. It was called the introducer program at the National Australia Bank. The bank decided that it would pay ordinary people—not financial experts, but people such as gym instructors—commissions for referring strangers to the National Australia Bank to ask for home loans. What could possibly go wrong?

I want to really make this clear. What we're talking about here is a bank that paid ordinary people with no financial expertise money to encourage other Australians to invest hundreds of thousands of dollars with a bank to make probably the biggest financial decision they'll ever make in their life. They did this through this dodgy incentive scheme that was paid to people such as gym instructors. More than $24 billion in home loans was lent by the National Australia Bank under this scheme between 2013 and 2016. I want to remind the parliament that at the end of 2017 the National Australia Bank posted a $6.4 billion profit, and in that same statement they announced that they were cutting 6,000 jobs. I want to pause there, because it's $6 billion and 6,000 jobs being cut. This goes right to the core of the issue that's in discussion in parliament this week about the effect of the $80 billion in corporate tax cuts that the government has decided to place at the heart of its economic agenda. The argument being made is that if we give companies more profit they will employ more people. I know that argument is not washing with the Australian community, because it does not conform with the lived experience they have of being in the Australian economy. How can the government ever expect Australians to buy this economic craziness when we have a company like the National Australia Bank announcing on the same day a $6.4 billion profit and 6,000 job cuts? It's just ridiculous.

I want to quote from an article called 'Banking royal commission is on track to expose a culture of greed'. This is from the Canberra Times. This recounts a situation in the royal commission where the Australian Securities and Investments Commission disciplined Aussie brokers over something called liar loans. I want to speak about liar loans because for me this is one of the clearest examples that the argument that it's just a few rotten apples, just a few people and a few financial services advisers doing the wrong thing, is completely wrong.

These liar loans are where financial advisers deliberately falsify the income of ordinary Australians to entitle them to get home loans they would not be able to properly repay—because their income has been deliberately inflated by a financial adviser who is supposed to be acting in their best interests. The commission will be taking a particular interest in liar loans over the coming weeks because it's feared these make up a third of all Australian home borrowings. So if any member of parliament talks to you about bad apples and this being some small part of the industry, remember that figure. It's possible that a third of all Australian home loans have been authorised on the basis of income that's been deliberately and dishonestly inflated by financial advisers. It's absolutely shocking.

We can't forget the Commonwealth Bank in all this because, my goodness, they have some issues to deal with. I want to mention the way that the Commonwealth Bank has approached the royal commission generally. As members of parliament will know, the royal commission has asked banks to account for their conduct by asking them to confess, essentially, to some of the things they've done wrong. The royal commission has not been given the time and resources it needs to go into these organisations on its own and search for misconduct.

What the Commonwealth Bank did, firstly, was write a submission to the royal commission which was flimsy. It was too brief, absolutely. The counsel assisting the submission talked about it being a 'high level and general approach' which 'did not disclose the totality of its conduct'. Come on, Commonwealth Bank. We are having a royal commission into your conduct. This culture of obfuscation, of turning your nose up at this parliament and the laws of this nation, has to end. The Commonwealth Bank had another opportunity to come back and give the information that's been requested by the commission. In its second submission it didn't do that. Instead, it provided an abundance of spreadsheets presenting information that was 'not in a form which made it possible to understand the type and scale of the bank's misconduct events'. This has to end. The Commonwealth Bank needs to accept that there is now some scrutiny around its activities—as there should have been 601 days ago—and it needs to understand that this royal commission will be looking into its activities and holding it to account. I have so many more articles here that I could talk about and—I can't believe it—we haven't even talked about AMP. AMP is the institution where we've seen the initial consequences of this unbelievable misconduct start to hit the fence.

I want to quickly talk about the fees-for-no-service scandal. What we understand now from the royal commission is that AMP was charging clients fees for services they did not receive. That on its own is shocking, but let's hear a little bit more. We know that in 45 per cent of those cases financial advisers were doing the wrong thing within AMP. In 20 per cent of cases the fees were not stopped for clients of advisers who'd been sacked. We'll understand more about the reason for that. In the rest of the cases, the reason they were being charged fees for services they were not receiving is that it was a business decision, to continue charging fees for no service while clients were transferred between advisers. Let's understand this. Leaders at AMP sat down and made a business decision to continue to charge their clients for services they were not receiving. This happened in a corporation in our country. It's a corporation that was meant to have been overseen by ASIC, the organisation that is the subject of the bill before us this afternoon.

We don't have nearly enough time to go through and deal with all the issues with ASIC. I'd simply make the point that despite all of the misconduct—the broken laws that we know are referred to, the counterterrorism laws which have been broken obscenely by the Commonwealth Bank—not one senior banker in this country has properly faced court in response. That's ASIC's job. So next time I talk about ASIC in this parliament I hope it's about a bill that does something a little more than make a minor change to the governance arrangements.

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