House debates

Thursday, 13 September 2018

Matters of Public Importance

Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

3:19 pm

Photo of Tony SmithTony Smith (Speaker) Share this | | Hansard source

I have received a letter from the honourable member for McMahon proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government voting against the banking Royal Commission 26 times.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Photo of Chris BowenChris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | | Hansard source

With all the melodrama and the self-focused soap opera we have had from the other side of the House over the last few weeks, it's perhaps easy to forget with all that melodrama just how many big calls this government has got wrong. It's not the daily ups and downs nor is it the ambitions and opportunities and Newspolls which are the reasons why this government is a failure; it's because it's been faced with some big decisions and, on almost every occasion, got those big decisions wrong, perhaps none more so than its decision to block a royal commission into Australia's banking and financial services sector.

More than two years ago the Labor Party, the Leader of the Opposition, the member for Isaacs, the member for Rankin—the then shadow minister for financial services—and I announced that a Labor government would call a royal commission into the banks and financial services sector. We said at that time we would do it in office but we hoped the Liberal government would do it earlier. We told the Liberal-National government they would have our full support if they called a royal commission into the banks and financial services. What we had was two years of obstruction, two years of denial, two years of delay, two years of inaction and two years of excuses, and in all that time the financial services scandals continued. In all that time the bad behaviour continued as this government continued to run a protection racket.

I acknowledge that the Prime Minister yesterday admitted that was wrong. I acknowledge that he admitted his mistake. But the key point is: it's not important what you admit when it is obvious you were wrong, when it is undeniable that you were wrong. What is important is your judgement when it's a hard call. When the Leader of the Opposition, the member for Isaacs and I announced a royal commission, it was controversial. We were pilloried as being populist. We were pilloried as being damaging to Australia's international reputation. We were told that we had it wrong. But we knew that the case for a royal commission was strong and that we could defend it and justify it against the political attacks and the attacks of those vested interests who denied it was necessary.

Having the judgement and the courage to get it right when it's a hard call is what governments are all about. Not admitting when it is so self-evident that it should have been done two years ago is not something to be proud of. Something the government could have been proud of was if they got it right when it was controversial. The Prime Minister says, 'Look, I made a mistake.' He's hinting, implying that, you know, he had not given it that much thought and that maybe should have given it that much more attention. It's not just that he didn't call the royal commission when he was Treasurer; he voted against it 26 times.

The government did everything they could to avoid a royal commission into the banks and financial services sector. It wasn't just that they voted against it. The Prime Minister called it, in his normal blustering way, 'a populist whinge'. He called it 'a political exercise for a political hack', referring to the Leader of the Opposition. He said that a royal commission was pursuing 'crass populism', undermining an institution that is critical to our country and our economy. He said it was a 'stunt'. He said that they only proposed a royal commission to help one person: the Leader of the Opposition. He said it's intended to bolster and prop up the stocks of the Leader of the Opposition. He said the Leader of the Opposition was doing it to pursue political gain.

It shows just how out of touch this Prime Minister is that he said all these things over such a long period of time. But I have to say it wasn't just the Prime Minister. The person responsible for the implementation of the royal commission's recommendations will be the Treasurer. What did the Treasurer say? He said the banks are already heavily regulated. He said when he was asked if there was no need for a royal commission, 'That's my view, yes.' He said it's 'just a distraction' from Bill Shorten. He said, 'I think it's a bit of populist politics from Bill Shorten.' That's what the now Treasurer said, joining a unity ticket with the now Prime Minister to ignore the need for a royal commission into the banking and financial services sector.

There has been a real cost to be paid for this misjudgement by the now Prime Minister and now Treasurer. What we have seen and what the Australian people have seen out of the royal commission is nothing short of scandalous; nothing short, in many instances, of stomach-turning; nothing short of immoral; and nothing short of outrageous. It has continued on for two years longer. If the Prime Minister had had his way, we never would have known about this. It was only because of the royal commission that we know about fees for no service. It's only because of the royal commission that we know about what happened at AMP. It's only because of the royal commission that we know that people who were dead were charged fees. It's only because of the royal commission that we know—we saw it this week—about perhaps the worst of all the revelations, about the push-selling to some of Australia's most vulnerable people of insurance they did not need and did not want. We know about the messages to staff to sell, sell, sell, and think about the holiday to Bali. Why do we know about all these things? Because of the royal commission.

We said the royal commission was necessary to get sunlight onto the problems in our banking and financial services sector, to get the issues out, to get the issues exposed, so that the parliament could deal with it and so that the people could know about it. We didn't know every detail about what would be found—of course we did not—but we knew there was a problem, and we knew it had to be fixed. We knew, as tough as it was, that a royal commission was justified and necessary. Even when the government called it—even when they were dragged, kicking and screaming—for political purposes, they said: 'It's very regrettable. We wish we didn't have to. We really regret having to do this, but we're doing it for political purposes.' It says a lot about the government. We did it because we knew it was necessary; they did it because they thought they had to. That says it all.

If the Prime Minister had had his way, we still wouldn't know about these scandals, and we would be no closer to getting a banking and financial services sector which works for all and not just for a few. But, if the Leader of the Opposition had had his way, this royal commission would have started more than two years ago and would now be finished. The government would now be implementing its recommendations. Not only would the bad behaviour have been highlighted and public but it would have been dealt with. We would have implemented the necessary regulations and changes. The 300,000 breaches of law by ClearView would have been known and dealt with. The problems at IOOF would have been known and dealt with. The problems of push-selling of insurance to vulnerable Australians would have been known and dealt with. All would have been done by now. We would have been getting on with it. We would have passed legislation; banks would have dealt with it; insurance companies would have dealt with it; mortgage brokers would have dealt with it; and the country would be better off.

Here we are, two years later, still talking about it and still seeing the almost daily revelations out of the royal commission. What does the government say? 'Sorry about that; we got it wrong.' You betcha you got it wrong. You betcha the government got it wrong. It goes to their judgement. We've seen plenty of misjudgements from this Prime Minister in his various portfolios. This Prime Minister thought it was a good idea to increase the GST. This Prime Minister thought it was a good idea to cut all Commonwealth funding to public schools. This Prime Minister, with his predecessor, thought it was a good idea to have state income taxes. There were all those misjudgements and more, but this, in many senses, is the worst.

The Prime Minister wants to reassure us all and reassure the Australian people that he's in touch. He's on their side, he tells us. He's on their side, and he wears a badge to remind him whose side he's on, he tells us. You don't need a badge to remind you whose side you're on if you know that the problems facing the Australian people need to be dealt with by this parliament and by tough action. Tough action is sometimes telling people what they don't want to hear. I rang the four chief executives of the banks and said, 'I'm giving you a warning that in a few hours Bill Shorten and I will be announcing a royal commission into the banks.' They weren't pleasant conversations, I have to tell you, Mr Speaker. It wasn't a welcome call for the four chief executives of the big banks. But, I tell you, I'm glad I made those calls.

I'm glad I'm a member of a political party with the toughness and the courage to make those calls. I'm glad I'm a member of a political party with a leader tough enough to make those calls. We know that not everybody will welcome our decisions, but we will put the Australian people first. We don't need to wear a football hat to tell people we'll put Australian people first. We don't need a selfie on a train to tell people we're in touch with their concerns. Our actions speak louder than our words, and our action two years ago, by calling for this royal commission, spoke louder than anything the government and their weasel words could do today, because we did it when it wasn't easy. We did it when it wasn't conventional. We did it when it was controversial. We did it when it was necessary. These people opposite not only didn't call a royal commission; they opposed our Future of Financial Advice reforms when we were in government and then tried to repeal them when they were in office. They are completely out of touch— (Time expired)

3:29 pm

Photo of Stuart RobertStuart Robert (Fadden, Liberal Party, Assistant Treasurer) Share this | | Hansard source

Can I say from the outset that the commissioner in the royal commission is doing an excellent job. He is due to present his final report in February, with an interim report at the end of September, and the government looks forward to receiving it. It's important that Australians know that there have been 8,600 public submissions, and they are all being read. Australians are being heard. Can I also make the point that if the commissioner asks the government for more time, we will provide it to him. At this stage the commissioner has not sought more time. The coalition government, though, has not waited until the royal commission to begin reforming the financial sector, and that remains a germane point.

I, like many of Labor's frontbench, came into this place 11 years ago in the 2007 election. From there, a number of scandals broke out due to the GFC, amongst other things. We saw the collapse of Trio Capital, involving 5,000 victims and $176 million; Storm Financial, with 4,000 claims and losses of something like $3 billion; Opes Prime, with 1,200 investors and tens of millions of dollars; MIS failures, and the rest. I was a part of the committee that did the inquiry into the financial services sector and did the bipartisan Ripoll report, which I think, from memory, had 11 recommendations. There was no dissenting report; it was a unity ticket on looking at what was required to fix the financial sector.

Years later, in an op-ed in The Australian on 9 February 2012, the Leader of the Opposition wrote:

Australia has some of the best banks in the world. It is partly because of our excellent regulatory system and prudent management.

He was the financial services minister. On 2 August 2013, just 36 days before the 7 September election and change of government, on 3AW, the then financial services minister and current Leader of the Opposition said:

… our financial system has held us in very good stead in recent years and in part it's a testament to the regulatory or the sound regulatory system we have in place.

The government would change 36 days later. The appalling behaviour we have seen from our banking, super and insurance areas did not start when the government changed 36 days after the Leader of the Opposition made that statement. It had started well before that.

We saw extraordinarily poor behaviour when we did the post-GFC banking inquiry. With Storm Financial, many of their advisers had masked degrees in financial planning. Don't think for a second that the Commonwealth Bank and its Townsville branch were not intimately involved in some of the appalling behaviour we saw from Storm Financial; they were. It was brought to account, as were the major banks that we had in committee at that time.

These behaviours have been appalling, and I join with the shadow Treasurer in acknowledging some of the dreadful things we've seen. But this behaviour didn't start when this government came to power. There has been a history of this perversity at times, much of which we bore out during the post-GFC banking inquiry and much of which is coming out now.

One of the first things this government did upon taking power was to instigate the financial systems inquiry, the Murray inquiry, which released its report in December 2014. The inquiry was done for a range of reasons, one of which was to understand the full extent of the challenges in the financial services industry. The government has been systematically implementing the recommendations of that inquiry. We started with purpose, with intent and with clarity to understand the issues, and we have been working methodically through implementing those recommendations. We set up the ASIC capability review in July 2015. We've been putting consumers first in systematically implementing these reforms for the financial services sector, and the reforms are extensive.

The legislation passed to date includes the Banking Executive Accountability Regime, or BEAR, ensuring that senior executives are accountable for the decisions they make. It is one of the most significant reforms in Australia's financial services history. We established the banking executive regulatory regime to impose higher standards of behaviours on banks and their senior executives and directors. We have strengthened the leadership of the financial systems regulators through enabling ASIC and APRA to have a second deputy chair. John Lonsdale will be appointed to APRA—he's a 30-year Treasury veteran—and Daniel Crennan QC has already started in his role as special prosecutor focusing on enforcement.

We've created a one-stop shop for external dispute resolution with the establishment of the Australian Financial Complaints Authority, which steps up on 1 November, to enable more consumers to access fast and free dispute resolution. We've increased the powers of regulators substantially, especially APRA, in relation to crisis management and non-bank lending to ensure the resilience and ongoing stability of the Australian financial system.

We've capped commissions paid on life insurance products to prevent unnecessary churning and raise the professional, educational and ethical standards of financial advisers. We've introduced a ban on excessive credit card surcharges. We've protected consumers from being granted excessive credit limits and building unsustainable debt across credit cards and simplified how interest is calculated. We've establish a regime requiring administrators of significant financial benchmarks to be licensed. There's better protection now for retail client moneys held by financial institutions in connection with over-the-counter derivatives. We've implemented the Asia Region Funds Passport. And, of course, we've done a bunch of work in crowdsourced equity funding to establish new businesses' access to that.

There's a bunch of legislation currently before the parliament to strengthen protections for whistleblowers; to enhance ASIC's capability to attract and retain staff; to relax the legislative 15 per cent ownership cap; to extend the crowdsourced equity-funding regime further; improve superannuation capability; and to protect individuals' superannuation savings from disproportionately high fees, insurance premiums and exit fees. Further reforms have also been announced for increasing the civil and criminal penalties for financial misconduct. They're the most significant increases to the maximum civil penalties, in some cases, in more than 20 years. For individuals, we're talking about criminal penalties of up to 10 years in jail. For corporations, we're talking about criminal penalties that are the larger of $9.45 million or three times the benefit or 10 per cent annual turnover. These are substantial penalties. We are talking about substantial cops on the beat with substantial powers and a substantial stick.

We've extended the unfair contract terms protections to insurance contracts. We're looking at combating illegal phoenix activity. We're imposing design and distribution obligations to ensure products sold by financial institutions are designed for and marketed to an identified target market to minimise the likelihood of consumers purchasing unsuitable products and we're imposing a product intervention power for ASIC to enable the regulator to intervene where products could pose significant harm. We've increased ASIC's funding by over $70 million to equip it with the resources. That's a lot of work that has been done—that is continually being done. This government was not found flat-footed coming into government; we commenced this work from day one in 2013.

The Prime Minister has stated publicly in this House that we didn't appreciate how much people had suffered as a result of the misconduct in banking, but the answer to addressing some of the issues in the financial sector is not just about strong regulation, although that is extremely important. It's also important to create more competition so people have the choice to go to another bank or another financial service provider if they're not happy with the service. People have choice to go somewhere else, if they're not happy with the price or reputational challenges.

Strong regulation is key. Strong regulators are key. As we are working through banking codes of conduct, strong self-regulation is key. They can't exist in isolation. They must exist as triumvirate together. That's why the coalition government has implemented a number of reforms to increase competition in the sector.

We've introduced open banking, and the broader consumer data right, to drive competition across the banking system. We've removed barriers for cooperatives and mutuals to access capitals to enable them to compete more effectively with larger, well-financed banks. We've provided a framework for an enhanced financial services regulatory sandbox to allow fintechs to test new products and services which enable them to compete. There is now mandatory comprehensive credit reporting to force large financial institutions to share their credit information securely. This includes competition considerations within ASIC's mandate, again, to drive more competition. We've permitted all authorised deposit-taking institutions to use the term 'bank' to improve their ability to compete.

This government has been systematically acting, in response to the financial systems inquiry, to get things done. We look forward to the commissioner's recommendations, and I'm very confident the Australian people trust that we, in government, will fix the problems that we encounter as we encounter them.

3:39 pm

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

It's been a very disturbing and a very distressing week in the royal commission. People who are observing the work of the commission will know that at the moment we are dealing with the insurance round. Commissioner Hayne has set aside two weeks to look into just this industry. What we're seeing is an industry that has many and significant issues. The stories we've heard told are genuinely gut-wrenching. I want to begin with the case of Grant Stewart, whose son has Down syndrome. His son was pressured into buying insurance that he didn't want and he didn't need. Words just cannot describe how angry I was and how angry I know my colleagues were listening to the audio tape of this young man and his disability being exploited by someone so that an insurance company could meet a sales target. For me, this incident actually encapsulates so many issues that this royal commission is uncovering.

Anyone who is in the chamber now or who is listening at home, if you've ever had a doubt about why this royal commission is necessary, why it is crucial, then I urge you to go and find the audio of Grant Stewart's son being sold this policy. One of the things that is most shocking about this incident with Grant Stewart's son is the fact that this happened two months after the Prime Minister, who was the then Treasurer, on the other side of the chamber, voted against a royal commission into the financial services industry. We know, because we have sat here for almost two years watching this person, the Prime Minister, the member for Cook, lead the charge on the other side of the chamber against this royal commission. Those opposite tried every trick in the book to stop this from happening. And when Australians are watching on television the things that are coming out of the royal commission, I want them to remember this: these are the stories the Prime Minister didn't want them to hear. And if he had had his way, if he had not buckled to the pressure and the leadership of the opposition leader then we would never have known about these problems and we would never have this once-in-a-generation opportunity to look at the matters facing this sector. I've talked about the one incident of Grant Stewart's son, but it is one of so many.

On the first day of the insurance round, on Monday, one of the first things we learnt was an insurer, ClearView, has probably broken the law 300,000 times. We heard about CommInsure, which has been the subject of a number of media inquiries about its monitoring of insurance. One of the instances we heard was about a customer who suffered from breast cancer. She had multiple surgeries but when she went to claim on her insurance, it was refused on the basis that because her operation wasn't a full mastectomy, it was not radical enough to be paid out under an insurance claim. That is just what we have heard about this week, but it is the tip of the iceberg of the despicable conduct we have seen come through in the royal commission.

One of the stories that sticks in my mind, and I am sure some of you on the benches behind me will remember this, was of a man who was a gambling addict. He knew he was a gambling addict and he went to his bank, the Commonwealth Bank, and said, 'Please, stop increasing my credit limit.' He was an addict. Instead of doing that, the bank continued to pursue him, continued to write to him and continued to increase the limit on his credit card. One of the images that sticks in my mind is of this man weeping in the dock of the royal commission as he explained his story—another story that never would have been told if the Prime Minister had got his way in avoiding the royal commission.

The Prime Minister did not just vote against a royal commission 26 times, he led the charge of his government against this. He called this 'a populist whinge'. He called it 'just a distraction', 'a QC complaints desk'. He told us he already knew what all these issues were, so then we asked the obvious question: if he knew this was happening, why didn't he do anything about it?

I feel incensed by something that I keep hearing from the other side of politics at the moment, that the reason they didn't support a royal commission was because they didn't understand the hurt the Australian people were feeling about this. This is not about hurt feelings. This is about law-breaking on a very large scale within a service industry that supports almost every Australian, almost every Australian business. You can only trust one party in this country to clean up this mess, and that is Labor.

3:45 pm

Photo of Andrew BroadAndrew Broad (Mallee, National Party, Assistant Minister to the Deputy Prime Minister) Share this | | Hansard source

It is very easy to be very wise in hindsight, and I hark back to 2017 and 2013. There was no royal commission under Labor. I must say, under Prime Minister Rudd, the banks came to you and you guaranteed them but didn't ask for anything in return. Everyone is on a journey. You might start off as a Green and then you might become a Labor person and then you might eventually evolve into being a Liberal—but, when you see the light, you might join the National Party. It has taken some time to bring us to this point, and I thought it would be wise for people to have a listen to a bit of history to give you an idea of why regulation of finance is not something that is new and is something that needs to be looked at. On 4 March 1933, FD Roosevelt said:

Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods—

as in the banks—

have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

I point out that regulation of the banks is nothing new. The need for a strong spotlight on the regulation of the banks must take place in every society fairly often and fairly thoroughly. That was in 1933. You cannot, unfortunately, get to a point where you can just trust the ethics of moneylenders. Their ethics must be held to account by a certain amount of transparency and a certain amount of regulation.

I would add that banks actually are a partner for Australians to achieve the standard of living that they must and hope to achieve. At the end of this royal commission I do not want to get to the point where a young person who wants to be able to purchase a house has a bank that is so regulated against it that they won't be able to achieve and access finance. We must be very careful on this point. One of the things that helps young Australians get ahead is that they can access finance. So, when we think about bank regulation, we must have transparency but we must also make sure that that transparency does not lead to a level of restriction where our young Australians cannot access finance. If you increase the wealth of the citizens of a country, you increase the wealth of the nation. It is still a concern to me that our banks have not got to a point where they give recognition to a person who may have three years of rental experience. They've proven that they've got the capacity to run a budget and proven that they have the ability to service and make provision. That should be, I think, seen as capacity for them to be able to get a loan.

So we do need to have regulation of our banks. We do need to have a strong royal commission that brings this to fruition. Those opposite missed an opportunity in 2007 to 2013. It took our side of parliament a while to come to this point, and I must it was the National Party who was instrumental in bringing it to this point. As a result of this royal commission, we must finish with a situation where banks can be trusted, institutions can be strong and young Australians who want to purchase a house are able to purchase a house. The two things outside of government that must be committed to is that if you want to have a job, you can get a job, and, if you want to be able to purchase a home, a modest home, you should be able to purchase one. If you get those two parts of your society right, you'll have a very, very strong society. This royal commission has a purpose. You should have done it when you were in power. We're now eventually doing it. It's the right thing to do. May we come up with a strong society as a result of it.

3:50 pm

Photo of Cathy O'TooleCathy O'Toole (Herbert, Australian Labor Party) Share this | | Hansard source

'A populist whinge'—that's how our now Prime Minister, Scott Morrison, has referred to calls for the royal commission into banking. That was something that the LNP government simply did not want. For more than 600 days, this arrogant, out-of-touch LNP government ignored Labor's and the Australian people's call for a royal commission. The then Treasurer and now Prime Minister, Scott Morrison, did everything possible to protect his banking mates. But, after 600 days, the then Treasurer and now Prime Minister, Scott Morrison, announced one of the shortest royal commissions in Australian history, referring to it as a 'regrettable decision'.

The stories so far in the royal commission are nothing but devastating. Let's go through some of the facts revealed in the royal commission that the Prime Minister did not want anyone to hear. ASIC has estimated, based on explosive evidence in the royal commission, that AMP and NAB gouged an estimated $1 billion from customers without providing them any service at all. The Commonwealth Bank has been caught charging fees to people who they knew had died. Some of these people had passed away more than a decade ago. NAB's Introducer Program led to rampant fraud, with one introducer paid over $488,000 in fees. Some of these introducers paid cash bribes in paper envelopes to brokers so they would push through loan applications and ignore missing details. That's fraud. The Commonwealth Bank knew the royal commission witness David Harris had a gambling problem, but they kept on offering him credit limit increases anyway. AMP admitted that it lost count of how many times it lied to ASIC. ANZ pushed a fourth generation farming family into selling their home within six weeks. ANZ pushed superannuation products through its bank branches despite knowing the tellers did not have the qualifications to advise the customers properly. ANZ earned $3.6 billion from this scheme, and it paid a paltry fine of $1.25 million.

On Tuesday, we heard evidence that Grant Stewart's son, who has Down syndrome, was bullied into signing up for insurance that he didn't want, need or even understand. Earlier this week we also heard that one insurance company, ClearView, broke the law over 300,000 times. And then there is a document tabled regarding the Commonwealth Bank's audit of its customers on Palm Island in my electorate. On Palm Island alone, Hannover Life Re charged customers 383 transactions for a total of $16,401 during a 14-month period, and St Andrew's Life Insurance had charged Palm Island residents 313 transactions for a total of $12,857 over the same period. According to the census data from the Australian Bureau of Statistics, Palm Island is one of the 10 most disadvantaged communities in Australia. This is absolutely unconscionable and disgraceful behaviour.

Last week the Prime Minister was having dinner and cosying up to the NAB CEO, Andrew Thorburn. This is the same bank that last year announced plans to sack one-fifth of their workers over the next three years whilst announcing on the same day a $6.6 billion annual profit. How out of touch can he truly be? At the same time that the Prime Minister is cosying up to the banks, I'm talking to veterans about this out-of-touch government—a government that is continuing to ignore the royal banking commission and the fact that the Commonwealth Superannuation Corporation needs to be included in the royal commission. Labor has written not one, not two but three letters to the LNP government demanding that the CSC be included, but this arrogant LNP government refuses to hear Labor's calls and refuses to act in the best interests of our veterans by including the CSC in the royal commission.

Last week the Leader of the Opposition, Bill Shorten; shadow minister Clare O'Neil; and I held a banking roundtable in Townsville. We heard stories that were chilling. We heard stories from veterans and people who had lost everything through bad practice from poor banking activities. After hearing their stories, the very next day the Leader of the Opposition wrote to the Prime Minister asking for him to provide an opportunity for more victims across the country to give evidence about banking misconduct. But once again Prime Minister Scott Morrison is refusing. This is a man who puts profits before people. This is a man who cannot guarantee that he works in the best interests of Australian people because we know he works in the best interests of the banks. Let's not wait another 600 days. I call on Prime Minister Scott Morrison to extend the royal commission and to also include the Commonwealth Superannuation Corporation. (Time expired)

3:55 pm

Photo of Luke HowarthLuke Howarth (Petrie, Liberal Party) Share this | | Hansard source

What a shocking speech from the member for Herbert, reflecting on the Prime Minister. She clearly doesn't know what she's talking about. In fact, we, the Liberal-National Party, were the ones who called this royal commission into the banks.

Ms O'Neil interjecting

Ms O'Toole interjecting

Is that right? You might want to look over the aisle. We're actually in government. The boisterous members opposite might want to remember that we're in government and we called the royal commission. The member for Hotham wants to come into this place and put herself on a pedestal. That's what she wants to do, as though she's been here for years and she knows everything. The Labor Party is holier than holier, according to the member for Hotham. She sits there, 'We're holier than holier.' These people in the gallery think they have no fault. They have no fault, they're perfect, according to the member for Hotham.

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

The member for Petrie will address the chair.

Photo of Luke HowarthLuke Howarth (Petrie, Liberal Party) Share this | | Hansard source

Mr Deputy Speaker, that's what we get from the member for Hotham. In fact, she wants to reflect on the Prime Minister, as does the member for Herbert. What do we get? The Labor Party had six years to call a royal commission when they were in government. In fact, the member for McMahon, who spoke first today, did nothing in those six years. The member for Hotham conveniently pulled out a couple of examples that were shocking, which the Prime Minister actually addressed in parliament this week, but said nothing about the six years when they were in government. She didn't mention any examples there at all.

The member for Hotham and the member for Herbert want to talk about the ANZ CEO. In the last two years, all they've done is bag the banks. You can bag the banks all you want. You can bag them. Why do we see that happening? For political opportunity. They might want to remember that the banking sector and the finance sector employ 168,000 people in Australia, and they have been bagging them for the last two years—absolutely bagging them, member for Hotham, holier than holier, through you, Mr Deputy Speaker. The fact is that today we heard Minister Andrews talk about the STEM industry, and that there are 10,000 people currently employed in the space industry and 20,000 new job opportunities in that industry. Yet we have 168,000 in the banking and finance industry, the 11th-largest employer.

I'm finding that, in my electorate now, young people who want to get home loans are finding it very difficult. Why? It's not their fault. They are not at fault. Those opposite have bagged the industry for the last two years instead of wanting to work with us. The fact is that this royal commission is happening now, yet they come into this place and what do they want to do? They want to score points, because the Labor Party is holier than holier. Is that right?

They bring up an MPI, but the fact is that the commissioner on this banking royal commission is due to hand down a summary in September and then finalise it next year. They haven't asked for a time extension. They haven't asked for a time extension at all. But no, those opposite want to drag it on. This is all about the Labor Party and how they're perfect and how none of it is their fault. It's not about the superannuation industry, whether it's the private sector or industry funds or self-managed funds. So many people have investments in the banking sector and the finance sector, but they don't mind running it down. They don't mind taking funds away from retirees in the policy that they will take to the 2019 election. Anyone in the gallery that's got shares and relies on dividend imputation knows they're going to tax them more. They want to tax them more. Anyone in the gallery who earns up to $200,000 knows they want to tax them more. They're going to take away the legislated income tax cuts that we've already got through. They fought the whole way against company tax reductions, including wanting to wind back tax reductions for small and medium businesses up to $50 million. No—the Labor Party are holier than holier; that's what they are. That's what the member for Hotham would have you believe. But the fact is that the coalition government, your Australian government, our Australian government, are the ones who called this royal commission.

I've got four or five pages here that I haven't even got to about what we've been doing in the financial sector. I just say to those opposite: they ought to be ashamed of themselves. (Time expired)

4:00 pm

Photo of Anne AlyAnne Aly (Cowan, Australian Labor Party) Share this | | Hansard source

Twenty-six—just to put that in perspective: that's about eight more than the number of women in the Liberal caucus. Also, it's the number of times that this Prime Minister voted against a royal commission over a period of two years. This isn't anything unusual. This is in the LNP government's DNA. Their DNA goes to protecting the banks over the victims. Their DNA goes to engaging big business and engaging the banks over and above supporting the victims and looking after everyday Australians. Their DNA goes to dismissing successive calls for a royal commission, terming it a populist whinge, a political exercise, crass populism and a distraction. Their DNA goes to accusing Australians of being whingers, of being beggars and of lacking aspiration when they dare to ask this government to do their job. It's in their DNA.

How does the Prime Minister respond to some of the abhorrent revelations that are coming out of the banking royal commission? There was the evidence that we saw about Grant Stewart's son, with Down syndrome—bullied into signing up for insurance that he didn't want, didn't need and didn't understand. How does the Prime Minister respond to that? He said:

... the problem I didn't see and I should have seen, the problem that also needed to be addressed, was the hurt that people were feeling as a result of the banking and financial sector.

'The problem I didn't see.' So, because he didn't see it, it didn't exist, but on this side we saw it. On this side we knew, and that's why we kept calling for a banking royal commission. We spoke to the people, we heard their concerns, we listened to Australians and, time and time again, called on the government to instigate a royal commission that they had to be dragged to, kicking and screaming.

I don't care how many pins you wear on your lapel. It doesn't matter how many you wear or where you wear them. This government will always be on the side of the banks. They'll always be on the side of big business over Australians. As I said, it's in their DNA; it's who they are. The advice that this Prime Minister has for Australians who are whingers or beggars is: 'Get over it.' 'Get over it,' he says.

Photo of Sharon ClaydonSharon Claydon (Newcastle, Australian Labor Party) Share this | | Hansard source

That's what he said.

Photo of Anne AlyAnne Aly (Cowan, Australian Labor Party) Share this | | Hansard source

That's what he said yesterday in question time: 'Get over it.' That's the advice he has. Suddenly, this Prime Minister has awoken. Suddenly he's reading the room. All of a sudden he woke up to the fact that, for years, the banks and the financial sector has been treating Australians abhorrently. We've had evidence and evidence and evidence—and I don't need to go through it all here, because I know that my colleagues, and particularly the member for Hotham, has given a very, very strong account of some of the claims we heard over the period of this banking royal commission. We on this side didn't need to be told that we needed a royal commission because we didn't see it. We knew it was there. We knew that a royal commission needed to be had. I think it's particularly disgraceful that those on the other side now stand up and claim some kind of victory over having called a royal commission only after they voted against it consecutively 26 times. If this royal commission had been done two years ago, when we first called for it, we would've had it over and done, and we would've had practical and substantive solutions in place now. But, again, all those opposite care about is protecting the banks. It's in their DNA. It's who they forever were and who they always will be.

4:05 pm

Photo of Ann SudmalisAnn Sudmalis (Gilmore, Liberal Party) Share this | | Hansard source

I have been worried, before being elected in 2013 and ever since, about the impacts of banking misbehaviour. That means it existed prior to me being in this House. Why didn't Labor do anything about it in the period from 2008? I need to remind those opposite that talking about my missed opportunities to get a royal commission is simply wrong. To get full justice, to get full examination, background and evidence to justify such a commission must first be constructively put in place, and that is exactly what I did. Never mind the rubbish presented by Labor. Most of the significant banking misbehaviour happened on their watch, starting in 2008. Labor were in government and they did nothing for five years. I don't recall a single instance of a call for a commission. We had media on a 24/7 news cycle and a great deal of ignorance both in the community and in the media political analysis. It was purely a political stunt in 2013. Truly, the commission should've been established in 2010, but it wasn't.

In 2016 the Parliamentary Joint Committee on Corporations and Financial Services, of which I was a member, tabled its report on the impairment of customer loans. The committee report determined there had been a persistent pattern of abuse of the almost complete asymmetry of power in the relationship between lender and borrower. It considered that there were a number of factors which created an environment in which small-business borrowers were very vulnerable and that banks were able to exploit that vulnerability. Additional background information related to the wide variation of conduct that was deemed acceptable by lenders due to the significant level of discretion and commercial judgement relating to initial lending and the management of loans and financial difficulty. Complex non-negotiable loan contracts, coupled with gaps in existing legislation and regulation, gave banks the power to behave in ways that, in relation to loans, were unethical, unreasonable and lacked transparency. There were many cases of borrowers in financial difficulty who were unable to pursue their rights through the courts because either the process was unaffordable or they had lost control of their finances. The significant gaps in the coverage of mediation and external dispute resolution schemes left borrowers without the means to have their disputes with banks tested. I must say that we have already addressed a large number of these.

At the end of one of the inquiries in 2016 into banking behaviour, the committee was not able to further investigate the matter as a significant proportion of the answers coming from the financial sector and the banking representatives were contradictory and strange. They seemed to just want to confuse the MPs asking the questions. In September 2016, the Minister for Small Business tasked the Australian Small Business and Family Enterprise Ombudsman to undertake an inquiry into the adequacy of the law and practices governing financial lending to small businesses. She reviewed 23 cases of the thousands that had been reported and found that about a third of the cases were simply poor business decisions where the bank appeared to have acted reasonably; a third were a mixture of poor business decisions and poor banking practice; and a third involved real issues where bank conduct was unacceptable and possibly unconscionable. This indicated the need for investigation into the other cases, and it had to have a regulatory environment with the practices of industry participants. There was an inability for small businesses to obtain justice.

These were just some of the areas of inappropriate treatment of small and medium enterprise businesses by banks: they didn't comply with their communications policies; their communication was poor or misleading; they priced with a focus on debt reduction without due consideration to the long-term viability of customers; they failed to give them proper documentation; they failed to give them proper valuation of their properties when they were making decisions about turning over loans; they failed to adopt some of the fair treatment procedures for customers; they failed to identify and handle customer complaints; and they failed to handle conflict-of-interest events.

Inappropriate treatment of customers can be considered systematic because of a failure of the bank to recognise and manage the conflicts of interest and put in place the appropriate governance and oversight procedures to ensure that a reasonable balance was struck between the interests of the bank and those of the small and medium enterprises. These findings were the necessary background to validate the very expensive process of a royal commission into the banking and other aspects of the financial sector. We were all appalled at the outcomes, some of which we had no idea were going to turn up. I'm proud that we have now painstakingly got the royal commission happening and are getting results. (Time expired)

4:10 pm

Photo of Patrick GormanPatrick Gorman (Perth, Australian Labor Party) Share this | | Hansard source

The Prime Minister told this House he had regret for not supporting the royal commission—he told us that yesterday. We've had three Prime Ministers vote against the need for a royal commission into the banks 26 times—that is, 26 times voting against a royal commission into the banks. It was 26 times, each represented by a different briefcase on Deal or No Dealevery single one saying 'no deal', no royal commission. There are 26 letters in the alphabet and for every single one of those letters, they voted no. They voted no A, no B, no—I will spare you the rest, but I think you get the picture.

There is something else that has a similarity on this number 26. I want to make this point: 26 times is a large number of times to vote against something. Something I learned today in researching for my contribution was there were 26 episodes of season 1 of The Muppet Show. I agree with the member for Cowan; I also do not think it a coincidence that there were 26 times this government voted against the banking royal commission, and 26 episodes of season 1 of The Muppet Show. I will share, for the more mathematically inclined, one other fact about the number 26. Twenty-six is the smallest non-palindromic number to have a palindromic square of 676.

I support those who work in banks in my community. I support those who work in the financial sector. It's a very important employer. But they would be embarrassed about some of the conduct that has been exposed by this royal commission. I'd like to think that voting against the banking royal commission 26 times was a mistake, and we all make mistakes from time to time. I made a mistake in this House on Monday. I failed to say in my first speech the name of Matt Rogers, one of the people who assisted me on my campaign. That was a genuine mistake, but I didn't make it 26 times.

People say that patience is a virtue. This government must be very, very virtuous to be so patient on the desperate need for a royal commission, when the evidence was coming to them week after week, month after month and they refused to act. We've seen the scandals. We have seen what the royal commission has shown us about what is happening here in our own country, in our own financial services sector, in our own banks.

There has not been a hearing held for the royal commission in Western Australia, but it hasn't stopped Western Australians from sharing their stories about what has happened to them as a result of, in this case, possible breaches of the code of conduct from the banking industry. I talk about the case for the Harley family. The ANZ Bank may have—I say 'may have'—breached the industry code of conduct. Whether or not ANZ breached the industry code of conduct is one thing, but they acted appallingly in how they treated this family. Stephen Harley had a heart attack. He was awaiting surgery. This was the time that the ANZ Bank decided for the Harleys, who had been farming on their land for 107 years, that it was time to call in debts of $2.5 million. He was waiting for surgery. And then, after they'd been kicked off the farm, the bank said, 'Oh, actually, we've cleared the debts. We're sorry.' Sorry doesn't cut it. If it weren't for the banking royal commission, these stories wouldn't have been told.

So, again, I commend the leadership shown by the shadow Treasurer, by the Leader of the Opposition, by the member for Hotham and by others to make sure that we had this royal commission. But it's a pattern of behaviour from this Liberal government—or from this Liberal-National government, if the Nationals want credit as well for this disgraceful activity—where they vote against important decisions, important national needs. They voted against protecting penalty rates. It's a pattern of behaviour. More recently, they voted against referring the member for Dickson to the High Court. Maybe that's a reflection on the sorts of judgement made in this place by those opposite.

But it's not all negative. They do vote for some things. We know that they voted to give the banks a $17 billion tax handout and voted to raise the pension age to 70.

4:15 pm

Photo of Tony PasinTony Pasin (Barker, Liberal Party) Share this | | Hansard source

Those opposite want the people of Australia to believe that those on this side of the chamber have spent our time in this place since being elected running some sort of protection racket for the banks. Let me tell you something about my history; it might mean something about what I think of banks. I'm no fan of banks. I grew up around the kitchen table, often when my parents would be close to tears, and I'd ask them, 'Mum, what's the problem?' and she'd say, 'Son, we're paying interest on our bank debt of over 20 per cent.' I wasn't young enough to calculate what 20 per cent meant, but I knew it was significant. I knew it was causing harm to my family, so, don't for one minute think that I'm a great fan of the banks.

Ladies and gentlemen, our job is to look at what we can do to fix problems. What have we done? Those opposite don't want to talk about what they've done. What they've actually voted against are some of the strongest regulatory improvements and strongest regulatory outcomes in terms of banks and their regulators in modern Australian history. We've established the Financial Complaints Authority, a one-stop shop to resolve complaints. We've created a framework to hold banking executives to account. We've boosted banking and financial services competition to benefit customers. We've provided over $70 million to enhance the capabilities and activities of the regulator, ASIC. We've created a new deputy chairman of ASIC—we focussed on enforcement and appointed the highly regarded Daniel Crennan QC to the position.

We had a choice. We could have either provided stronger rules, regulations and resources to the regulators or had a royal commission. We thought, at the time, it was better to get on with fixing the problem. But I won't be lectured by those opposite about these things, because, do you know what? When we moved to establish the royal commission—indeed, before we did—one thing was missing: the Leader of the Opposition's terms of reference. There were no terms of reference. He wasn't prepared to tell us what he expected to see in a royal commission. I took the opportunity to check his letter, and this is a really scary prospect: his letter to the then Prime Minister indicated that the Prime Minister could direct the commissioner on how to run the royal commission. The Leader of the Opposition clearly doesn't understand the separation of powers. He was suggesting that he could get the Prime Minister to direct the royal commissioner. To think that we could have a potential Prime Minister who doesn't understand that there is an important need for independence within a royal commission!

We've heard also some of the compelling stories out of the royal commission—they're compelling and they're sad. Those opposite assume that the regulators don't have that information to hand. I don't think, with respect, that's a safe assumption to make. It's safe to say these have been ventilated in the royal commission. I, like the Prime Minister, share the view that I'm grateful that this process is allowing some closure for individuals, to allow the hurt to be ameliorated. But to therefore assume that the regulators didn't have this information and weren't working to resolve the issues is, I think, particularly unfair.

But the biggest issue here, and it is one which I'm not going to let those opposite get away with, is that many of the stories which have given us cause for concern out of the royal commission have come from the broader financial services sector. Sure, some have related to banks themselves, but many of the ones, even the ones we've heard today, come from the broader financial industry sector—superannuation, insurance. I remember distinctly that those opposite were pretty keen for the superannuation industry not to be included and for the broader financial services sectors not to be included. Let's be clear. This place can do some great work, and it does its best work when we extend our hand over the divide, as the Prime Minister and the Leader of the Opposition did on Monday this week. Let's stop playing politics with this and let's get on with fixing the problem. That was our intention. It has been our intention from day one, and it's our intention now. If you want to play politics, have fun; the people of Australia are switching off.

Photo of Kevin HoganKevin Hogan (Page, National Party) Share this | | Hansard source

The discussion has concluded.