Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Before I get to my next question to Senator Cormann, I might say, for Senator Patrick's benefit—and I did cover this in my second reading contribution yesterday—that the Israeli parliament looked at this issue of executive caps, starting with their own version of a parliamentary inquiry in 2010. At the time it was very progressive legislation around executive caps, and it took the approach that you mentioned, whereby they said that they wanted to give shareholders, especially, more transparency and more say in setting executive caps for the banking sector. That legislation was passed in 2012, but they found that it led to no change at all in the executive salary caps. Then in 2016, four years later, they passed the first legislation internationally capping executive salaries at very similar levels to what we're proposing. Any banker who earns more than that gets a massive amount of tax, and basically it's not worth it. They came to the conclusion that, left to their own devices—many of the big institutional shareholders that control the banks are part of the market system and part of the same ethos, the profit ethos, that drives the banks and a lot of the bad behaviour. But their decision wasn't just about bringing the banking sector into line and holding it to account. It was also fundamentally a question of equity and a moral argument about inequality in their own country. If a banker earns $1½ million, that's still a hell of a lot more than most people will ever earn. It's still 100 times your average weekly earnings. They felt that was sufficient.

Interestingly enough, the bankers association in Israel challenged it in the Supreme Court, as you'd expect they would, and failed. So, they were the first country in the world to do it. And I don't often get up in this place and speak about Israel, but in this case I think they've led the way and there's absolutely no reason we can't do the same thing. So, I will just say that, which I did cover during the second reading debate yesterday.

Senator Cormann, my last question to you, you'll be pleased to know, on this amendment is on the differences in the sizes of the tier 1 banks. As you just agreed, those banks are very different sizes. The Commonwealth Bank is nearly twice the size of the National Australia Bank. Isn't that fundamentally also accepting that those different banks will have different advantages and disadvantages in funding a penalty, if it's capped at $210 million? Essentially, by saying that, given the funds available to CommBank, it'll be twice as easy for them to pay a fine of $210 million based on their market capitalisation. I think that we actually need to differentiate all banks on the size of their assets.