Thursday, 30 November 2017
Questions without Notice: Take Note of Answers
Banking and Financial Services
That the Senate take note of the answers given by the Minister representing the Prime Minister (Senator Brandis) and the Minister for Finance (Senator Cormann) to questions asked by Senators Carr, Bilyk and Ketter relating to banking and financial services.
Well, today is a good day for ordinary Australians. It's a good day for farmers. It's a good day for small business owners. It's really a very good day for everyone except the big banks. But it's a very sad day—a very sad day—for the Prime Minister, because the Prime Minister has backflipped on the one point of principle that he had left. Marriage equality, climate change, tax, social policy: he has shown himself prepared to cave in on every single one of those things that he once held dear. But there was just one issue, one issue of principle, that he was apparently prepared to go to the wall on, and that was protecting the big banks.
Well, not anymore. The Prime Minister has folded. It is 601 days since Labor called for a royal commission into the banks. Over those 601 days, we have gone on a fascinating voyage of discovery. We found out exactly what it takes for this Prime Minister to change his mind. When Labor first called for a royal commission, we already knew about the illegal activity, the misconduct, the inappropriate financial advice, the insurance claims unfairly declined, the fraudulent activity, the cover-ups, the targeting of whistleblowers and the irresponsible lending. But apparently that wasn't enough for this Prime Minister.
Would appalling exploitation of ordinary Australians change the Prime Minister's mind? For example, back in 2016, in October, ASIC's Financial advice: fees for no service report revealed that Australia's four big banks and the AMP had spent years charging over 200,000 customers fees for services they did not receive. ASIC's report said that they were going to have to pay back nearly $180 million to customers. But the Prime Minister wouldn't budge—not at that point. What about cartel conduct? In December 2016, ANZ was fined $9 million by the Federal Court for attempted cartel conduct in relation to manipulation of the Malaysian ringgit. Justice Wigney of the Federal Court said that the attempted contraventions were very serious. He went on to say that the conduct of the traders in question was deliberate and systematic. The Prime Minister wouldn't budge.
Or what about rigging financial markets? Recently, NAB and ANZ settled with ASIC for $50 million each over the bank-bill-swap-rate rigging case. Justice Jagot of the Federal Court is reported to have said that the conduct was a gross departure from basic standards of commercial decency, honesty and fairness, and that the Australian public had a right to be shocked and disgusted at what took place. Not this Prime Minister, because he wouldn't budge—not even then.
Allegations of money laundering: in August this year we had incredibly serious allegations from AUSTRAC, alleging significant breaches of anti-money-laundering and counterterrorism financing laws by the Commonwealth Bank. The PM wouldn't budge. We asked then: 'What about political embarrassment? Perhaps that would be motivating for our Prime Minister?' The member for Dawson was threatening to cross the floor, threatening to reveal the Prime Minister's lack of authority. What did he do at that point? Still he backed the banks. He doubled down and he declared on national TV that there would be no royal commission under this government. There is public support up at levels of 60 and 70 per cent for a banking royal commission in a number of polls. The public wants one. Would the Prime Minister budge in the face of overwhelming public support for a royal commission? No.
But now there is going to be a royal commission. So, what has changed? From all reports, what's changed is that the Prime Minister received a telephone call from his friends at the banks. They relieved him of his duty to continue to throw himself in front of the train for them. That is what it takes to change this Prime Minister's mind—not corruption, not collusion, not exploitation of Australians, not even money laundering, not political embarrassment by disgruntled members of the National Party who finally cottoned on that they're on the wrong side of this argument, not even a compelling poll. All it takes for this Prime Minister to change his mind is a phone call from the major banks.
I too rise to speak, first of all, on the question of banking, superannuation and financial services, but, more importantly, to counter the misrepresentations that Senator McAllister has just provided to the Senate. We have one of the strongest and most stable banking, superannuation and financial services industries in the world. They perform a critical role in underpinning the Australian economy. Our banking system is systematically strong, with internationally recognised world's best prudential regulation and oversight. However, the ongoing speculation and fearmongering about a banking inquiry or a royal commission has been disruptive, and it risks undermining the reputation of Australia's world-class financial system. This is what those opposite have been doing. They have been going out there deliberately and systematically fuelling fearmongering and speculation about this banking inquiry and, therefore, in so doing, they are risking and undermining the reputation of our financial system. As a consequence of this, we have decided to establish this royal commission to further ensure our financial system will work efficiently and effectively.
The royal commission will inquire into the alleged misconduct of Australia's banks and other financial services entities. All Australians have the right to be treated honestly and fairly in their dealings with the banking system, with superannuation entities and providers and with financial service providers. The highest standards for these institutions is vitally important to the good governance and corporate culture of those providers and of our system so that the best outcomes possible are provided for Australian consumers. I think that this banking inquiry will also afford the opportunity to look at what this government has actually been doing in its steady program of addressing misconduct by the banks. We have embarked on a reform agenda and we will be continuing that reform agenda. We will take action, where necessary, to hold banks and other financial service entities accountable. The royal commission will not defer, delay or limit in any way any proposed and any announced policy, legislation or regulation that we are currently implementing.
Senator Gallagher came into this place today at an appropriate time, given the circumstances that we are facing today. I will say for the record: Senator Dastyari's comments as he came into this chamber in relation to his conduct fall very short of what is required for this Senate. It was very clear that Senator Dastyari has a lot more to say on this matter. He has failed to do so and, I think, failed to provide adequate explanation in relation to his dealings with Mr Huang.
Whilst we are here and we are talking about issues, I also want to have a look at Mr Dastyari's—
Madam Deputy President, a point of order. You were correct in trying to advise the minister that the issue now before the chair is taking note of answers to questions on the banking royal commission and the lack of leadership from Malcolm Turnbull. It has nothing to do with Senator Dastyari.
I do. I think, as Senator Reynolds correctly points out, it is also about transparency and honesty, and we have seen very little of that in this place today. Of course, we are talking about the transparency and honesty of those opposite, and that's really what I was focusing on. In question time, some of the answers were also in relation to that, and objections to some of the comments I made about Kristina Keneally.
Senator Fierravanti-Wells, please resume your seat. Senator McAllister talked about answers to questions from senators at question time today, and you are not one of the people that the opposition is taking note of. I appreciate it's a broad-ranging debate, but it's a broad-ranging debate within those parameters. So please continue.
It's a broad-ranging debate, Madam Deputy President, and it does go to transparency and accountability. I was going to say that what would one expect with the sort of conduct that Senator Dastyari is alleged to have been involved in? (Time expired)
In rising to speak to the motion to take note, I think ending where the good minister did was quite inept. You talk about transparency. The Australian people see the Prime Minister for the failed leader that he is. Here is a man who promised, if he became Prime Minister, to be agile. This morning he proved that, yes, he is agile. It didn't matter what happened with our work in trying to get the government to come to terms with the fact there should be a royal commission into the banks. No. Was he ever concerned about the consumers, the mums and dads, who were being ripped off by the banks? No, he wasn't. But he was very agile when he got a letter from the four big banks giving him his riding instructions, outlining what they wanted so that they can keep control of any investigation or royal commission into the banks.
We saw the Prime Minister act very quickly: after getting that letter at 8.30 this morning, 30 minutes later he was doing another backflip. This is a Prime Minister who is so desperate to save his own job. It's not just the opposition saying that. It's not just the Australian people who understand what a failed leader he has been for this government; it's his own backbench that have been coming out and saying that. They're in so much trouble. They're in disarray. There is no unity of purpose. This is a man who has taken instructions from the four major banks in this country. They have outlined what they want in the terms of reference. It is not the government that is showing any leadership. It's not taking up the campaign that was run by the consumers who have been ripped off or after the opposition, Mr Bill Shorten and Mr Chris Bowen, had been saying for 601 days how badly this country needed to see transparency in the operations of Australian banks. No. As soon as he got that letter from those four big banks, he acted. It was 30 minutes later. It took him 30 minutes. But how many days have we been campaigning for? It's 601. This government is so dysfunctional that it's hard to describe. They are full of chaos.
It was the Prime Minister himself who, not so very long ago, liked to tell us all that he was a strong leader. Well, he is anything else but a strong leader. He is trying to govern a rabble of a government. We have the National Party senators and members dissenting from the government's policies. They have been calling for a royal commission. Did he listen to them? No, he didn't. So, as I said, he hasn't worried at all about consumers. He hasn't worried at all about the mums and dads. He hasn't worried at all about farmers. The only people he's been concerned about are the banks, and the reason he changed his position on having a royal commission into the banks is that the banks told him he should do that.
Why did they tell him he should do that? Because they know that they're getting all the heat from their customers. That's why. They knew that, if they gave the direction to the Prime Minister, they could control the terms of reference. The banking victims in this country have not been consulted, even on the terms of reference, because this is a stitch-up by the big banks and the Prime Minister of this country. He's trying to do whatever it will take to keep his job, because he knows that, as a result of poll after poll after poll, backbenchers in marginal seats on the government's side are concerned about their own positions.
I want to also respond to the latitude that was given to Senator Fierravanti-Wells to come into this place. It's all within the bounds of this place to talk about the concerns about Senator Dastyari, but those on that side that brought his children into this debate and criticised a father for talking about his children and the impact on his family should be ashamed of themselves.
Senator Polley, resume your seat. I have already spoken once today about what taking note is about. It is in response to answers given by Senator Brandis and Senator Cormann broadly around the banks. I appreciate there can be latitude but, when I've already pulled up one senator for going beyond, I don't expect another senator to do so. So please continue your remarks.
Thank you, Madam Deputy President. When it comes to the Prime Minister and his lack of leadership and vision, he has been renowned as a Prime Minister of backflips and thought bubbles—thought bubbles that he tries to grasp as they float by to give him another opportunity to try to save his position. Time and time again the Prime Minister said, 'We will not be having a royal commission.' As I said at the outset, this is a government that is being controlled, in this royal commission, by the banks themselves. (Time expired)
I too rise to take note of comments by my ministerial colleagues during question time, and I will absolutely address the banking royal commission. The first comment I'd make is that, unusually, I wholeheartedly agree with Senator McAllister's comments commending the government for introducing this royal commission on banking and financial services. I also commend the government on the terms of reference and, in particular, on the timing of it to get in, get it done and implement the recommendations of the many inquiries that have been happening since then.
Despite the demonisation by those opposite of the Australian banks, there is no question that our banking system and our financial sector in general are strong and robust. However, there is also no question that there have been many issues that have to be addressed by this parliament and by our agencies. That is particularly why I commend the government for their approach on this. As early as a few days ago, I was still unconvinced. I was open to the idea, but I was unconvinced it was necessary given the depth and breadth of activities the government has already been taking, and I've said so on the public record. But, after having a look at the terms of reference today and how they intend to go about it, I think that it is the right thing to do at this time, and I will explain why.
Senator Polley was just telling us that those opposite have, for 601 days, been calling for a royal commission into the banking and financial sectors. Guess what? This government, for those 601 days, hasn't been calling for a two-, three-, four- or five-year royal commission which would mean that nothing would have happened in relation to reforms until the end of the inquiry. So, Senator Polley, in the 601 days during which you have been calling for yet another inquiry, what has this government been doing? Let me tell you that what we have been doing is really substantial. In those 601 days during which you were proposing a lawyers' picnic, this government has conducted the Murray financial system inquiry, the Australian Financial Complaints Authority has been established, there are additional resources and powers for ASIC, the Banking Executive Accountability Regime has been introduced, the House of Representatives Standing Committee on Economics has done a significant amount of work, and we have increased competition in the banking sector. So, instead of waiting 601 days for an inquiry, we have taken substantive action which I commend the government for.
But now the government is saying that, given the political events surrounding us, we need certainty for our banking sector. It is a sector which is absolutely vital for our economy, for our national sovereignty and for every single man, woman and child in this country, who need a strong, reliable and secure banking system. All of these reforms and actions that have occurred to date—and if I had another half an hour, Senator Polley, I would happily go through—
To the chair. I would happily remind those opposite, including Senator Polley, of all the achievements that have been implemented and are still in the process of being implemented. What the government has done with this announcement today is absolutely in the best interest because those reforms that wouldn't have happened under your regime and your proposal are still being implemented. We will have a 12-month inquiry while all of the other reforms are happening, and then additional reforms will be brought in at the end of that time. Again, I thoroughly commend the government for that very sensible approach.
So, why now? The government has been very clear, and the Treasurer and the Prime Minister both said today, that ongoing speculation—quite often generated by those opposite—about a royal commission is causing disruption and uncertainty and has the potential to impact and to undermine Australia's reputation as a world-class financial system. It's got to such a point that even the major banks have today asked for that uncertainty to end, which is not, as they suggest, some grand conspiracy. It is actually in the national interest for our banks to have certainty and for all of the millions of Australians—not only the hundreds of thousands of Australians employed in our banking and financial sector, but also every single Australian—to know that their money, their superannuation and all of their other financial affairs are managed, and managed very well and transparently. Most Australians, as I said, are consumers of banking, superannuation and financial services and they all have the right to be treated fairly. I commend the government's action to the Senate and I congratulate them.
There is nothing clearer: this is government by the banks, for the banks and of the banks. There is no other conclusion that can be reached as a result of the government's incredible backflip today. It is an important day. There will be many thousands of Australians greeting the news of a royal commission. But they will also be very, very sceptical that it has come to this: within half an hour of receiving a letter from the four major banks—a letter, if you care to read it, setting out all of the prescriptions the banks would like to see in the royal commission—the government has complied, in lightning swift time. It is absolutely incredible. We have a weak Prime Minister and an incompetent Treasurer finally waking up to the fact that their facade, their smokescreen of so-called action, was not the change that victims and the community demanded.
The press conference was a sight to behold. We had the Prime Minister describing the royal commission as 'regrettable' and desperately trying to show off an aura of control when the reality is that this government is in total chaos. We today heard Senator Brandis talk about the fact that the need for the royal commission came about because there were 'wild and foolish' comments being made in the public arena. Since when was it just wild and foolish comments that went so far as to undermine confidence in our financial system? This clearly overlooks the many, many scandals that have taken place over some five to 10 years, which have been ignored by this government.
Dennis Shanahan wrote in The Australian today, 'No leader who has to say he is leading, is leading.' Even at this late hour, this weak Prime Minister and his incompetent Treasurer are still trying to run a protection racket for the big banks. They still want to ramraid the budget with $60 billion of corporate tax cuts, which significantly benefit the big banks. This government is at the bidding of those major banks. Only when the major banks wrote to the government did it finally choose to jump on this issue. When the big banks say, 'Jump', this Prime Minister asks, 'How high?'—don't worry about consulting with the banking victims about the terms of reference. What an insult to those people who have fought so hard for justice.
It just goes to show who has the ear of this government: it's not the ordinary people who've been ripped off; it's the big banks. This government has no excuse for not hearing the voices of these people. It's the work of this Senate over a number of years that has highlighted some of the most egregious examples of banking misconduct. It's amazing to me, as a senator who's been involved in the process, that a government can have such a hard heart when it comes to listening to ordinary Australians yet when it comes to Collins Street getting on the phone or dropping a line we see immediate action. And the government could be in no greater chaos than it is today. Let's be clear: the relationship between the Nationals and the Liberal Party has broken down. Day by day we see the sniping, the games and the disunity. No-one could be blamed for thinking this government is nothing but a rabble. It's clear to me that the Nationals party members have given up on being in government and have given up on the Liberal Party because they know deep down that the government wants to stand up for the big banks and not ordinary Australians.
I just want to touch on those scandals that have emerged. Where was the Prime Minister when each of those occurred? He was still running the protection racket for the banks. If you want to take a snapshot of just one of the banks, let's look at the CBA—CommInsure and the denial of insurance claims. It took a whistleblower to expose what is really going on: refunding CreditCard Plus insurance customers who purchased coverage, refunding home loan protection insurance customers, ongoing discussions with ASIC over the regulator's concern about advice given to Essential Super customers, and charges on disputed card transactions. And let's not forget the AUSTRAC scandal: 53,000 breaches of our anti-money-laundering legislation.
And that's just one bank. Those who are interested can read the submission by the Australian Institute of Superannuation Trustees to the Economics References Committee for a more complete list of banking scandals. So, even the banks have now acknowledged the need for action: the recent spate of sackings for misconduct; the removal of ATM fees in a desperate attempt to buy back goodwill. And now we have a government weakly— (Time expired)
Question agreed to.
That the Senate take note of the answer given by the Minister representing the Treasurer (Senator Cormann) to a question without notice asked by Senator Whish-Wilson today relating to banking and financial services.
I might surprise a few people in this chamber by saying that it's actually time to put the politics aside on this issue around a royal commission. A number of us in here have campaigned for a full parliamentary inquiry or a royal commission. Certainly I've been campaigning for it for nearly four years, and the work of the Senate is where this started. In fact, it started with the Future of Financial Advice debate in this chamber, when we managed to claw back a weakening of the FoFA laws. And then the Senate itself was the first institution to recommend a royal commission into the Commonwealth Bank. Since then, the good work of this place, this chamber, has uncovered a number of incidences of financial misconduct, and a number of our senators who have been involved in these inquiries and committees have felt a sense of frustration that, as good as our Senate people are, we haven't had the resources, the time or the powers to get to the bottom of some of these financial scandals.
For example, just with forestry management investment schemes, I know how frustrated I felt that we couldn't actually help the hundreds of witnesses and victims we met. This is a really important point, because these people are still not being compensated for the way they were treated by the banks and other players in the managed investment scheme scandal—or should I say Ponzi scheme collapse. The reason they're still not being compensated is that this misconduct has never been properly investigated. The Senate did the best we could, but it was just too much work for us. It really needed someone dedicated, with the resources and the powers to compel witnesses, to offer immunity to whistleblowers, to seize documents and to search premises—all the things we can't really do as an institution.
Now that we have a royal commission established, I hope we can get it right. This is the most important point that I want to make today: if we've got a chance of actually doing this properly, then we can restore the Australian people's trust in the banks and in our financial system, we can restore the reputation of the banks and we can get some justice for the victims of financial crime that, so far, have been let down by the system. We can also change the culture in the banking sector. I and the Greens have made it really clear that that culture starts at the top. It's the culture of putting profits before people. It's a culture of excessive remunerations, chasing returns in every division, taking shortcuts, charging inappropriately, all the way through to direct fraud, misconduct and unconscionable conduct. These are the kinds of things that this Senate has uncovered.
We have a regulator that we know is under-resourced. They do a good job. I'm a supporter of ASIC and APRA and all of our regulators—I always have been—but, when I asked Greg Medcraft, before he left, whether he supported a royal commission, he didn't answer my question. He'd never answered the question all the way along; he was a consummate professional to the end. He just said to me, 'I'll just point out what I've already pointed out publicly, Peter—and that is, the culture hasn't changed. No matter what the government's done in recent years to try and tackle the banks, their culture hasn't changed.' I've heard the same comment from some of the big investors in the banks. Some of the bank's biggest investors—the superannuation funds, the pension funds, the hedge funds—have told me the same thing. So this inquiry, a well resourced inquiry with the right powers, will certainly let the banks know that they're on notice and they have to change some of their ways.
We want to see systematic issues looked at, because, if we don't fix some of the systematic issues, the kind of misconduct we've seen is going to continue. We've got to look at whether we've got the settings right and why the legal system has failed some of these victims. There's a lot we need to do in this inquiry, and I ask everybody, including the government, to come together and listen to all the stakeholders—the victims of financial crime, the community centres, the farmers, those who've been campaigning for years—to get this right. This is a chance to get good terms of reference that we can all use and actually get this right.
Today, I wanted to thank a lot of the people who have been out there on this journey with the Greens and other parliamentarians. I'll have to do that probably at an adjournment next week. But I want to say that a number of people inside this building and outside this building have finally achieved a fantastic result; let's not waste an opportunity. (Time expired)
Question agreed to.