Tuesday, 12 February 2019
Matters of Public Importance
Banking and Financial Services
I inform the Senate that at 8.30 am today seven proposals were received. In accordance with standing order 75, the question of which proposal would be submitted to the Senate was determined by lot. As a result, I inform the Senate that the following letter has been received from Senator Collins:
Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:
'The Morrison Government's failure to act on delivering better protections for Australian consumers after voting against a banking royal commission 26 times'
Is the proposal supported?
More than the number of senators required by the standing orders having risen in their places—
I understand that informal arrangements have been made to allocate specific times to each of the speakers in today's debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.
I rise today to speak in relation to this matter of public importance and the vitally important issue of consumer protection. It's quite clear that the Morrison Liberal government has failed to act on delivering better protections for consumers on a whole range of issues, not least of which the issue we're talking about: the reform of the financial sector.
I am going to come back to that issue, but I want to outline some of the history leading up to this. I want to make the point firstly that when it comes to stepping up and addressing issues that are of concern to Australian families the coalition has either been missing in action or has had to be dragged kicking and screaming to do the right thing. I'm talking about some of the big issues in Australian history, going to some of the fundamental protections that Australian families enjoy—things like universal health care. Universal health care was opposed by the coalition government at the time, in the 1970s with Medibank and later with Medicare. When it comes to the retirement savings of Australians and the formation of the occupational superannuation system, again, this was something that the coalition opposed vehemently. When we come to reform of the financial sector and the appalling scandals that have bedevilled Australians, not only in the last few years but over the previous 10 years or so, we see once again the government choosing to stick its head in the sand, looking after its big business mates and its banking mates, and eventually having to be dragged kicking and screaming to do the right thing.
We know the precursor to the more recent scandals—some of the scandals that took place under the previous Labor government. We saw things like the collapse of Storm Financial, Trio Capital and Westpoint. All of these things were looked at by the previous Labor government. There was a Parliamentary Joint Committee on Corporations and Financial Services inquiry in 2011-12. The reforms that came out of that included financial advice providers being legally required to act in the best interests of their clients and eliminating kickbacks to financial advisers. But these things were fought by the coalition. They voted against Labor's future of financial advice legislation in the House, they voted against FOFA in the Senate and they tried to undermine the functioning of the FOFA reforms when they came to government. But, thanks to Labor taking up the fight on the finance front, FOFA was able to continue, and we went on to see some further work being done by ASIC down the track. For example, in 2016 they found that customers were paying fees for financial advice that was never provided. There were more than 300,000 customers affected by this scandal.
In the face of all these scandals at the time, not only was the government dissembling and trying to fight against Labor's sensible reforms—I remember at the time the comments from the Minister for Finance, Senator Cormann, and Senator Sinodinos opposing some of these changes—but then we saw further scandals erupting. It wasn't until after those scandals that Labor started to call for the royal commission. That was in April 2016. We called for that royal commission in light of all the mounting evidence that was there. We saw the pain that was inflicted on ordinary Australians by banks which had a total culture of greed, being driven by the profit motive and return to shareholders at all costs. That was what was driving the system. In the face of that, Labor decided that there was a need for a royal commission. But once again the coalition was there to block Labor's sensible proposals. Over the 601 days or so that Labor was calling for a royal commission and the coalition was holding out, we had the Prime Minister at the time, Mr Turnbull, adamant that there was not going to be a royal commission. He said that it was just going to be a report and nothing would come out of that. He talked about the royal commission being a waste of money and said that the only thing a royal commission can do is ask questions and that it would be a political exercise that wouldn't do anything to resolve people's needs and concerns. He talked about the fact that the royal commission would be a forum for the legal profession and would go on for years—this is what Mr Turnbull said—and would cost hundreds of millions of dollars and not tell us anything new. How wrong Mr Turnbull was, as it turns out and as many of us were aware.
Mr Turnbull also said that the royal commission would be a waste of time. He said it was a populist campaign. He said that it was just a slogan and nothing of substance. He said it was a political exercise, a cynical exploitation. He talked about it being crass populism. We know that the royal commission has handed down a very substantial report. There is a lot of work to be done, but I think we all are in debt to the work that Commissioner Hayne has done in this area. He has shone a light, over the 12 months of his commission, on some egregious conduct, something which I think many of us wouldn't have expected would have come out. Many of us thought that the situation was bad, but we didn't know just how bad it really was. So this opposition to the royal commission, I think, has been a low point for the coalition.
But the opposition to the royal commission is not the only way in which this government has let down Australian consumers. I can make reference to some of the work the Senate Economics References Committee has done in its inquiries in a range of areas: looking at the issue of non-conforming building products and the very slow rate of response by the government to a whole range of issues that are coming out there, particularly asbestos coming into Australia continuously, and the government's failure to protect Australians in their homes by taking the step of supporting Labor's principled position of proposing a ban on the introduction of flammable cladding into Australia. The issue of foreign bribery is an area where the government has had an extremely slow response. On the issue of general insurance protections, we had a report in this area, Australia's general insurance industry: sapping consumers of the will to compare, finding that there were issues with competition in the general insurance market. Of course, I've already talked about the future of financial advice and the scrutiny of financial advice as well, which has been an area where the government has been completely missing in action.
When it comes to the protection of consumers in a financial sense, I also want to make reference to the superannuation area, where we've also seen the government missing in action when it comes to superannuation guarantee nonpayments, which affect the most vulnerable in society. The rates of nonpayment of superannuation are in the billions of dollars. This has occurred under this government's watch, and collection and enforcement action by the ATO has been very, very disappointing. The best response that this government came up with was an amnesty, and, of course, as part of that, companies got a tax benefit from the underpayment of superannuation. It's come up at the Productivity Commission review, and the royal commission has dealt with this as well. This government shies away from debate on these issues, dragging its feet on reform over and over again. So many times super bills have been listed on the Notice Paper, and yet we never get to debate them.
There are a number of other areas where this government has been missing in action on consumer protection—for example, payday lending. I give a shout-out to Mr Dick, who has dealt with this particular issue, and, on dodgy rural lending practices and local bank closures, a shout-out to Zac Beers, our candidate in the seat of Flynn. It is having effects on local businesses in Dickson, and our candidate in Dickson, Ali France, is dealing with this issue very clearly. It's time for a Labor government to step in and address this particular issue.
I'm very happy to stand and talk on this motion today. The first thing I wanted to highlight to the Labor Party was how long they took to support the call for a royal commission. It's often not discussed, and it's certainly not in the media frame around royal commissions at the moment, but I think it's important considering we're debating how long it took the Liberals to support a royal commission, and it absolutely did take them too long. The previous Prime Minister, Malcolm Turnbull, has recently gone on the record as saying that he wished he'd done it earlier. Well, the call for a royal commission was first made in 2013 by a Senate inquiry which Labor was a key part of. I know from my work in that Senate inquiry that it took me and the Greens nearly two years to get Labor on board. So, if you want to talk about delays to getting outcomes for consumers and taking on the financial services industry for misconduct, it's taken all of us in this chamber way too long to get to this point where we are today.
I think it's really important to point out that this has been a nearly five-year journey by a large number of good people to get it to where it is. I would've actually liked to have heard Senator Williams's contribution today, because I think Senator Williams played a key role in calling for this royal commission in the first place. Certainly, the recommendations, which were supported by Senator Williams and by former senator Mark Bishop, who was a chair of that committee, and call for a royal commission would have just remained by the side of the road—a pit stop in time—had it not been for the Greens, who built the wagon, campaigned and moved it down the road through numerous Senate inquiries. In fact, I remember both Labor and the Liberals voting against a Greens motion in this Senate to call a royal commission into the financial services industry. There was no point of difference between you guys. But let me say that I am still very appreciative that Labor did decide to join the Greens in our call for a royal commission in 2016.
Today, in the remaining few minutes that I have, I'd like to discuss what I've been talking about, which is the 'royal omission'—something that wasn't looked at in the royal commission into banking and financial services. Commissioner Hayne, in his very first public hearing, made it very clear that he felt that the rotten heart of the financial services industry was simply greed—a profit-at-all-costs mentality, a culture that puts profits before people. He told the CEOs in that first briefing to go away and see if they could find the balance and where that balance lay between their pursuit of profits and their ethical duty to customers and other stakeholders.
There are inherent conflicts of interest in the financial services industry, which became very clear throughout a number of witness hearings. I want to talk about the toxic culture and the inherent conflict of interest that is in this place—in politics—that is very much part of the misconduct story in the financial services industry and very much part of why it took five years for Labor and the Liberals to support a royal commission. You've got mountains of money washing around in this place; you've got both Labor and Liberals taking donations from the financial services companies—millions of dollars in donations over the time period that the royal commission looked into. When we saw systemic misconduct and potential fraudulent and criminal conduct, both the big parties were taking donations. No wonder it took so long for this royal commission to happen; no wonder it took so long to get outcomes.
If we don't fix that culture of greed—that toxic culture at the heart of our democracy—how are we going to possibly fix the problems in the financial services industry? It really saddened me to hear Labor say last week that they were going to continue to take donations from the big banks and the financial services companies. If we're going to get on with the job, we need to understand and respect that lobbyists and donations, pay for play, have caused a big part of a problem that we dealt with in the royal commission and that we deal with in legislation in here. So I would like to see Labor give that money back and the Liberals give that money back. Why don't you put it into a fund for victims of financial crime? I'd like to see CEO bonuses put into a fund for victims of financial crime. We've got to travel a lot further down this road if we're going to fix the problems in the financial services— (Time expired)
We've come to the end of a royal commission that the current Prime Minister and former Treasurer, Mr Morrison, voted 26 times to prevent. It's an understatement to say Mr Morrison was dragged kicking and screaming to this commission. When the former Prime Minister, Mr Turnbull, folded to public pressure and announced the government would finally establish a royal commission, the then Treasurer could not have looked more despondent. He described it as a 'regrettable but necessary action' only taken because 'politics is doing damage to our banking and financial system'. Let's reflect on that a little bit more. It was politics, he asserted, doing damage to our banking and financial system. Those words haven't really aged well, have they? The evidence unearthed by the royal commission is shocking, and it has shown that the royal commission was about much more than responding to political concerns. It was about exposing serious systemic deficiencies. Even the head of the Australian Banking Association has admitted:
Suffice to say that it is in everyone's interest that we build a better banking system. And that as painful as the process has been, sunlight is the best disinfectant.
It might have been better had Mr Morrison heeded those ideas a little earlier.
It's worth contemplating exactly what it meant for Mr Morrison, as Treasurer, and all of his colleagues, to vote 26 times against the establishment of this commission. These are the things that the Prime Minister voted 26 times to hide. These are the scandals, the issues and the problems in the sector that the Prime Minister thought should never be exposed to sunlight. There were multiple institutions charging fees for providing advice to people who had died. There were the financial planners from the Commonwealth Bank subsidiary Count Financial. There were the NAB superannuation services that charged more than 4,000 dead customers. There was AMP deducting life insurance premiums from the superannuation accounts of more than 4,000 dead people. It's just shameful and, in fact, shameless.
The commission also exposed the aggressive sales culture that took advantage of vulnerable people. The commission heard a now infamous and harrowing recording of a phone call in which a young man with Down syndrome was cold-called and aggressively sold life insurance. When his father tried to cancel the policy on behalf of his son, staff belittled the family in internal messages, and one message referred to that man as a 'bloody whinger'. It was part of a culture that incentivised sales over everything else. There was evidence of luxury overseas holidays handed out as incentives to salespeople, and those incentives were at the heart of the culture of greed that drove these abhorrent and immoral behaviours.
There were the aggressive claims-handling processes by insurance companies to avoid payouts. CommInsure rejected a woman's claim for treatment for breast cancer because the surgery wasn't radical enough. Another insurer, TAL, hired a private investigator who filmed a nurse in her home and in her pool to fight her claim for income protection arising from an anxiety disorder.
The commission also heard about the irresponsible provision of credit. There were stories from people who had received credit card increases after confessing to their banks that they had a gambling problem and asking their banks to cut them off. It comes on top of the routine underestimation of customers' living and other expenses, including the use of benchmarks like the Henderson poverty index, which is in no way a way to undertake assessments in relation to responsible lending obligations.
All of these things came to light through the work of the commission. These are all the things that Mr Morrison and all of his colleagues sought to hide over and over again in their refusal to support a royal commission. What did the commissioner say about all of this behaviour? He said:
First, in almost every case, the conduct in issue was driven not only by the relevant entity's pursuit of profit but also by individuals' pursuit of gain … Providing a service to customers was relegated to second place. Sales became all important. Those who dealt with customers became sellers. And the confusion of roles extended well beyond frontline service staff. Advisers became sellers and sellers became advisers.
… … …
Rewarding misconduct is wrong. Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards … rewards have been paid, regardless of whether the sale was made, or profit derived, in accordance with law. Rewards have been paid regardless of whether the person rewarded should have done what they did.
Why did they act this way? The commissioner was very clear: because they could.
It was damning evidence and damning commentary, but the royal commission has now run its course. The evidence, the findings and the recommendations are in the public domain, and it is now the responsibility of the parliament and the government to act. The government is shirking its responsibilities. We've heard from the Manager of Government Business in the House that the issues arising from the royal commission won't be dealt with until after the election. This part-time government, barely sitting in the first half of this year, cannot make time, it appears, to deal with the recommendations in the report. The Prime Minister and his cabinet have lined up to say that the issues are very complex and they need to take the time to work through them.
Well, maybe some other government, some other government with a different track record, some other government with a different frontbench, could get away with saying this. But does any Australian, anyone out there, really think that this government and this Prime Minister really want to take their time for this purpose? Are they really taking time because they want to do the hard work and get the policy settings right? No, they don't. No-one believes anything they say when it comes to banking. They have no credibility, after spending more than a year using every trick in the book to avoid the royal commission being started. Once it did start, they continued to disparage it. They continued to say that it wasn't important. The then Treasurer, now Prime Minister, said in April last year:
Other agencies certainly have addressed many issues being raised. I think that will more directly impact on the public consciousness of these things, but they are not things that the government was not aware of.
Why didn't the government do something about it, if they knew all about it? Everything about their behaviour suggests that they just don't care. Does any Australian really believe that this government has now seen the light and is beavering away so that if it's re-elected, once the public pressure is off, it can introduce a comprehensive set of reforms? Or is it more likely that the government's delay, its refusal to schedule more parliamentary time to deal with these things, is just another attempt in a very long list to delay action?
We've seen it before when the government takes its time to get it right on financial services protections. It's been reported that the Assistant Treasurer, Mr Robert, got emotional in the other place today describing his experiences with the banks. Maybe he should spare a thought for the families whose lives have been turned upside down on his watch by the actions of unscrupulous payday lenders and consumer lease operators. For more than two years the government has been sitting on clear recommendations to amend the SACC legislation, to put in place protections for vulnerable Australians who have been charged outrageous amounts of interests by predatory lenders. It's been more than a year since the government released an exposure draft of legislation that would respond to those allegations. But it has disappeared into the moor of chaos and indifference on the other side. Nothing is being done to support these very low-income people. Nothing is being done to rein in scandalous behaviour in that sector.
The government cannot be trusted to act on financial services reform. They have not acted on the payday lenders, despite saying that they would. Is there any reason for anyone to believe that they will act on these recommendations? Why should we give them the chance? Time and time again they've been presented with an opportunity to make change and they have failed that test. In fact, one of the first things they did upon attaining power was to seek to wind back the FOFA reforms. Their first priority when coming to government was to remove protections for consumers. Every fibre of their being sees every problem in the banking sector through the perspective of the banks and the financial services sector. So many of their people are drawn from that sector that they are unable to see these things through the lens of the consumers. They cannot be trusted to act on financial services reform unless their feet are held to the fire. History repeats itself: delay on SACC; delay on response to the royal commission. Australians deserve a great deal better than what they're getting.
I think I would agree with all senators in this place that the banking royal commission has revealed for us some terribly damning happenings in the financial services sector; things that none of us want to turn our backs on and ignore, things that do need to be addressed. This is why I find it a bit rich when senators opposite complain about the government and the time it's taking to outline its plans to respond to the recommendations of the Hayne royal commission. It's something that we've outlined quite clearly and very publicly; it's something that the opposition have not yet been able to do.
It is not often that I agree with my friend and fellow Tasmanian Senator Whish-Wilson—about as much as I agree with Senator Polley, I suppose, which is not very often either—but the point made by Senator Whish-Wilson in his contribution is something that I think Australians need to be aware of, and that is that the opposition, who talk about this historic fact of how many times a government voted against motions for a royal commission, spent two years rejecting the same calls for a similar inquiry. Now they are trying to take the moral high ground. They come in here and say, 'This government should've done it the first time we moved a motion.' What happened between the years 2013 and 2014? They are as guilty as those they point the finger at. So we're not in here to have a history lesson. We're not here to rake over the coals of history. That has been done. We've had the royal commission. We've heard the heart-rending stories. We've seen the terrible deeds that have been done to hardworking Australians, who simply wanted to get ahead and trusted the banks, the insurance providers, the superannuation funds and all the other entities involved in this inquiry. We now need to act.
Before the commission's findings had been presented to government, we had the opposition demanding that everything be released immediately, including the government's response. Yet here we are, days later, and the opposition are yet to outline a position when it comes to default superannuation funds and what they'll do for the small business operators, the mortgage brokers, who have been quite vociferous in their communication with members of this parliament about how the recommendations, if implemented, would impact on their business. I think we need to take stock of what would happen.
The point made by the opposition is that they would agree in principle to all the recommendations—which is part of what they've said; I'm not sure what that actually means. This would devastate the mortgage broking sector. The great majority of home loans provided to hardworking Australian families is, as I understand it, through mortgage brokers. You only have to think about the competition that they provide. If you go to a particular big bank, they're not going to tell you about the bank down the road and the rates they're going to offer. They're not going to tell you about the small credit union and how they might be a bit better for you. That's what a mortgage broker does. Let's not forget that these people are small businesses. There are 17,000 of them across the country, employing more than 20,000 people and providing a service which has seen a reduction in rates that banks apply to home loans in great numbers.
The opposition can rake over the coals of history, but there is an election coming up later this year and this is a group of people who say they want to be in government, who say they can be trusted to run this country. I would encourage them to provide us, to provide the Australian people, with their answer to the royal commission and its recommendations. What are they going to do? If they are going to implement everything which they agree with in principle, as they say they will, how will it impact on those who rely on the services that mortgage brokers provide? Tell us what they're going to do about the default superannuation situation. How are they going to address these things? They haven't and they won't.
In the few seconds remaining to me, I think it is important to talk about what we have done. To sit there and rake over the coals of history about how many times a motion had been voted against is one thing, but we should actually look at the facts of what has happened in this place over a period of time and what measures the government has put in place to make the financial services sector better for consumers. There was the inquiry in 2013 and the Bank Executive Accountability Regime, which started in July 2018; the Australian Financial Complaints Authority, which started last November—a free service; and $170 million in more funding to ASIC—just to name a few. Action has been taken. They can rake over the coals of history but they should stump up now and tell us exactly what they're going to do. (Time expired)
As a matter of public record, the Turnbull-Morrison government fought tooth and nail on behalf of its bank cronies to prevent a royal commission into banking. The royal commission only occurred because a backbench revolt led by Senator O'Sullivan forced the government's hand. Then, when we finally got the royal commission, the government tried to turn it into a whitewash, appointing only a single commissioner, severely limiting the time allowed for it to report and, of course, greatly restricting the terms of reference. At my instigation, a motion was passed unanimously by the Senate calling on the government to extend the terms of reference to include liquidators, receivers, auditors and the Commonwealth Superannuation Corporation and increase the time available for the commission, yet the government simply ignored this motion. During the Royal Commission into Institutional Responses to Child Sexual Abuse, around 6,000 victims were allowed to tell their stories to the commission. However, during the royal commission into the banks, only a tiny handful of small-business owners and farmers were allowed to testify.
In response to this, on 14 August last year I organised a meeting for farmers here at Parliament House to tell their stories. Around 150 farmers attended and put on formal record the appalling accounts of mistreatment—tales in which banks imposed millions of dollars in penalties in response to single missed payments, in which banks used the police as their private goon squad and in which one bank manager actually urged a desperate farmer to kill herself. I approached the Leader of the Government in the Senate privately and asked that the government listen to the victims and act on the motions passed by the Senate, but my request fell on deaf ears. Again today I met with bank victims here at Parliament House to discuss what we could do to get them justice.
The fact is that the royal commission has been a tragic missed opportunity. It has uncovered serious criminal misconduct by the banks, but it has also not actually recommended any criminal charges be laid. It has identified gross failings and mistreatment of borrowers, but it has not recommended any legislative response. For the thousands of desperate rural families who have lost their properties due to criminal misconduct by the banks, there is no solace in this and certainly no appropriate compensation. As things stand, the royal commission and the government have failed utterly to meet the expectations of the Australian community.
I rise to speak on the Morrison government's failure to act on delivering better protections for Australian consumers after it voted 26 times against establishing a banking royal commission. We now know the finance sector has fallen short of treating Australians honestly and fairly. The finance sector has made mistakes and needs to apologise for those mistakes. Mr Morrison, I ask you: where is your apology? The big banks have, one after another, admitted wrongdoing. Where is your apology to hardworking Australians who have been taken advantage of daily by those big banks? Mr Morrison, where is your apology for being so out of touch as to claim that there simply was no problem and that Labor's insight was just a populist whinge? Well, Mr Morrison, the issue is quite popular now, isn't it? The Australian people have received your response loud and clear. You chose to pass the buck, to push ownership elsewhere, anywhere but where it lies—with yourself.
'Labor was to blame' was your response. The irony is not lost on Australia. It was Labor who, for month after month, called for a banking royal commission, and it was you who fought tooth and nail against it—26 times, in fact, you voted against it. That is 26 times you denied a fair go to ordinary Australians, 26 times you failed to protect and stand up for Australians and 26 times that you—as Treasurer no less—defended what has now come to light about the 54,000 breaches of terrorism-financing and money-laundering laws. And that was just one bank. Was it not yesterday that you stood in front of the Australian people and proclaimed that the Liberals were the party of strength, that you were protecting Australia from organised crime and money laundering and that keeping Australia safe and secure was the government's top priority? That's cute, isn't it?
Why should the Australian people trust a government that had to be dragged, kicking and screaming, in the first place, to hold this royal commission? If there is one thing the banking royal commission revealed it's an issue close to my heart, the exploitation of older Australians by people in positions of trust, be they financial institutions, family, friends or carers. Revelations of irresponsible lending from the banking royal commission are a sobering reminder of the banks' failure to help protect older Australians from financial abuse, scams and fraud. These revelations are also a reminder that this incompetent government stood in the way and failed to act in the best interest of these people for years.
The pattern is clear, and we ask ourselves: what institution will fall next because of this government's neglect? I think of our aged-care sector, which has reached a crisis point under this government: '26 times too late' is the cry of the Australian people. It is now the cry of our elderly. Our aged-care system is in such a mess under this incompetent, do-nothing government that it had to call a royal commission into its own failings. That is how incompetent and inept this government is. Those opposite should be ashamed of the five years of their government's failure to protect older Australians.
Time and time again, Mr Morrison, you refused to cooperate, offering nothing but scaremongering and empty rhetoric about a so-called conspiracy aimed at undermining confidence in our financial system—$100 million in fines later, with more on the way, and I must admit that you were right, Mr Morrison. This has been quite the conspiracy. It has been the conspiracy of a government uninterested in keeping our big banks accountable and uninterested in protecting the financial interests of hardworking Australians. It has been a conspiracy embedded within neglect by this out-of-touch government and the out-of-touch attitude that has plagued it from day one. It has been a conspiracy that cares more for the profit of the government's own interests than for a fair go for the Australian people.
This government has let Australians down and is still doing it, day after day. It's time the government called an election so the Australian people can voice their opinions on how inept the government is and how it has failed them right across the board, whether we are talking about the banking royal commission or about the royal commission into the aged-care sector and its own failing— (Time expired)
I rise to speak on the matter of public importance proposed by Senator Collins, but before I do I would like to remind the chamber of a little bit of history. The Labor Party had six years in government—six years in government—in which they could have called a royal commission. In fact, so many of the incidents that Commissioner Hayne heard about when the royal commission hearings were underway in the last 12 months occurred under Labor's watch. It was in fact the current opposition leader, Mr Shorten, who was at the time the Minister for Financial Services and Superannuation. Despite all of this going on under his nose—despite the financial scandals of Trio, Storm and Opes Prime—not only did the Labor Party not call for a banking royal commission; in fact, they defended themselves against one. In fact, Mr Shorten, who was, I remind the chamber, at the time the Minister for Financial Services and Superannuation, said at the time:
Australia has some of the best banks in the world. It is partly because of our excellent regulatory system and prudent management.
That was Mr Shorten, quoted in The Australian in February 2012. So it's ironic, hypocritical and highly convenient that the Labor Party would now start wagging the finger at the coalition—the coalition who did in fact announce a royal commission into the banking sector, in November 2017. In the last 12 months we've had 68 days of hearings and heard from 130 witnesses, and more than 10,000 submissions have been accepted.
But that wasn't the beginning of the coalition's attention towards the banking sector. In fact, the moment we came to government the Financial System Inquiry was commenced. I might add: that was against the will of the Labor Party. That was in December 2013. The Murray inquiry was one of the most far-reaching inquiries into the financial sector in decades.
We also, I will remind the chamber, brought in the Banking Executive Accountability Regime, known as the BEAR, which came into effect from July last year. Once again, we brought the Labor Party along with us on these reforms, kicking and screaming.
Indeed, the pattern repeats itself again. The Australian Financial Complaints Authority, AFCA, began last year, in November. And, on top of that, additional funding of $170 million has been provided to the regulators, to ASIC and APRA, and also to the Commonwealth Director of Public Prosecutions and the Federal Court, so that they can effectively pursue misconduct in this sector. Additionally, the coalition appointed a new chair of ASIC and new deputy chairs of ASIC and APRA. So action had been taken well before the banking royal commission was even called.
That said, the royal commission itself was an important undertaking. Commissioner Hayne found that the financial sector misconduct had been driven by a culture of greed in the pursuit of short-term profit ahead of the interests of customers. In fact, the commissioner's own words were:
There can be no doubt that the primary responsibility for misconduct in the financial services industry lies with the entities concerned, and … their boards and senior management.
Of course, the irony now is that the Labor Party is calling for legislative change but Commissioner Hayne in fact said that more often than not the conduct that was condemned was contrary to existing laws; they simply weren't officially enforced.
Commissioner Hayne made 76 recommendations, 40 of which require legislative change. I understand the convenience of suggesting haste in making those 40 legislative changes, but those opposite know full well that making appropriate, considered, measured legislative change can't be done in an extra fortnight of sittings. Where's the stakeholder engagement? Where's the consultation process? If we don't want to risk unintended consequences that would have negative effects for consumers—that wouldn't protect consumers but would have negative effects on consumers—then these things will take a little more time. A knee-jerk reaction will do no good for anyone.
Those 76 recommendations—and the government has committed to acting on all of them—fall into four different areas: improving outcomes for consumers, enhancing the accountability of the industry, ensuring strong and effective regulators, and providing redress for those who have been most harmed by misconduct. However, the government not only has said it will take action on all 76 recommendations but has expanded the Federal Court's jurisdiction to incorporate criminal misconduct and it's also expanded the BEAR, the Banking Executive Accountability Regime, to non-prudentially regulated entities. These recommendations go above and beyond those of Commissioner Hayne.
There has been a number of consumer outcomes to do with protecting farmers and to do with advice and superannuation. But I personally think that the real interest is in the extraordinary hypocrisy that has arisen today in the accusation of the Labor Party that the coalition are not acting on those 76 recommendations. Not only have we said that we will act on all of them, and we have been quite definitive about that, but the Labor Party are yet to come out and tell us if they will. They have said they will agree in principle with the 76 recommendations; they just haven't landed on a few of them—for instance, default superannuation. Commissioner Hayne said there should be one default superannuation fund for all participants in the industry. I can understand why the Labor Party might feel a bit uncomfortable with this, because decoupling superannuation from industrial relations is a bit of a sticking point for you guys. It goes against the entire vested interests that you have within the superannuation industry—that unholy alliance between the Labor Party, the union movement and particularly the industry superannuation funds. How are you guys going to manage to propose reforms to superannuation as recommended not just by Hayne but also by the Productivity Commission to protect consumers if you have those vested interests? You cannot. You are incapable of reforming superannuation to advantage consumers over providers because of those vested interests. It's just not possible for you. Only the coalition can reform superannuation in favour of consumers over providers.
The ultimate irony is that we have legislation right in front of us today, right now, sitting on my desk, that is addressing some of the issues that Hayne specifically mentioned. For instance, we have the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 in front of us right now and yet we have spent so much time today wasting the chamber's time, doing almost anything else other than dealing with government business that would in fact enact some of those Hayne recommendations.
My great frustration in this is that the government have been reforming the financial services sector from the first day we were elected. The financial systems inquiry started that ball rolling and we have been systematically addressing the recommendations made by the Murray review. The Treasurer has led a very comprehensive response to the royal commission in just days. In fact, it was only two days, I think, after we had the commission's report before we released the government's response. The opposition has had that report for more than twice the time that the government has had it and yet has not come out with anything even vaguely comprehensive.
Labor don't know how to reform the financial services sector. They never have been able to because of those vested interests. The Law Council made the same point just today. The government will deal with the recommendations from Hayne in a very sensible and prudent manner and, most importantly, will put customer interests first, not unions and not industry superannuation. Labor's vested interests prevent them from ever making meaningful reforms that prioritise consumers over providers.
Restoring trust in Australia's financial system is part of the coalition's plan for a stronger economy. Australians can trust the coalition and do trust the coalition when it comes to managing the economy. They do trust the coalition when it comes to managing the economy because we don't go and beat an important sector of our economy with a baseball bat senselessly, thinking that the consequences are meaningless. (Time expired)
An opposition senator interjecting —
Did you just threaten—
Oh, Mr Acting Deputy President, what a load of rubbish! Not even in my worst times would I think that that was funny. What a load of bulldust. I did not say it. If the senator is that deaf and thinks that, my goodness me—
Senator Sterle, order! That's disorderly. A senator has asked for an opinion. I asked whether—
Senator Sterle interjecting—
Resume your seat. Just a moment, Senator. I asked if you'd said it and whether you'd withdraw it. We don't want a debate about it at all. You haven't made a positive contribution to it. You've said you didn't say it, and we accept that. Senator Hume, on another point of order.
It's taken about 10 years to uncover and expose the dirt, lies and misconduct committed by many of our banks. We were all shocked to hear of the fraudulent money-laundering schemes, charges against dead people and a host of other irregularities, not to mention the losses our farmers and primary producers suffered at the hands of the banks. In the wake of the royal commission, 24 cases have been referred for possible civil and criminal prosecution. While the government voted 26 times against a royal commission happening, it seems the bankers and the executives have got off scot-free. Perhaps the government knew the result, hence they voted the way they did 26 times, but that doesn't make it right. Then again, what did Labor do prior to the 2013 election when it was still in power? The Labor Party had chances to call for a commission but instead sat on its hands, and now it wants to play the righteous card.
I put motion after motion calling for a royal commission in this chamber, only to be ignored by both major parties. Meanwhile, scores of Australians and many businesses have been annihilated and lost millions of dollars. What's even more alarming now is we have the mortgage brokers coming under fire for simply trying to do their jobs and get people into the housing market. The royal commission came out swinging and, as a result, has knocked the head off the mortgage-broking industry. Meanwhile, the bankers have been given a slap on the wrist and their share prices have increased.
Both sides of politics have chosen self-preservation, influenced by big donations by the big four and political pointscoring instead of protecting Australians who have been financially affected by the banks. Both sides of politics spruik their ideology, but when the time comes to put their philosophy into practice they are all hot air. One Nation, on the other hand, has been standing up for farmers and consumers who have been shafted by the banks since day dot. Shame on you all. You can't fool the Australian people, and we will show this come the May election.
I rise to contribute to this debate. Now the politics start. Let me give you a bit of a history lesson. Of course I called for a royal commission many years ago when I got involved with Storm Financial and many other things. But what's happened since then? I'll tell you what's happened. I met with whistleblower Jeff Morris, who will be here tomorrow for my final speech. We got working on the Commonwealth financial planning and worked with Adele Ferguson. It all became public and so on it went.
At Senate estimates one night I said to Peter Kell, the Deputy Commissioner of ASIC, 'Mr Kell, why did it take 16 months for you to react to the whistleblowers when they got in touch with you?' He said, 'We got a great result, Senator Williams—we had an enforceable undertaking'. I asked the question again. Mr Kell did not answer the question. I turned to the then chair, Senator Mark Bishop. I said, 'Chair, how do we get these people to answer a question?' He said, 'I can't direct them how to answer the question.' Luckily, Senator Cameron's staffer was watching. The staffer said to Senator Cameron, 'Dougie, they're belting Wacka up, you better help him.' Senator Cameron came into the Senate estimates—I'll repeat this tomorrow in my valedictory speech—and said, 'Mr Kell, don't give me the run around the mulberry bush like you gave Senator Williams, I warn you.' After that little display of Senator Cameron's front-foot activities, he walked out and said to me, 'Wacka, we should have an inquiry into ASIC.' I said, 'Good point, Dougie'.
We drew up the terms of reference. All the chamber agreed with it. We had an inquiry into ASIC and how it did its job. At the end of the inquiry, a great job chaired by Mark Bishop, the then Labor senator from Western Australia—and a decent bloke, I might add—we recommended a royal commission. Who opposed it? Labor opposed it. The government opposed it. I imagine some of the crossbenchers opposed it. When the motion was put forward by Senator Whish-Wilson of the Greens to have a royal commission, I crossed the floor and sat with the Greens. I remember saying to Senator Di Natale, 'When I join the Greens I will become leader—you watch me and see how I go.' I got a giggle back. Senator Dastyari was sitting over there. He voted against a royal commission. That's where the big force came from—that committee. That's where it was driven from. It was a couple of years later that Labor finally supported it. What really brought the royal commission on, it's all about numbers in here and the other place. We always knew that the royal commission would pass a vote in the Senate, but it would not pass in the House. That is until two MPs, The Nationals' George Christensen and Llew O'Brien, went out public and said, 'If it comes to the House, we will vote for it.' So the numbers were in the House because of the National Party members Llew O'Brien and George Christensen there—make no mistake about that. The banks realised that the numbers were there in both houses to pass a royal commission. They wrote to the government and said, 'Bring it on.' The rest is history.
When we drew up the terms of reference—I commend my colleague Senator Barry O'Sullivan for this—we included superannuation in the terms of reference. If Labor had drawn up the terms of reference, I would have been very surprised if they had included superannuation, because they would want to cover the industry super funds and their friends there. What did the royal commission tell us? It told us that there are a lot of bad doings and wrongdoings and bad behaviour in the superannuation funds, especially the retail funds.
The royal commission has done a great job. The media have done a great job highlighting the wrongdoings. I commend the bank leadership now for saying that they know it's wrong and they have to fix it. That is exactly how it will be. But the question is, for how long? How long will the right activities be carried out? We don't know. In 10 or 15 years we will have different board members in the banks, and life insurance companies like AMP will have different CEOs. Will it still be right then? We've had numerous inquiries: the Martin inquiry, the Murray inquiry, numerous parliamentary inquiries and now the royal commission. The situation of people before profit must be embedded.
There's a new code of conduct coming out on 1 July in the banking industry. It's voluntary. You don't have to join; but if you join, you must abide by it. I think we should lock in a mandatory code of conduct in the finance industry to see that good behaviour and respect carries on not for five or 10 years, but for 50 or 100. It's disappointing to see the banks' reputation being trashed. When I was a young fellow the bank manager was the most respected bloke in the town. There were no women bank managers in those days; they seemed to be all blokes. Thankfully, it has changed now, and they are giving women a much fairer go in the senior positions. But we need to make it last. I commend the government for taking it on. I commend my colleagues Llew O'Brien and George Christensen from the other place, the MPs. They gave the numbers. I commend the banks for asking for it. I don't think they realised how much they were throwing themselves under the bus. Now it's done. AFCA's in place. Let's get the wrongs righted. Let's cement it in for decades to come. That's the big issue: how long will it last? I hope it lasts for generations and generations. I hope that faith is restored in the banking industry, because we need banks. We need good, strong banks. We have good, strong banks. We need them to behave properly with many of the other institutions as well.