At the request of Senator Bragg, I move:

That the following matter be referred to the Economics References Committee for inquiry and report by 7 June 2027:

Mortgage offset accounts, with particular reference to:

(a) the establishment of home mortgage offset accounts, including setup and linking of accounts;

(b) the implementation of ongoing management and governance arrangements, including policies, procedures and internal controls;

(c) the impact of costs and fees versus benefits of offset accounts for customers;

(d) the identification of account failures and internal incident reporting and escalation;

(e) remediation for customers affected by account failures;

(f) compensation for customers experiencing account failures;

(g) the impact on mortgagees and implications for home ownership including increased interest costs, effects on mortgage repayments and sustainability of home ownership; and

(h) any other related matters.

Mortgage offset accounts are an important issue for the Senate economics committee to consider, and I think this is an issue that has been under discussion for quite a long while. I can remember having this discussion when I was Mathias Cormann's chief of staff when he was shadow minister for financial services, and that goes back a fair way now. I may have even had a chat about this with Senator Bragg back then. Obviously, I wasn't Senator Brockman, and he wasn't Senator Bragg, but this topic is one that is of interest. It is one that is worthy of consideration, but, given Senator Bragg has now entered the chamber, I'm happy to hand the description of the motion over to him, because he is in a lot better position to talk about it than I am.

I thank the good Senator Brockman for moving this important motion, because it's very important that we do our job here as parliamentarians and that we are able to inquire, from time to time, into great matters of community concern. I believe we are living through a period in Australian history where there is a huge concentration inside certain vested interests. In this case, we're talking about the banking sector, which I believe has an undue level of influence over our society.

One of the things that has characterised the Australian economy over the past 2½ centuries is the fact that we have been a nation largely of oligopolies, and the banking system, which has been particularly known through its four-pillars policy, is one such sector where this is very problematic. What we have seen in recent times—given the context of this debate, we should remember that homeownership is harder than it ever has been. I avoid making all the routine and boring political points about the government's terrible tax policies, but, in effect, we end up with higher rents, fewer houses and fewer homeowners as a result of these policies. The context is important because, in this case, we are talking about consumers who have decided to take out a mortgage, and a mortgage is a hard, hard thing to get these days, given how expensive housing is and given the supply constraints that we see in the housing system.

The reason this inquiry has come up for debate is that there have been many Australians that have lost considerable sums of money as a result of the offset systems not working properly. What I mean by that is that, when a person establishes a loan, they may be given an opportunity to also establish an offset account. The money they hold in their offset account would actually reduce the amount of interest that the person needs to pay to their bank. The general feeling and sentiment in the community has been that people would expect, perhaps naively in some cases, that the banks would try and do the right thing when those systems are set up so that the offset account is linked to the mortgage account and therefore the money that is held in the offset account would actually benefit the individual who holds the mortgage by reducing the amount of interest that they are required to pay. But we have found, due to some important research by the financial regulators, that there have been many cases where that hasn't been true and that, in fact, many Australians have been ripped off by these major banks where they have not done the right thing and ensured that they had processes to protect their interests by always linking their mortgage offset account to their mortgage.

That is really the heart of this issue that we want to pursue, because it's not good enough for a major scandal like this to be unearthed by the financial regulators and for that to be the end of it. These are the most privileged organisations. They are protected with banking guarantees. They are protected by the four pillars policy. They are protected by a range of other preferential rules. They operate in a very concentrated market. They generate enormous, eye-watering profits. So it is only reasonable that the CEOs of these banks should be required to explain how it's happened that people's mortgage offset accounts fell apart. I think that is an eminently reasonable question for this chamber to ask, because the regulators appear to have done a report and that's been the end of it. We hear nothing from the government. They're not interested in digging into this any deeper. But I would say that this is a good example of the executives of these banks, who are very well-paid people, establishing and presiding over regimes where people have been seriously damaged by virtue of the failure to link these offset accounts to mortgages.

So that is why I think it is very important that we have the opportunity to properly interview people and get to the bottom of this matter by bringing in the CEOs of these banks and understand exactly what systems worked, what systems didn't work, what implications that was going to generate for these customers, how much money they actually lost, what the processes are for remediation, what the processes are for compensation and what the overall impact is on their home-loan journey. These are the basic questions that we need to ask.

I think this is a very good example of how there is effectively an inertia tax here, where the banks just assume that you're going to set and forget. You set this up at the start and you make some changes midway through the loan. You hope for the best that the banks will do the right thing by you. But we've found, again and again, that these institutions, if they can get away with it, will steal your money in the dark, where they there is no sunlight and no disinfectant.

That is why there have been a series of banking inquiries over the last couple of decades. There have been royal commissions. I question whether or not all of them have been able to actually get to the bottom of the issues. But this is a very targeted scope to look at the offset accounts and how that is tied back to senior management. It is ultimately the senior management that should be on the hook for these important consumer judgements. We have more laws than you can poke a stick at in financial services regulation. We have the BEAR. We have the accountability rules. But what we don't see is a mean, lean, hungry law enforcement agency. We see the financial regulators publishing reports which state that there are terrible consequences for people when these things happen, but what we don't see is prosecutions, incarceration or fines which are big enough to be more substantial than just speeding tickets for these institutions.

Again, I'm loath to be critical of the government, but it is also a fact that the government took 2½ years to respond to the ASIC inquiry and, when they did, they just rejected all the recommendations. I don't think you can seriously argue, when you look at the DPP figures and the number of referrals, where referrals from ASIC have almost halved over the past half decade, that the corporate cop is doing the work it should be doing. There is no way that white-collar crime in Australia has just gone away. In the last parliament and a half we've seen the First Guardian, Shield and Lion collapses. All these people who have lost significant sums of money, often through fraud, thought they were living in a country where the rule of law would be strongly enforced and the regulator would come in quickly and act. What we saw in these cases was the same thing we saw with Melissa Caddick and the other cases, where ASIC was given warnings in writing by organisations with standing saying, 'Someone over here is running an unlicensed financial services organisation,' and where ASIC loses the pieces of paper, brings the dogs in to eat the pieces of paper and fails to do anything for years and years. The problem with this model is, if I'm given a warning about financial malfeasance and I take two years to do anything about it, in that period a lot of people will lose their money. They might lose their money and they might lose their mental health. That is the reality of the situation that we have today. It's all well and good for the corporate cop to go and do research into offset accounts and put out papers and the like. That's helpful, but what really matters is establishing a precedent where, if you break the law and you damage consumer interests significantly, then you will be facing serious penalties—the executives of the banks will be facing penalties. That is not the situation we have today.

I think it is an important test case for this parliament to put these people in the dock and work out: 'What exactly did you do when it came to the offset accounts? What did you know about it? What have you done to satisfy yourself that people are not going to be wronged?' The cascading effect of not aligning an offset account with a mortgage could be very significant over the life of a loan. These are the longest form transactions people will have in their whole lives. We're looking at 30- or 40-year mortgages in some cases that people will be taking out, so it is only reasonable, off the back of the failure to properly calibrate ASIC to become the lean, mean crime-fighting machine that we want it to be, that we look at this as a very important case in point.

I say to the Senate tonight that the people who've been wronged here are people living all across our country. They're people who took out a mortgage in good faith and established the mortgage with an offset account. They, perhaps naively, trusted that their institution would do the right thing by them. They also trusted that they live in a country where there is a rule of law, and they imagined that all these laws we talk about here would be enforced. They imagine they're living in a serious country where they remunerate parliamentarians well to come to Canberra to make laws that the regulator will take seriously and enforce. That is their expectation.

In this particular inquiry, if it is supported this evening, I think we will be seeing a lot of individuals who have lost significant amounts of money and have lost trust in these institutions. What you'll be able to see, I believe, is the cascading effect of the failure to link these accounts over the long term, because a failure to link an offset account to a mortgage could mean many hundreds of thousands of dollars will be lost to that person, even on just an average loan at the average house value in this country. This is a serious matter and a great opportunity for this Senate to do the best work that we do, in my view, which is the committee work. It's a great opportunity for us to properly interview the people who run these institutions to work out what went wrong and what they are doing to ensure that it doesn't happen again, and to consider whether or not the compensation and remediation that they say they have undertaken is appropriate. I make the point that it is very important that we never give up on the idea that law enforcement is just as important as new laws.

There is an addiction in Canberra to new laws being placed onto the books, with ministers from all different kinds of governments historically deciding: 'We will announce today that we are doing XYZ. We will pass these laws, and that will solve the problem.' The reality is that the law enforcement in this country is often porous, and it doesn't mean that the systems work any better.

There are many, many laws in this area of financial services, and I suspect that this committee, if it were to be established, will not recommend more laws, because more laws won't solve the problems when the existing laws are already on the books. All you need to see happen is the corporate cop actually do their job and rigorously enforce those laws. Until we see a few people be made an example, I don't believe there's a culture of fear that is needed to clean up this sector. That's why I commend this particular motion to establish this inquiry to the chamber.

I thank Senator Bragg for providing us with this opportunity this evening to discuss matters associated with the banks in Australia. I want to start by making the obvious point here that, while millions of Australians are really struggling to pay their bills—including their grocery bills, their electricity bills, the costs to educate their children, the costs to go to the doctor or the dentist, or the costs to fill up their cars with a tank of fuel—Australian banks, particularly the big four banks, are absolutely making off like bandits.

Remember, colleagues, the Commonwealth Bank recently announced its 2026 financial year profit, an eye-watering $11 billion in profit. That's from just one of the big four banks, the Commonwealth Bank. Collectively the big four banks made somewhere in the region of $30 billion in the last financial year. These are eye-watering figures when you consider that every dollar of those profits came out of the pockets of Australians or were underpinned by banking services provided in Australia.

Who can forget the banking royal commission? Who can forget that, when the Greens put up demands, motions, amendments and in fact legislation to properly scrutinise the rotten culture in Australian banks, the two major parties in this place—the parties of government, the Labor Party and the coalition—time after time voted against establishing a royal commission into the way Australia's banks were operating.

I want to pay credit to former senator Wacka Williams, who broke ranks with the Nationals. As many people have pointed out, over recent decades when the Greens and the Nationals get together, things can happen in this parliament—

Or not happen!

Things did happen, Senator Green, in this parliament. The Nationals got on board, and then finally the Liberals got on board. Labor saw the writing on the wall, and the then prime minister, Mr Turnbull, supported the creation of a royal commission into the banks.

Boy oh boy, what a royal commission that was! It exposed an absolutely stinking, rotten culture in Australia's banks. Commissioner Kenneth Hayne, in the section of his interim report which dealt with how we ended up in this place, said it was 'greed—the pursuit of short term profit at the expense of basic standards of honesty'. I could not have put it any better myself. The banks—when we say 'banks', of course, what we are talking about here is the senior executives in our big banking corporations—pursued greed and pursued profit at the expense of basic standards of honesty. In other words, they were crooked, they were dishonest and they lost sight of the requirement on our so-called captains of industry to behave ethically and to behave honestly. Instead, driven by greed, driven by a relentless desire to expand the size of their remuneration packages, they behaved dishonestly. It was ordinary Australians who paid the price for that through the dollars that the banks were skimming off the top of the mortgage repayments and other banking services provided to ordinary Australians.

Of course, out of the banking royal commission came a number of recommendations, including some to improve executive accountability. These were known as the Financial Accountability Regime recommendations. Who can forget the infamous time when the Greens had made an agreement with former minister Mr Jones to amend the Financial Accountability Regime to put in place million-dollar fines for dodgy bankers—that is, fines levied personally on bank executives when they failed to fulfil their obligations under the Financial Accountability Regime package. I looked Mr Jones in the eye and shook hands with him on this agreement. It took less than 24 hours to be overturned because, of course, former Labor premier of Queensland Anna Bligh, who was then head of the Australian Banking Association, made some calls to Dr Chalmers's office or into Mr Albanese's office—I actually don't know who she called, but rest assured it was pretty high up inside the Labor Party—and within 48 hours Labor completely backflipped and reneged on that deal.

What a brazen demonstration of power that was. The banks didn't care who knew that they were pulling Labor's strings; they just needed Labor's strings to be pulled, and pulled they were. The puppetmasters pulled the strings, and the Australian Labor Party puppet danced to their tune. The deal was off. The million-dollar fines for dodgy bankers are still not enshrined in legislation to this very day, and that is a shame. In fact, it is a disgrace because unless you have these fines in place, there is nothing to focus the minds of the people who get paid many, many millions of dollars a year to run the big banks in this country on the need to behave ethically and honestly. Remember, they were found not to have behaved honestly by Commissioner Ken Hayne in his interim report.

Why am I going through relatively ancient history like this? Well, I'll tell you why: because Senator Bragg has put up a motion calling for another inquiry into the banks. Obviously, this is a very narrowly scoped motion compared to the scope of the royal commission, and I offer that as no criticism of Senator Bragg. He's identified an issue here, and he's made a quite reasonable request of this Senate: that the matter of the banks' treatment of offset accounts ought to be further scrutinised. That is not an unreasonable request by Senator Bragg.

The point here, colleagues, is that we've heard these stories before. We've repeatedly heard these stories. The behaviour of Australia's banks—and, I might add, the failure of some of our corporate regulators—was so bad and of such a high level that this chamber, and in fact both chambers of this parliament, decided that they should face the most serious of inquisitions—that is, a royal commission. It doesn't get any more serious than that. There was a royal commission where the banks were hauled over the coals and their executives were publicly humiliated, as they should have been. The royal commission found that bank executives had acted motivated by greed and by the pursuit of short-term profits at the expense of basic standards of honesty.

Now, do we need another royal commission into the banking sector? Well, that is an open question. But what I can say is that it's not just the banks' treatment of offset accounts that has offended Australians. Who can forget the serial and repeated breaches of the anti-money-laundering and counterterrorism framework that at least one Australian bank engaged in? Who can forget that? Who can forget their failures to realise that many of their so-called customers were actually deceased and still paying bank fees even though they were dead?

The litany of failures from Australia's big banks continues to grow, and Senator Bragg is quite reasonably requesting that this chamber have a look at quite a narrowly scoped element of that. When you've got a corporation—just the one corporation, the Commonwealth Bank—making over $10 billion in profits just in the last financial year alone, and yet banks cannot maintain basic standards of probity and accountability and responsibly exercise those very basic standards, then you have a problem that needs to be considered by this chamber. While millions of Australians are struggling to make ends meet, while wages are failing to keep pace with the cost of living, while the housing bubble—even though house prices have come off recently, which is a good thing—still means that for millions of Australians—in particular millions of young Australians—the great Australian dream of owning their own home continues to recede into the distance, and while you still have a banking sector that appears not to have learned the lessons that it should have learned from being hauled over the coals by the Hayne royal commission, then you have a scenario where the eyes of this Senate should be open and the ears of this Senate should be alert to what is going on.

I will say to you something very, very obvious. If you go out onto the street and you ask an ordinary Australian—whether it's someone waiting to pick up their kid after school, whether it's someone down at the local bowls club, whether it's someone you might be yarning to over the back fence or whether it's someone you might be having a beer with down at your local watering hole—what they think about the big banking corporations, I'll tell you what you're going to get. You're going to get an earful and rightly so, because these big corporations are absolutely taking the proverbial. The big banks are making off like bandits, and they are doing it by screwing over ordinary Australians. They are making obscene eye-watering profits while the people that they are price gouging are struggling to meet their mortgage repayments or are watching the Australian dream of owning their own home fade ever further into the distance.

The big banks need to be held to account, and, if the government won't do it, it is the job of this Senate to do it. It is time that we stop bowing down before big corporate price gouging in this country, and it is time that we absolutely had the back of ordinary Australian people, who are sick of being price gouged by big banking corporations.

Do you know what? Sometimes the conversations in this place are so disconnected from reality. We have conversations about banking, and somebody will come in here and talk about the minutiae of a particular sector or a reform needed to a subgenre of mortgage. A lot of complicated talk, often fed straight into the back of the head of the minister or shadow minister by the banking lobby, gets spewed out in here.

It is so disconnected from the reality that the community members talk to me about in Western Australia and across the country. You know what they tell me about? They tell me about how much they hate the big four, because people know that these banks have ripped them off for generations and are ripping them off to this very day. They know that on average the salaries of these fat cats are paid off the interest of the sweat of the brow of people paying their mortgages in some of the most difficult situations you can possibly imagine. Over the life of a loan, a big bank will make $229,000 from an average mortgage. It's disgusting. These are Australians doing their best, trying to actually pay their bills, actually do the work of raising a family, contribute to community and build this country up. Yet along comes the Commonwealth, along comes NAB, along comes ANZ, and they cut them off at the knees every damn time.

And, oh, don't the high priests of neoliberalism come forth with their explanations as to why it is justifiable that a mother and a father, that a family, that grandparents doing it tough should go without food and should go without medical care in order to pay their monthly pound of flesh to this system. It's disgusting, and it has built for the big four a pile of wealth that exceeds the ability of most people even to conceptualise. The Commonwealth Bank alone in the last year made a net profit of $11 billion. Let's put that into context. If you earnt $1 a second, it would take you 11½ days to earn $1 million. If you earnt a dollar a second, it would take you over 31 years to earn $1 billion. These are scales of wealth almost beyond imagining. I have to apologise to Senator Allman-Payne for the mutilation of her excellent analogy there, which was, in fact, meant to be quite different to what I just shared with the chamber. I put that on the record right now.

But, in all seriousness, my family got into debt. This is why I'm angry about this. My family built a home because my great-grandma was kind enough, at the end of her life, to leave a chunk of money to my mum. With that money we built a home. My mum was able to do it without a mortgage because of that generosity. In the run-up to the global financial crisis—a lot of people don't remember this—the big banks here in Australia were just as guilty as the big banks elsewhere of really dangerous and coercive mortgage practices, such as lending to people who could not pay the money back. We got into debt. My family got into debt. We did what so many families at the time were doing. We were told by our local bank: 'Your house is a pot. Your house, itself, is a form of bank. Why not release the equity? It's so cheap. You'll never notice the payments.' We thought that we'd finally be able to build a small business and that we'd finally be able to get a shot at being independent, after medical bill after medical bill and mental health crisis after mental health crisis knocked the wind out of my family again and again.

Between the mortgage payments building up, then rebuilding up and the credit card debt coming in, what was sold to us as a lifeline ended up being a chain around our neck. That chain sat there until I was elected. My nan and pop paid the mortgage for us as long as they could. Every single utility bill that we had was in a payment arrangement when I was elected. Finally, when I got this job, I was able to pay the mortgage. Mum could never refinance because of her health conditions. Once you get into a situation where you have been in arrears for a certain amount of time, even when you've got out from under that structure, they'll never do a refinancing package for you. We had a relatively tiny mortgage, but we were locked into this rate that just sucked everything we had. It went to ANZ. What did they do with it? Did they finance a couple of coalmines or subsidise a few billionaires' holidays? They didn't care. Whatever they did with it, they didn't care. If luck and fate hadn't meant that I ended up here, we would still be under that right now.

These are the types of lending practices that were laid bare during the royal commission into Australia's banking sector. I pay tribute to Senator Whish-Wilson and others who brought about that much-needed investigation. But can anybody honestly say that there has truly been accountability in this sector—that there has truly been adequate accountability for the lives destroyed by scandal after scandal? People in this country are furious. They are grabbing at any and every stone and stick they can find and hurling it with all their might at the mainstream establishment of politics. The treatment they have experienced at the hands of the big banks is a big part of why, because, though they may have expected their bank, or the colloquial 'banker', to rip them off, they certainly didn't expect their elected representative to help that banker, to let that banker off the hook, to peddle that banker's nonsense lines in this place and to allow the whole process to start again.

Can anybody in this place truly blame a voter for not believing a single word that comes out of the mouth of a politician, the mouth of a minister, the mouth of an opposition leader, when we sit here right now and there are so many more penalties that may and do fall on the head of somebody that may take an illicit substance or may fail to pay a fine than there are those that would fall on the head of the CEO of a bank in this country? It's a disgrace. In Western Australia, if you don't show up to your mutually obligated structure, served to you via Services Australia, if you don't meet those mutual obligations, you lose, or you risk losing, the money you need to live. What of the banking sector's mutual obligations to the Australian people—let alone any sort of human morality that might ask whether an industry that makes its living scraping and scrounging around to seize as much of the wealth of the people as it can and place it into private hands is something that should be allowed to exist in the way it does right now?

Some of the people, some of the parties, in here are proud of this. They will proudly speak of Australia's financial sector, of its competitiveness on the global stage—the wisdom of deregulation, of selling off the banks. They're proud of it. It's their legacy. And yet the people live in the reality that was let rip under deregulation and neoliberalism as it tore through communities in Tasmania, as it tore through communities in Queensland, as it tore through communities in Western Australia. It tears through them still—all sacrificed on the altar of neoliberalism, all aspiration and hope smashed on the anvil of ideological commitment to people whose political ideology is nothing less than academically justified greed and selfishness, those human traits which our parents teach us, when we are knee-high to a grasshopper, are behaviours that we should steer clear of. We teach the values of hope and love and sharing and mutual support to our kids, yet, in our corporate leaders, we celebrate and justify ruthlessness, greed, avarice of the most disgusting nature. We give them awards for it. We plop them up on Forbes—'Richest people of the year', 'Best corporations in Australia'.

Well, it's time for a change. It's time to stop the banks making bank on the backs of Australian people. It's time for banking to be boring again for those that run it—the simple, humdrum transaction and transfer of savings from one place to another, not to be traded on a global blackjack board and not to be passed around like chips in a casino, but basic financial services, such as boring mortgages with low rates. We need to go back to a time when to introduce yourself as a banker was not notable at all because it simply meant enabling people to get hold of the money they have and spend it in the ways that they need to. We need to go back to community banking, we need to go back to public banking and, more than anything, we need to go back to—or, indeed, we need to create—moral banking driven by community, owned by community and in service of community. We need to stamp out the greed and replace it with accountability.

Question agreed to.