Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Hansard source

Okay, I am being a little presumptuous. But I can say—

Opposition members interjecting—

I am going to be really pleased to hear the member for McMahon because when he was Assistant Treasurer in 2013 he said: 'The financial system is strong, well regulated and well managed, and I have not seen a case for a full-blown inquiry.' But there was not just that. He also said: 'Our two market guardians are the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission—APRA and ASIC. The standard they set is world's best practice.' He said that when he was Assistant Treasurer—in an op ed entitled 'Good place in an economic storm' published in Fairfax's Sydney Morning Herald on 24 September 2008. So, when given the opportunity, the member for McMahon did not want a royal commission.

The big banks can, and will, be accountable. Australia's major banks are now going to be called to appear before parliament at least annually. They will be brought before the House of Representatives Standing Committee on Economics to report jointly to the Treasurer, the member for Cook, and the parliament on our banking and financial system in Australia. That is entirely right and appropriate. It is up to the banks to explain their actions to their customers in full so that customers can be fully informed when making their personal financial decisions. Of course, we live in a free market age. In financial markets, if people do not like what they are getting from the banks they can walk down the street to a customer owned banking association facility. They can go to a credit union.

The banks, in coming before the committee, will have an opportunity to explain how they are responding to funding issues to support Australian consumers and businesses. I am proud to be the Minister for Small Business. Small business is the engine room of the economy. It employs 4.7 million Australians. It accounts for $340 billion worth of economic good to this nation. The banks' appearance before the committee will ensure they can transparently account for their decision making and how they balance the needs of borrowers, savers, shareholders and the wider community. This is important. The banks will be required to explain to the parliamentary committee matters including international economic and financial market developments and how these are affecting our nation. They will be required to explain, if necessary, developments in prudential regulation, including capital requirements, and how these are affecting the policies of Australian banks. They will be required to explain the costs of funds, the impacts on margins and the basis for bank interest rate pricing decisions. All these are good. All these are necessary. They will be required to explain how individual banks and the banking industry as a whole are responding to issues previously raised in parliamentary inquiries through the necessary processes, through their package of reforms announced in April this year, and also bank perspectives on the performance of the Australian economy, including its strengths and potential risks.

The coalition government has already taken significant and proper steps to further strengthen our banking and financial system through the conduct of the Murray financial system inquiry and the ongoing implementation of the recommendations of that particular report. In addition, the government has acted to strengthen the resources and capability of ASIC—not just the investigator powers of a royal commission but also the ability to prosecute and otherwise act against those responsible for malfeasance in the banking and financial sector. And that is totally right and proper.

Just yesterday Minister O'Dwyer and I announced that the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, who is a very respected political and business figure, has been directed to take undertake an inquiry to assess whether the current laws address the concerns raised by the Joint Parliamentary Committee on Corporations and Financial Services in its report. It was tabled on 4 May 2016 and was entitled, Impairment of customer loans.

The ombudsman will examine selected cases as identified by the parliamentary joint committee and, with the terms of reference provided, she will give advice to the government to help determine if further regulatory action is required. That is right, that is proper, that is necessary. We are taking action. We do not need a royal commission into the banks. The PJC raised serious concerns about how banks treated some of their small business lending customers and they made a number of recommendations to address the deficiencies they identified.

The government has a substantial financial sector agenda to improve consumer outcomes. However, the ombudsman will be able to identify, through a forensic analysis, if further reforms are needed. Ombudsman Carnell will do that. She will provide interim findings to the Ramsey review to inform the wider review of external dispute resolution schemes in the final financial services sector, and the final report is due to be provided to the government in 12 weeks.

The government has recently announced that the major banks and other financial firms are going to report annually. As I said previously, this is necessary and this approach will ensure that the banks and other major financial firms are more transparent in their decision making. They will be held account to the Australian people and by the Australian people.

I would like to put in Hansard the terms of reference of this very important inquiry which is going to be conducted by Ombudsman Carnell. The terms of reference are:

As I said, small business is the engine room of this economy. Further:

we know that, we appreciate that—

including market losses, when they have been treated fairly, and any impact on the availability and cost of credit to small business.

The government does not support a royal commission into the banking and financial services sector because a royal commission will not benefit consumers or the Australian economy; it will benefit lawyers—the Prime Minister make that point in question time today and question time yesterday.

Critically, a royal commission would just go over old ground and would delay well developed and important reforms, which will strengthen consumer protections and ensure that malpractice is detected and, where necessary, punished, and provide a one-stop shop for consumer complaints. In addition a royal commission would send a signal internationally—that is the last thing that we need—that the government believes that there are structural problems with our banking and financial sector. This would have a significant repercussion for confidence, for international investment and, of course, for our all-important AAA credit rating.

This motion is a further demonstration that the Leader of the Opposition is not fit to hold his current position. He had the opportunity he was the Minister for Financial Services and Superannuation from the 14 September 2010 to 1 July 2013 and he was the Minister for Workplace Relations from 2011 to 2013. In that time, he did not call for a royal commission into the banking sector. When he was in charge of workplace relations, about the most notable thing that he did was to talk up the Road Safety Remuneration Tribunal, a tribunal I might add—

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