Trevor Evans (Brisbane, Liberal Party) Share this | Hansard source

It gives me great pleasure to speak on the House Standing Committee on Economics' review of the Australian Prudential Regulation Authority annual report 2015. I note the report and I also note the two reports which will follow this order of the day, being the committee's reviews of the 2015 annual reports of the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission.

As a former economist and having previously worked for one of these regulators, I have very much enjoyed my time on the Economics Committee so far, and I look forward to continuing to work hard and to make a contribution here. So far in this 45th Parliament, the work of the committee has included working with these regulators to explore issues relating to Australia's banking sector. APRA has its role to play in the regulation of our banks, and it was one of the many regulators we heard from, alongside the hearings we conducted with the CEOs of the four major banks.

The task of the committee with respect to the bank hearings is an important one. Our banking and financial industries weathered the recent global financial crisis relatively well compared to those in other countries. So, without in any way undermining the stability and the security of our banking system, one of our tasks has been to focus on consumer issues and address what is viewed as a pattern of conduct where the big banks have let their customers down. Quite separately, to the dozen or so other steps being taken by this government with respect to the regulation of our banking and financial sectors, these hearings have been very important and have already produced results. In fact, the committee is due to release its first report and its recommendations in coming days.

In my view, one of the most beneficial aspects of the bank hearings is the good discipline it has been instilling as the CEOs of the big banks prepare for their hearings. It is good practice for the bank CEOs to spend what I suspect were many hours, if not many days, considering what the public might wish to have them asked, speaking to their middle managers about the details of past scandals and other issues and reflecting broadly on what they might wish to better communicate to the public.

Also very important is the prospect that regular oversight will force cultural change at the most senior levels in the banks, and that will occur if we can bring about greater accountability. Greater accountability is warranted when you consider how poorly Australians believe that banks are explaining themselves when it comes to their conduct, various scandals or even just the decisions around passing on—or not—the interest rate decisions of the Reserve Bank of Australia. I am a strong believer in the disinfecting power of transparency, and confidence is one of the most important elements of what a banking system provides to our economy. We want to foster confidence because, ultimately, the growth of our nation depends on it.

I believe it is good discipline for the banks to start preparing for this type of scrutiny because, hopefully, the government intends to have them called back frequently for these hearings. While it was certainly somewhat expected to hear the banks say things like, 'Sorry,' and to acknowledge that they 'Have more work to do,' the committee's focus on the internal processes and compliance systems of the banks suggests that answers like that will quickly wear thin in future hearings. Certainly, the type of regular accountability I am describing would force faster responses to any new or emerging scandals from our banking sector compared with the years of delay we heard about in some instances. And I just want to make the additional point, in passing, that most of the terrible stories and scandals we have heard about in these hearings originated quite some years ago, when Labor was last in government and the responsible minister at the time was the now opposition leader, Bill Shorten.

It was also very worthwhile to have the banks consider and comment on some areas where the government is considering further reforms. On the topic of competition, which is very close to my heart, I was very interested to ask the big banks some questions about their own views and thoughts on the state of competition in their own industry. I note that Australia's biggest four banks collectively hold about $3 trillion of Australian resident assets, which is approximately twice Australia's GDP. I note that they collectively hold over $1 trillion in mortgages, which I understand is over 80 per cent of the market, and that they hold collectively over half a trillion dollars in business loans, which is about three-quarters of that market.

Coming from the retail sector, I was also very interested to hear the banks admitting to losing touch with their customers. In most other sectors, and especially in small business and in retail, losing touch with your customers would mean going out of business. But these companies have not gone out of business; most advised me that they had increased their market share in recent times in many major product markets. For that reason, I was also very interested to explore giving customers more power over their own data and making it easier to take their accounts with them if they switch banks. I was interested to learn how other comparable economies are enhancing consumer confidence in the sector, such as reforms in data sharing happening in the United Kingdom.

As a member of the committee, I also took up the good opportunity to ask the bank CEOs some of the questions my local constituents have been raising with me. Since these hearings will occur in the future I encourage all Australians with their own stories or concerns about the banks to contact their own MPs so that the government and the committee can continue to apply this accountability.

On the topic of customer complaints, an area of reform already mooted is the establishment of a one-stop-shop tribunal to replace the various existing dispute mechanisms and resolution schemes. Indeed, while many of the CEOs of the banks were open to establishing such a tribunal, Mr Rod Sims, the chairman of the ACCC, stated his support in favour of such a move. To help address many of the consumer groups' concerns we should be considering how a one-stop tribunal for hearing complaints can help Australian banking customers to get their issues resolved, as the Prime Minister himself has proposed. We should be thinking about how such a tribunal can be as easy as possible to access and as cheap and efficient as possible in achieving outcomes, while avoiding any overly legalistic approach.

Finally, I was also very interested to hear about the bank's approach to lending in the small business sector. Coming from a small business family and background, I must say that some of the evidence provided was somewhat unsatisfying and in my view has the potential to become a more significant issue in the future. I want to make the point very strongly that the entrepreneurship, the risk taking and the sheer hard work of our small business community right now is generating the jobs and the opportunities that our country needs so critically. We must support our rising entrepreneurs and our hardworking small business owners as they help our nation to grow, improve and advance. I will always welcome any steps the government can take to support our small businesses which are, after all, the backbone of our economy.

On that note, I welcome the appointment of the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, who I know very well from our days fighting for the interests of small business when she was with the Australian Chamber of Commerce and Industry. I look forward to her separate review into the lending practices of the banks when it comes to small business and to the recommendations she will make.

I just want to say, as I said in my first speech to this parliament, that I believe the more powerful you are that the more responsibility you have to wield your power in a way that is true to your origins and that benefits and protects those coming from the same place as where you started. That means being fair to small businesses so that they can become bigger businesses employing our friends and our family members and generating wealth that can be distributed around our continent and our society.

As I come from small business and am a former regulator and an economist, I am naturally suspicious of concentrated power, whether that is found in the clumsy power of concentrated and central government, the institutional influence of big unions or the market power of big businesses. Some of those in Australia's biggest businesses have acted as if it is possible to skirt the public contests about the regulations they comply with, to shirk the national debates that actually impact how many Australians they employ or how much wealth they generate for their shareholders and Australia's retirees. Those who shirk the national debate or have not communicated well, honestly or forthrightly with Australians about their own interests should not be at all surprised when they are targeted by public suspicion or, indeed, reforms. That is one of the reasons I was so happy to participate in the bank hearings and that is why I support holding these bank hearings into the future in the interests of transparency and to allow the banks themselves to consider their efforts to communicate more honestly and forthrightly with the public and with government.

I am looking forward to the release of the committee's recommendations in coming days and likewise I am keenly awaiting the next opportunity to continue our ongoing dialogue with our financial regulators such as the Australian Prudential Regulation Authority, the ACCC and ASIC. I note the review of the APRA annual report and I commend it to honourable members.

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