Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

There is a problem with banks in this country. People do not trust them, and rightly so. Trust in the banks has been eroding for a very, very long time. People wonder why the Australian government gives the banks such a massive leg-up, by effectively underwriting the big banks' activities, because they know they're too big to fail, and then allows them to make world-leading record profits. Yet, at the same time, people find themselves going further and further into debt, paying more and more in bank fees every year, and they wonder where the bank profits are coming from. Well, the bank profits are coming from the people of Australia. The bank profits are coming from an overinflated housing market that sees the banks get rich from writing huge mortgages. The bubble keeps growing and growing and the people in the banks and those at the top keep doing better and better. People know something is wrong with the system.

The big part of the problem, the driver of the problem, is that what the banks pay themselves, their executives and the people at the top is not based on how happy customers are but is based solely, or in very large part, on how much money they make for their shareholders. It is based on whether or not they can find strategies to keep these world-leading record profits going, by hell or high water. So the people at the top of the banks have an interest in making as much money as possible and putting the community last. Money first, community last—that's the way the big banks run in this country, but they rely on the government to step in should they ever get into trouble, as they did during the global financial crisis.

The way the system works is that the salaries of so many of the people at the top are tied to the bonuses they make, which are based on how much profit the banks rein in. Because of this, we have this system and this bubble that is going to keep inflating and get bigger and bigger, unless action is taken. When you see the head of the Commonwealth Bank of Australia, for example—an organisation that's been prosecuted in court for allegedly illegal activity—in 2016 have a base salary of $2.65 million and a total salary of $12.3 million, you see how much of a problem there is with this bonus culture inside the banks, where they are forced, by hell or high water, to find ways of making money out of everyday Australians, even if it puts Australians into further and further debt that ultimately they can't afford.

If the culture of an organisation starts at the top, we need to change the way that banking executives are paid. Start saying to them, 'You operate in this country under a social licence.' Everyone has to have a bank account now, whether you work or are unemployed or whatever you are. They have a steady stream of our money coming in and they have the government underwriting them, because they know they are too big to fail. Well, there's a quid pro quo, which is that you don't contribute to inequality in Australian society. You pay a reasonable amount, but no more.

This bill largely leaves all of that untouched. They'll still be able to get away with paying themselves enormous salaries and enormous bonuses, and it's that bonus culture that is putting Australians further and further into debt and seeing the banks continue to make a motza. So this bill can be supported for being a very small drop in the very big bucket that needs to be filled, if we are to regain trust in this country.

But one of the things we should do is seize the opportunity, now that the government has rediscovered that it's time we took on the banks and reined them in, to fix this bill. When this bill comes before the Senate, the Greens and Senator Peter Whish-Wilson, who has been paying very close attention to this and has been all over it like a rash for a very long time, will be introducing some amendments to give this bill some teeth. In this country we legislate for the minimum wage. It's not much, it puts people in poverty, but we legislate for the minimum wage. What we don't have are any controls at the other end. As a result we see these bank bosses who can earn over 100 times the average wage—not the minimum wage, the average wage. Is there any justification for the head of a bank to earn over 100 times the average wage in this country? There is not.

It is time to make Australia more equal, it is time to make the banks behave better and it is time to stop them contributing to inequality in this country, which is why the Greens will be moving to amend this bill. This bill should include hard caps on how much bank executives at the top are able to pay themselves. There is no reason that their base remuneration should be any more than 10 times the average national wage. That would start to make Australia a more equal place. I ask people who say that you can't go around restricting banks: what is the justification for someone in this country earning more than 10 times the average wage? Surely, after you've earned your first million dollars a year, what's the point of the rest of it? You're living a very comfortable life. What can be the justification for saying in Australia, in an egalitarian country, that we're quite happy, through government largesse and government support, to allow someone to earn $12 million a year? That is not what the banks are there for. That's not the social licence they operate under.

We'll move to say that the base rate should be limited to 10 times the average national wage, but, as I said, that variable bonus component is the real problem, and that should be limited to a further five times the average national wage. This will start to make Australia a more equal place again. You shouldn't shed a tear for the bank executives if those amendments get through, because they would still be able to earn over a million dollars. According to the Parliamentary Library, they'd still have $840,000 per annum as the cap for the base salary and about $420,000 per annum for the variable component. They could still count themselves millionaires, but they wouldn't be earning more than 10 times what the average Australian worker does. At a time when everyone else's wages are going backwards, the pay of bank executives is skyrocketing, their profits are skyrocketing and the shareholders, the people who own the banks, are doing very well out of it, but it's all at the expense of everyday people in Australia who are going further and further into debt and getting mortgages that they are struggling to meet, who are paying outrageous bank fees and who are getting advice from their banks about wealth management products that aren't in people's best interests but are just in the banks' best interests. We need to crack that nut and say to banks: 'You operate here under a social licence. We'll let you earn 10 times what the average person does, but above that is just unjustifiable greed that is coming at people's expense.'

When this bill passes the House, as I imagine it will, I hope that consideration is given in the Senate to giving it some teeth, because this bill sees a big problem and then really does nothing about it. It introduces some little moves around the edges but it is turning a blind eye to the core problem, which is that greed still drives this industry and still drives the pay structure in this industry. Until we start saying, 'You get remunerated for something close to the value of your work, not because you've been able to fleece a lot of money out of everyday Australians,' we will continue to have this problem. I commend the amendments that are to be moved in the Senate to this chamber and I hope this parliament won't just be seen to be saying something about the banks but will actually do something to rein in the obscene salaries that we're seeing.

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