Andrew Giles (Scullin, Australian Labor Party, Shadow Assistant Minister for Schools) Share this | Hansard source

The bill before the House is less than what it seems and much less than what Australians need. I rise to make a brief contribution to the debate on the bill. In particular, I want to support the amendment moved by the shadow Treasurer, the member for McMahon, and express some concerns and make two wider points relating to the issue of banking regulation and executive remuneration. The member for Kingsford Smith described the government's approach to regulation in this area as 'piecemeal'—and, characteristically, that was both accurate and generous. The bill before us amends the Banking Act and the APRA Act to put in place some new accountability obligations on executives of authorised deposit-taking institutions. To make this meaningful, the bill will put in place new penalty provisions and additional powers for APRA in the Banking Executive Accountability Regime.

This is a regime that is modelled on that which has been relatively recently put in place in the UK—and so far so good. The regime is much more limited in nature than that which has been introduced in the UK. In terms of its coverage, in terms of the industry and indeed conduct rules and the rest of it, there are things that are worthy of wider consideration through, in particular, the banking royal commission into which this government has been dragged kicking and screaming. This bill was put before the House prior to the government's concession to a royal commission in December last year. Looking at the terms of the bill before us, we could do much more to align the consequences of a failure to meet community standards with the expectations that lead to the social licence our banks have.

The bill before us, so far as it goes, achieves some reasonable objectives, particularly if the amendment moved by the shadow Treasurer is agreed to. But there are a couple of concerns I wish to put before the House. First and foremost, there are some on the government benches who clearly don't get it, who don't accept that there is a need for action. I've been very disturbed at reports that a number of government members feel there is no warrant for these sorts of measures. These members have not been paying attention to what has been going on in our banks—in particular, our big banks. I'm very disturbed by these reports, and I hope by their actions on the floor of this place they will prove them wrong.

I'm also concerned at reports about some in the banking industry. In an interview with the Treasurer published in the Fin Review today, I was concerned to read of reports that concerns were apparently expressed to Mr Hartzer in Davos that people don't see where the problem is. If this is the case, they haven't been looking very hard because clearly there are very significant and systemic issues in the Australian banking industry which require detailed and holistic review.

That takes me to the first of the two wider points I wish to mention briefly. Firstly, the government's signature and indeed only economic policy for growth is an enormous company tax cut. Secondly, the four biggest banks are already some of the most profitable businesses in Australia, so a giveaway to those banks would be enormous. That context is important when we're debating this piece of legislation because it reminds us of what is going on in the wider economy and that the piecemeal measures here are no substitute for wholesale reform, particularly in light of the litany of regulatory failures that the member for Burt has detailed.

What is required is a holistic review and widespread cultural change. That cultural change is needed more widely in the Australian business community beyond the banks, though the banks are the exemplars of worst practice. Last year I was pleased to put before the House a private member's bill looking at executive remuneration more generally. It highlighted the positive impact of Labor's two-strikes policy on restraining the extraordinary growth of salaries which has seen the top 0.1 per cent of Australian's income share increase exponentially—and, with that, their share of wealth grow even more. Other members have spoken about the bonus culture which is particularly prevalent in our big banks. These big issues remain.

I note that Malcolm Borland's comments have been referred to in the Bills Digest, very helpfully looking at the mystery of the lack of conformity of bonuses and executive remuneration generally with performance. The mystery has been unpacked quite a bit by such inquiries as that conducted by the Productivity Commission in 2009. There is a lot more work to be done to deal with the issues of banking culture and, indeed, with an executive remuneration system that remains too mysterious, not just for shareholders but also for the social licence it grants to those who are its beneficiaries.

See this speech in context