Chris Bowen (McMahon, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 that we're debating today could perhaps be called the 'What a Difference a Few Days Makes Bill' because it is emblematic of the chaotic nature of policymaking at the heart of this government and, in particular, by this Treasurer. On 28 November last year, which wasn't that long ago, the Prime Minister said, 'We've made it clear that we are not going to establish a royal commission.' A couple of weeks after this legislation was introduced into the parliament, the Treasurer said on 3 November:

I'm not quite sure how spending $150 million on a QC's complaints desk, otherwise known as what others are pushing for, would help resolve any of those issues.

He was talking about a royal commission into banking and financial services. He quoted the measures in this bill, the Banking Executive Accountability Regime, as evidence that 'the government was taking action now', which is why, he said, they didn't need a royal commission into the banking and financial services sector. And then on 30 November, after 600 days of fighting Labor's call for a royal commission, the government announced a royal commission. That could be regarded as one of the more spectacular backflips of this government—and it's a very long list.

As I said, this goes to the lack of a coherent agenda and coherent policy narrative at the heart of this government. We know that the government doesn't even fully believe in what it is doing: at the time the Prime Minister announced the royal commission, he called it 'regrettable'. I don't think the victims of financial scandals would regard it regrettable; they would see it as essential. Sometimes it is said, and the government has said, the royal commission would take too long. If the government had adopted a royal commission at the time that Labor proposed it, it would now be over. We would be moving on. We would be dealing with the implementation of recommendations. All this wasted time wouldn't have existed, and we would have been getting on with these important challenges as a nation. This has been just the latest example of a government doing anything it can to avoid a royal commission. It's all about avoiding a royal commission, and yet now we have this bill as well as a royal commission.

We will be supporting this bill. In fact, the government can rely on more support from this side of the House than they can from their own when it comes to this bill. It's reported that the member for McMillan called this a contravention of Liberal Party philosophy. There were concerns also expressed by the members for Goldstein and Corangamite. So the government has some internal issues on this bill, but it will be enjoying the support of the opposition.

The bill does introduce an accountability framework for banks. Who the framework applies to, what the obligations are for the banks and for employees of the banks, deferred remuneration obligations for banks, a civil penalty regime for breaches of these obligations and other related issues are all covered by this legislation, which is said to take effect from 1 July this year.

We do have some issues and concerns about this bill, and I will be moving an amendment in the consideration-in-detail phase. While I'm not moving an amendment on this particular matter, it strikes me as odd that the government has empowered APRA, not ASIC, in this space, and this is something that will need to be monitored. We have well-respected regulators in Australia. We have had, traditionally, a very clear delineation of responsibility between the regulators. Based on what is being implemented here, it would be a natural fit for ASIC to have these responsibilities that the government has chosen to give APRA. I'm not going to quibble about that in consideration-in-detail amendments or try and change that. I just point that out as we go and say that that will need to be monitored in terms of how this regime is implemented, going forward.

What I will move a consideration-in-detail amendment about is the start date of the legislation in relation to small- and medium-sized banks. Now, this is a considerable regime. It will take considerable effort on behalf of the banks to comply with it. I'm confident that our large institutions will be able to do that by the proposed start date, but smaller institutions will struggle. Banking competition is an important matter in this country. We have a Productivity Commission inquiry into banking competition. I think most honourable members would concede that more competition in banking would be a good thing. We saw some hollowing-out of competition with the departure of St George and Bankwest, or their being subsumed by parent entities. We all, I think, would support the role of customer-owned banking, credit unions and the like, and smaller banks, and recognise they play an important role in the financial system. We will wait and see what the Productivity Commission recommends; that could potentially play an even more important role going forward.

What we don't want to do is put them at a substantial disadvantage. I think that this legislation as it's currently framed would put them at a substantial disadvantage. The Australian Bankers' Association noted:

Effective implementation of the BEAR regime will require material effort and reallocation of resources by ADIs and APRA to meet the proposed deadline.

The Australian Shareholders' Association said:

While we acknowledge the government’s desire to implement the legislation as soon as possible, we are of the view that ADIs will need time to undertake changes to policies, contracts and systems.

The Australian Institute of Company Directors, the AICD, have said that they reiterated their view that BEAR's implementation date should be deferred so that it commences on 20 January 2019. Customer Owned Banking Australia said:

In order to effectively and efficiently implement the BEAR there are a number of things that must happen prior to the implementation date.

They went on to argue that there was insufficient time to do that. So I do note that this has been raised by a number of stakeholders. Concern about the implementation date was shared by some government senators, who, in their report, recommended the date of implementation of the entire package be delayed for 12 months. But, for small- and medium-sized banks, the Labor Party has suggested previously that the implementation be delayed by 12 months—and that is the amendment that I will move when we get to consideration in detail.

The Senate inquiry clearly showed that small- and medium-sized banks are not afforded the same access as the big banks to the development of this policy. I make that observation in passing as well.

It was noted in paragraph 2.75 of the explanatory memorandum that discussions were held with the big banks in February 2017 about options to address accountability gaps. But evidence from the Customer Owned Banking Association is that they had no knowledge of or involvement in these meetings. Labor senators made it clear that our position was to delay the implementation for small and medium ADIs by one year. I note the Treasurer's comments in the media that there would be 'a slower pace of implementation for the smaller banks'—we welcome that. That is, in effect, him agreeing with the Labor Party's position. As I understand it, the amendment I move may well receive the support of both sides of the House. Obviously I don't speak for the government. That's a matter for them to talk about in the House, but I would be hopeful of that amendment receiving bipartisan support in this House.

I do think this is a bill which should receive the bipartisan support of the chamber. We don't, as I said, agree with every single element of it. We have made commentary on different parts of it, but none of that is enough for us not to support the bill as a step forward. None of it obviates the need for a royal commission—a point I would have made if the government had not already announced one. But, the government having announced a royal commission, quite evidently a royal commission is now bipartisan policy as well, so it's not in conflict with the fact that we are going to have a royal commission.

I note that some have said that this doesn't go far enough. The Consumer Action Law Centre said:

Treasury has restricted the application of the proposed BEAR so that it will apply to poor conduct or behaviour that is of a systemic and prudential nature. This misses the crucial element of the United Kingdom model that ties accountability measures to poor consumer outcomes, not just prudential matters.

CHOICE went on to say:

As it stands, what we've got is a bit of a teddy bear.

As I said, none of those concerns would be reason to oppose the passage of the legislation. It will receive our support, and I would hope for support for the amendment that I will move.

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