Julian Leeser (Berowra, Liberal Party) Share this | Hansard source

I'm pleased to rise to speak on the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017. This bill amends the Banking Act to establish the Banking Executive Accountability Regime, or the BEAR, as it's more commonly known. The BEAR is a strengthened responsibility and accountability framework for the most senior and influential executives and directors in banking groups. To support the BEAR, the bill gives the Australian Prudential Regulation Authority, APRA, new and strengthened powers.

The banking sector plays an essential role in promoting economic growth and a critical role in the lives of all Australians. In order for it to operate in an efficient, stable and fair way, the community has to have trust in the banking sector. More than perhaps any other sector in the economy, this is the case for banks because we all rely on the banks to provide us with finance to conduct our activities. Whether you are borrowing money to finance the purchase of a home or borrowing money to finance the purchase of a business or to expand a business, the banks are absolutely fundamental to the functioning of the Australian economy.

In Australia, however, a series of incidents involving poor behaviour by banks over recent years has raised the question of whether there may be emerging systemic issues that are undermining public trust in the banks. Public trust is very important in the banking sector precisely because so many of us rely on the banks. In order to have an efficient, effective, secure and stable banking system, we need to ensure that there remains public trust.

Under the BEAR legislation, banks and their most senior executives and directors would be expected to conduct their businesses and responsibilities with honesty, with integrity, with due skill and with care and diligence; deal with APRA in an open, constructive and cooperative way; and prevent matters from arising that would adversely affect the authorised deposit-taking institutions' prudential reputation or standing. Where these expectations are not met, APRA will be empowered to more easily disqualify individuals, ensure that bank remuneration policies result in financial consequences for individuals and impose substantial fines on banks. Banks will be required to register with the Australian Prudential Regulation Authority before appointing people as senior executives and directors. The Australian Prudential Regulation Authority will also get additional examination powers which will help it to investigate potential breaches of the BEAR legislation. These mechanisms are intended to deter poor behaviour and ensure that banks and individuals are held to account where they fail to meet the high standards that are expected of them.

The legislation provides further clarity on the accountability obligations of banks and their directors and senior executives, and the enhanced consequences for being in breach of those obligations. In particular, APRA is empowered to impose substantial fines on banks, to more easily disqualify accountable persons and to ensure that bank remuneration policies result in financial consequences for individuals. The regime is due to start from 1 July this year. Banks may, as I said, remain at the centre of some of the most critical decisions in people's lives—buying a home, starting a business and saving for retirement—and it is important that mechanisms are in place to deter poor behaviour and provide for accountability where the high standards of behaviour that we all expect of such an important sector are not being met.

I heard a lot from the member for Kingsford Smith, who preceded me in this debate, about government inaction and government failures, but I think those opposite need to have a look at their own record in relation to banking matters. Their record of inaction stands in contrast to the Turnbull government's ongoing reform of the financial services sector. Under our government, we've established the Australian Financial Complaints Authority, a one-stop shop to provide victims with compensation now, not years down the track. There is the creation of the Financial Adviser Standards and Ethics Authority, which protects consumers from dodgy practices, and industry funding of ASIC to bolster their resources and powers properly. Just last year, the government set up a focused and responsible inquiry into misconduct in the banking, superannuation and financial services industry.

From the early days of my candidacy, I have supported calls for a royal commission into the banks, and I'm pleased the government has acted, yet again, as part of its ongoing work into the financial services sector. I've personally been concerned about customer complaints relating to the Commonwealth Bank's takeover of Bankwest in 2008. The Commonwealth Bank's conduct in the aftermath of the global financial crisis has seen it accused of impairing healthy Bankwest loans and forcing customers into foreclosure. I think of the heroic work of my constituent Peter McNamee, who himself was not a victim of the Commonwealth Bank's conduct in this regard but who became a great advocate for victims before the various inquiries that occurred in this place, the inquiry established under Kate Carnell and the inquiries set up by ASIC. He was doing the hard yards to get public policy changed in this space to provide justice for victims. Peter has been a very strong advocate of the banking royal commission, and I'm very pleased that, through his work, many of the victims of the Bankwest issue will now have their chance to put their case before a very distinguished former High Court judge in Ken Hayne, who will make recommendations to the government about what to do going forward in this area.

These issues have been long-running. They date back to when Labor was in government. The opposition had six years to act on banking misconduct, but they didn't do anything. When Storm Financial collapsed and other crises hit Australia under their government, what did they do? Their silence was deafening. When the coalition proposed a financial system inquiry in opposition, how did they respond? They refused to support it. Despite what the member for Kingsford Smith and others on the other side of the House may claim, when they sat on this side of the House, they were a government defined by inaction, and we've seen it time and time again. It takes the coalition to respond in a responsible and reasonable manner. That's what we've done with the royal commission, that's what we've done with a range of other financial services elements and that's what we're doing with the Banking Executive Accountability Regime, which is being established under the legislation that is currently before the House.

The opposition leader has pursued politics over people here. He has led a campaign where political pointscoring has drowned out the voices of victims. For all his talk, where was he when Labor was in power? If only the opposition leader had been in a position to act then, perhaps in his capacity as minister for financial services! But whether it was the Leader of the Opposition or the shadow Treasurer, who was then the Assistant Treasurer, Labor repeatedly rejected in government the need for a royal commission. The contrast of record to rhetoric couldn't be clearer. The Turnbull government's take-action-now approach puts the inaction of previous Labor governments to shame. The establishment of the royal commission and the BEAR are just the latest in the long list of measures implemented by this government. They are the end result of orderly and orthodox processes, where the government has consulted with industry and affected parties in order to consider the best way forward to enhance public confidence and trust in the banking and financial services industries.

Despite all of the noise we heard from those opposite about the royal commission, despite making a lot of noise over a long period of time, they never suggested anything about terms of reference for a royal commission. If you're serious about a royal commission, you publish your set of terms of reference. No—instead, it was just a political stunt. For all their boasting and bank-bashing, they never suggested these terms of reference. What's worse is that, in the way those opposite have conducted themselves, they have given false hope to the victims of banking misconduct. In this legislation, we have a way forward to ensure that bank executives act properly, ethically and prudentially and are appropriately supervised by the relevant authority.

While the Banking Executive Accountability Regime and a royal commission might uncover instances that lead to recommendations of compensation or, in relation to this particular regime, fines in relation to bank executives, those opposite just made a lot of noise rather than proposing actual policies. On top of their rhetoric, they should be ashamed at the way they have undermined Australia's financial stability through their alarmist attacks. In irresponsibly bashing the banks, they've put politics above people and their own egos above the economy. Our major banks represent almost nine per cent of Australia's GDP and employ more than 400,000 people. Millions of Australians have banking shares either directly or through their superannuation funds. We must be prudent and careful and sensible in the regulation of the banking industry. The vast majority of Australians not only are customers of the banks but have a direct stake in them through their superannuation, but those opposite have gone about this debate in a way that has put the economy at risk. They have put at risk the very system that supports Australian employment and wages. No-one in the Labor Party has done more to bash the banks than the former senator Sam Dastyari. His calls for a royal commission and actions on banks pre-date the official Labor position by some two years—and, where the former senator Sam Dastyari went, the Leader of the Opposition followed.

Time and time again, it has been a coalition government that has had to clean up the mess left behind by Labor, and that's what we're doing with the legislation before the House today. The failure of past Labor governments to adequately support victims of banking misconduct is reflected in their do-nothing approach. They didn't support a financial systems inquiry; they didn't respond to the victims of Bankwest or Storm Financial; and they didn't even bother to write terms of reference for their stunt of a royal commission. Shame on those opposite for leaving a legacy of inaction.

Once again, with the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill, the coalition government has come to pick up the pieces and restore stability and public confidence in our banking sector.

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