Madeleine King (Brand, Australian Labor Party) Share this | Hansard source

I rise to speak on the Review of the four major banks (third report) conducted by the House Standing Committee on Economics. I was a member of this committee and participated in two of these reviews. I'd like to thank my colleagues the member for Kingsford Smith and the member for Burt and those members opposite who were part of the committee, and also the secretariat for all of their efforts in conducting not only this review but all the work that the House Standing Committee on Economics undertakes.

I also participated in briefings with the Reserve Bank Governor, Dr Philip Lowe, and in hearings with Dr Lowe and his very able team: Dr Guy Debelle, Deputy Governor; Dr Luci Ellis, Assistant Governor (Economics); and Ms Michelle Bullock, Assistant Governor (Financial System); among others. The Reserve Bank is a very important institution providing central bank services, and is a touchstone of the Australian economy. The RBA performs this work ably and professionally, and I thank the Reserve Bank and all of their staff for all of their efforts.

As a member of the economics committee, I also had the entirely unedifying experience of witnessing government members attack industry super funds in public hearings with the Australian Prudential Regulation Authority and ASIC. It was staggering to see the government attack those superannuation funds, which have been the best-performing super funds in the country over decades. Industry super funds are respected, trusted and embraced by their members because of their exceptional and consistent performance. They deliver lower administration fees and higher returns, as well as delivering the best value for money for Australian workers and their hard-earned money, which will support them in their retirement. This is what the government wants to attack. By virtue of my former employment for over a decade at a university, I'm a member of an industry super fund—UniSuper. Like most members of industry super funds, I'm very happy. Returns are good and management is excellent. This is what the government wants to attack.

With regards to the review of the four major banks, it was remarkable to witness this government dig their heels in, oppose the royal commission and get down to the business of protecting their powerful friends in the banks. This government, ridiculously, said that this review would sufficiently address any and all concerns held by victims of malpractice in the banking sector and lead to a more open and transparent culture in what has fast become one of the most scandal-ridden industries in Australia. As a member of the standing committee reviewing the four major banks, and after participating in the second and third hearings of these reviews, it was clear this was not happening, and it just highlighted the farcical nature of the whole process.

This is reflected in the dissenting report from Labor members of the committee—the member for Kingsford Smith, the member for Burt and me—that shows just how much we disagreed with the whole thing from the outset, and just how imbalanced the whole process was in the economics committee. It was dominated by government members who are utterly out of touch with the victims of bad behaviour by the banks—they are either out of touch or they are hamstrung by their party. Members had 10 to 20 minutes only to question the most powerful business executives in this country, to assess and to try and work through myriad of issues in what is a complex and highly secretive industry. It was clearly not enough, and this was evident throughout every hearing and every question that was asked.

Finally, Labor has dragged the Prime Minister and the Treasurer to a royal commission. We have consistently called for a royal commission, but it took a letter from the old mates at the banks to bring it on. But even now it seems it won't go far enough, and there are already glaring holes in the submissions process, not least of all the lack of information about how the commission will allow for public submissions, given that everyday Australians are the most affected by this. And I must congratulate the ACTU for setting up a website very quickly to collect individual stories of the victims. This Liberal royal commission already echoes all the fatal weaknesses of the review that has preceded it—padding up the banks and preparing them for a soft landing. Make no mistake: the big four knew that this was coming, and the last 12 months has been an exercise in preparation and anticipation of the day they knew would come. I even asked each executive during the hearing if, in fact, they knew a royal commission was inevitable. I was given a mix of responses, including one from Mr Ian Narev, formerly of CBA, who said:

If there were to be any other forums—in parliament, royal commissions or whatever they might be—we would be prepared to come and do what we do here, which is talk about what we're doing and talk about what we can do better.

There's a lot they can do better. I received a similar response from Ms Catherine Livingstone, the Chair of the CBA, when asking about preparations in the boardroom. She said:

I think the conversation around the board is on the extent of the regulatory environment and also the intersection with community expectations …

Communication expectations? I bet the community didn't expect the CBA to facilitate money laundering by criminal gangs right around this country.

The letter produced to the Prime Minister only a few months later from the big four banks only confirmed my suspicions and, frankly, the very obvious fact that these banks have been preparing for a royal commission for some time. They had got their ducks in a row, preparing the terms of reference. All these circumstances serve to undermine a royal commission before it has even started.

These banks need a royal commission to re-establish accountability and public confidence. That much is true and that much they admit. The most profitable industry in Australia is also the most scandalous with the largest of these corporate scandals currently playing out in the Australian courtrooms with the CBA under money laundering allegations from AUSTRAC to the tune of some $600 million. Other allegations include: failure to report transactions of $10,000 or more on some 53,000 occasions in three years; failure to calculate interest on offset accounts for home loans; 8,600 customers receiving poor financial advice over nine years; allegations of unpaid super to part-time employees; inadequate systems and controls for inappropriate conduct as identified by ASIC; ongoing fees when not providing a service to customers; misappropriation of funds from clients; and exorbitant ATM fees. These are just some of the allegations engulfing the sector as set out in the Labor report. I could go on and on.

In the first two reports, Labor members made one recommendation only, that the government:

… take responsibility, stop defending the banks and establish the systematic, thorough and transparent investigation that only a Royal Commission can provide.

Unlike the recommendations made by the government members on the committee, which have largely been ignored, Labor's single recommendation, a royal commission, has been adopted by the government. This is clearly a vote of confidence in the Labor opposition, and I thank the government for its support. Sadly, yet surprisingly, it is a half-hearted, insipid and lacklustre attempt at holding this bank industry to account. As it stands, it is unlikely to restore public confidence in institutions which are at the centre of the Australian economy and which should have treated Australians with greater respect than they have.

In the third report on the banks review by Labor members, we've recommended to the government that, if this royal commission is to go ahead, it must appoint more commissioners to deal with the royal commission's workload and extend the terms of reference of the royal commission to include the matters that Labor has been calling for. These include: looking at the culture of the banks and executive remuneration; consultation with banking victims groups; protection for whistleblowers; regulation or oversight and the overall regulatory architecture of the banking system; and the conduct of liquidators where this relates to the financial services sector Finally, Labor recommends removing the term:

And, the Commission may choose not to inquire into certain matters otherwise within the scope of this Inquiry, but any such decision will be the Commission’s, alone.

That's the get-out-of-jail-free card for the banks. Then and only then is it possible that this royal commission can retain some semblance of propriety, due process and validity to combat the rising tide of malpractice and malfeasance of the four major banks in this country.

Once again, I'd like to thank the secretariat of the House Standing Committee on Economics for the extraordinary work they do and for the preparation they do to help all members of the committee in preparing for all the reviews that we do. And thank you very much for the support of members who were on the committee with me. I thank the House.

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