Tony Smith (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Perth proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The Government failing to protect consumers from the economic power of the banks.

I call upon all those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Tim Hammond (Perth, Australian Labor Party) Share this | Link to this | Hansard source

Before I get to articulating the ways in which this government has failed to protect consumers from the economic power of the banks, let me put into context the importance of getting it right. What does it look like on the ground? Well, the impact and the necessity and the importance of getting it right are stark when you look at the sheer number of customers held by the big four banks—those consumers affected by the ways in which the banks go about conducting their business: 3.15 million customers with the NAB, 3.8 million customers with Westpac, five million customers with the ANZ and 7.4 million customers with the Commonwealth Bank. That is almost 20 million Australians who bank with the big four and, when we look at the market share of the big four, when combined with their subsidiaries'—Westpac's St. George brand, the Commonwealth's Bankwest brand and NAB's UBank—the big four have a total market share of somewhere just shy of 75 per cent. That is why it is just so important to get this right, and it highlights why it is such a tragedy that this government continues to drop the ball when it comes to managing relationships with the banks.

Let me make it clear that there is one party, the Labor Party, that understands the need to have confidence in banks and financial institutions. The Labor Party understands how important it is to deal with unethical behaviour that compromises that confidence. It is the Labor Party that understands the importance of having a healthy banking and financial services sector, and it is the Labor Party that supports a strong banking and financial services sector. But what we will never support, for as long as we have breath in our bodies, are practices, systems and cultures that allow consumers to continue to be ripped off, small business owners who are working hard and doing the right thing to lose their livelihoods, and retirees to lose their life savings.

If we are truly honest with ourselves we know, and if those on the other side are honest with themselves they will confess to the number of constituents who come through their doors on a daily basis with stories of predatory behaviour and harsh treatment by the banks in the sector. What they should admit but what they fail to admit is how this government is failing those constituents in relation to truly protecting their interests.

One need look no further than the paltry, inept approach—tinkering around the edges, at best—taken by this government in the recent budget in relation to dealing with the banks insofar as they affect consumers. The government has attempted a no-net-red-tape approach, increasing regulation in some areas but decreasing regulation in others. And of course who could go further than looking at this attempted trojan horse, commonly known as a levy on the banking sector. We can try as hard as we might to make the numbers stack up but once again they fail dismally.

We will see, while one is drilling down into the detail of these so-called attempts to deliver benefits to consumers, the need for a royal commission to truly get to the bottom of what is at heart in order to ensure consumers are protected from predatory behaviour from the financial services sector. The so-called $6 billion levy on the banks—what a wonderful trojan horse this is: falling apart at the seams before you even get into the gates of Troy. It is a poorly designed attempt at trying to protect consumers, for these reasons: not because it is not important to make sure the banks give back to the community but because of the fact that when you look at all the other paltry changes attempted to be made by this government it risks achieving no net benefit. There is absolutely nothing in this rushed attempt to win over the electorate that would stop the banks passing on the costs of this levy to mums and dads, consumers and small businesses.

The ink is barely dry on this budget and we already know that the shortfall in relation to accruing the so-called benefits of this levy adds up to something in the range of $2 billion. For Westpac, the $260 million annual liability under the levy represents a $68 cost on each of their 3.8 million customers. How is that possibly delivering a benefit or a protection for consumers in the banking sector? The cost of the new banking levy has pushed up borrowing, making it even harder for new entrants to establish new banks undermining the budget measures. Now, it is true that we have no objection to the banks paying a levy, but what we have here is a rush job. There is a clear discrepancy between what the banks are actually saying they will raise and what the government is telling everyday Australians.

Look no further than yesterday in parliament. On three separate occasions, the Prime Minister and the Treasurer would not confirm how much money the banks were actually able to claim back in deductions. Only a frustrated, desperate, panicked government, trying so hard to be something they are not, would come up with a scheme which on one hand says they are going to tax the banks and on the other hand is going to let the banks claim the costs of paying the tax in the form of a deduction. If they were serious about wanting respect from the financial services sector—the only thing that these banks will respect in government is when they have a government prepared to give them a royal commission, and this government is pulling up short.

Meanwhile, at the same time, talk about Robin Hood! While the government is giving a $65 billion tax cut to big business, of which over $7 billion will be given to the big four banks, they are imposing a $6 billion levy with absolutely no guarantee or protection for consumers that they will not be hit with the cost. This is a government literally taking money out of the pockets of banks' consumers, only to give that money back to the banks in the form of a tax cut.

We have here the Minister for Small Business, who has come along to listen to what we have to say here in relation to the ways in which small business operators are also affected by the big four banks. He is not doing much listening and he is not doing much acting. He comes up here off the long run yesterday in question time and cannot work out why, he says, that 'Labor hates small business'. 'Why is it that they hate small business?' he asks. Well, Sunshine, there is one party in this town that protects small business and it is the Labor Party.

It was the Labor Party that went to the election in 2016 ensuring a policy that would make life better for 95 per cent of small businesses. Count them: 95 per cent of small businesses would have benefited from a tax cut with a turnover of up to $2 million.

The truth does hurt and the numbers hurt. This is just fantastic! This is where the government gets it so wrong. They think that, by doing a deal to make the top end of town like them more, somehow they are landing on the focus group initiative of fairness. That is right: 'What is going to deliver a benefit to consumers? What is going to deliver a benefit to small business? I know! We are going to give the big banks a $7 billion tax cut.' Even if they got this levy right, even if they got the $6 billion water tight, so consumers were not going to have to lump the cost, it would still see the banks $1 billion in front.

Go figure! That does not sound like the great protector of small business, to me.

While the minister is concentrating so hard on sticking up for the big end of town, we on this side have actually been working for consumers. We have been working to make sure that consumers were protected. It was the Labor Party who went to the last election advocating for consumers, to make sure that, under the Australian Consumer Law, penalties for companies engaged in misleading and deceptive conduct would be commensurate to their conduct and we would actually see those penalties increase to $100 million.

This minister has done very, very little. On budget night, the Minister for Small Business got up to profess:

My most important job as the Minister responsible for Consumer Affairs is to ensure Australians are protected from being ripped off or misled, so people can make purchases with confidence.

I would like to ask those who are playing this game at home to go back through the minister's press releases and press conferences and try and work out how many times he has actually mentioned the word 'consumer'. How many times has he actually mentioned the word 'consumer' out of—count them—29 media releases? Apart from a bit of lip-service on budget night, not once. That's right: not once—you win the prize! As far as failing goes, we are seeing them failing to get the bank levy right and failing by giving a $7 billion tax cut. As far as report cards go, it is an 'F' for failure. (Time expired)

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

The last time the member for Perth and I debated a matter of public importance it was supposed to be about consumers that time too, except on that day, 7 February this year, the member's home state was in the middle of an election campaign. Naturally, it was then that the member for Perth spent his entire MPI contribution telling the House, the federal House of Representatives, how wonderful a WA Labor government would be. There was a lot of talk about Premier Colin Barnett, but there was very little talk about consumers—very little.

It is interesting that the member for Perth has not brought up the WA state of affairs today, considering the funding cuts his WA Labor mates have brought to the Western Australian regional areas. It is interesting to see the WA Nationals investment in Royalties for Regions now in jeopardy. Those projects which have brought so much benefit to so many country communities across Western Australia—and they have; I have been there and seen them—did not get a mention today. It is interesting that the member for Perth, who talked a lot in February about Western Australia's unemployment, is not quite so effusive in his praise of the Premier of Western Australia today. The hypocrisy of the WA Labor government and its mates here in Canberra is truly breathtaking. So happy they are to lecture about funding for country WA projects, but then they cut them just weeks into government. And it is the same here in Canberra. While this government gets on with the job, all those opposite do is bluster, blow bag and lecture.

At the core of everything that I do as the minister responsible for consumer affairs is make sure Australian consumers are protected. Whether that is an update to the mandatory standard for product safety or increasing penalties on those who take advantage of consumers, this government is taking real action to protect consumers. The member for Perth talked about press releases. He was not in the Gillard-Rudd years when it was 'government by press release'. I much prefer to use action rather than just mere words, Member for Perth. Much as those opposite do not like it, this government does not spend its time pacing the press gallery in search of a headline to get our name in the newspaper, nor do we issue press releases or shop out op-eds claiming that consumers are ripped off and say, 'We will give the ACCC powers'—powers that it already has. No, we are an action government.

Mr Hammond interjecting—

No, we do not do that, Member for Perth; we are indeed an action government.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

I remind members sitting here on the frontbench that the small business minister has the call.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

It is like a bunch of galahs on a telegraph line.

Opposition members interjecting—

Magpies, galahs—call it what you like. We are a government that gets things done. We will continue to get things done. We are a government which is very much up to the job. That is the contrast between this government and those opposite—indeed, it is. They come into this parliament, they move motions to say how deeply and heartfelt they feel for those who have been taken advantage of. But when this government puts some action on the table, something that will actually protect consumers, they crab walk away. On budget day the government announced it will introduce a major bank levy on our five major financial institutions with liabilities of at least $100 billion. As members of the community who benefit so substantially from the public, it is only fair that the banks do their bit to help pay for the hospitals, schools and pensions, giving back to the community where they have benefited so mightily. The levy recognises that the banks pose an element of risk to our economy, and it asks the big banks to help compensate the community for this risk. The levy will also raise revenue to help bring the budget back into balance and maintain our AAA rating.

You will recall that we once had a budget surplus. That was in the years where Howard and Costello were organising the financial levers. Then, of course, we had those sorrowful years of Rudd-Gillard-Rudd, with the member for Lilley in control: years of economic mismanagement.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

When are you going into surplus?

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

2020-21, Member for Wakefield. It was years of economic mismanagement under those opposite. It works in tandem with the reforms being implemented by the Australian Prudential Regulation Authority—this is the bank levy—and the government. APRA will have the power to remove and disqualify senior executives and directors from all APRA-regulated institutions, and there will be civil penalties of up to $200 million for larger authorised deposit-taking institutions and $50 million for smaller authorised deposit-taking institutions. As well, APRA will also be able to impose penalties on authorised deposit-taking institutions that do not appropriately monitor the suitability of their executives to hold senior positions. The levy provides a more level playing field for smaller and non-bank competitors. That is what you can expect from the coalition government. We are the government which has amended section 46 to prevent the misuse of market power to help level the playing field for small business. We are the government which enacted unfair contract protections for small business. The bank levy will increase competition between the big banks and smaller regional and foreign banks. My message to consumers is that if they do not like the actions of their bank—

Mr Clare interjecting—

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Blaxland is warned.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

then they should take their business down the street to their local customer-owned bank or credit union. There are many good ones. I know there are many fine ones in your electorate, Mr Deputy Speaker, as well as mine.

This deliberate policy decision is designed so that the affected banks will absorb the levy, as they should, rather than pass it on to their customers. So whilst those opposite talk about how deeply they feel for consumers, they do not match the serious action we are taking to ensure they are protected. Our plan, unlike that of the Labor Party, does not punish savers or depositors, such as pensioners, as Labor's proposed deposit tax did. Those opposite wanted to tax every single account holder in the country, regardless of the company they banked with, and included pensioners and ordinary account holders. Instead, ours is a modest contribution from the big five banks and is just 6c in $100 of specified liabilities. It is only on the liabilities of those institutions with more than $100 billion. The levy will not apply to deposits protected by the Financial Claims Scheme or mortgages or additional tier 1 capital. It is a fair contribution from those banks, which Australians backed during the global financial crisis and which are posting profits of more than $30 billion a year after tax. This levy ensures that Australians are compensated for the banks' risk, there is increased competition in the bank sector and customers are treated equitably. We are enshrining fairness in Australia's financial sector. We are creating a one-stop shop, known as the Australian Financial Complaints Authority, where consumers and small businesses can go to resolve their disputes with banks and other financial institutions. There will be a new banking executive accountability scheme to make sure the pay of very senior executives at the banks reinforces their obligation to act in the interests of consumers. Getting things done—that is what this government is doing. In addition to this, the ACCC will have the powers and resources to undertake monitoring of residential mortgage pricing. It will require relevant banks to explain any changes, or indeed proposed changes, to fees, charges or interest rates.

At the heart of everything this government does is the desire to get the job done for Australians and to take action, real and meaningful action, to protect consumers. We are taking action to make that a reality. Only this government will hold the banks to account, have them pay their fair share and level the playing field in Australia's banking sector. Only this government backs small business the way it wants to be backed. The member for Perth talked about a $2 million threshold. He called me sunshine. Well, we are allowing the sunshine to come in—we are making the threshold $10 million. If you are any good with your numbers, Member for Perth, $10 million is five times what your side of parliament proposed. So it is a $10 million turnover threshold, the tax rate is going down to 27½ per cent—the lowest it has been for many, many decades—and the instant asset write-off is being extended by 12 months. It is now available to far more businesses than ever would have been looked after by those opposite. If ever there was a government with the back of small business, it is this one. (Time expired)

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

The honourable gentleman ended on a nice note but prior to that he called all of my colleagues galahs, magpies and all sorts of things. It was quite unfair, coming from this government. He just indulged the House with 10 minutes of confusion, with incoherent meanderings like some sort of muddleheaded wombat at the dispatch box, giving us all his bons mots of wisdom. You can just see the enthusiasm on the backbench. I do not think Keith Pitts heart has raced that much. Now he really is excited!

But you cannot blame the minister for such a confused, incoherent meandering history lesson when this is a government that has had two prime ministers, three defence ministers, a couple of treasurers, a dozen other ministerial changes and a revolving door in the National Security Committee. Who knows what comes next out of this government. They wander from one end of the horseshoe to be other. They have spent all this time defending banks against a royal commission. We get these arguments from the Prime Minister in question time. He says, 'Royal commissions are a lawyers picnic.' You guys held one into trade unions and one into roof bats, constantly referred to them and made many lawyers very rich, yet you rock up in the House with the argument, 'It's a lawyers picnic and we couldn't possibly have a royal commission into the banks.' You have to think, 'How does this government's mind work?

In order to avoid a royal commission, they launched multiple inquiries and made multiple regulations, all on the rush, with nobody really know where they are going—anything but a royal commission. They come in here with this tough rhetoric against the banks but they neglect to mention that they are giving a $65 billion tax cut to corporate Australia—$7 billion of it going to the big four banks. I bet they are really angry. I bet they are quaking in their boots every time they have a meeting with you. I bet small business is so enthusiastic about that $7 billion tax cut for the big four banks. Even if that not enough, there are the income tax cuts to the bank CEOs. On his base salary, the tax cut for the CEO of the Commonwealth Bank will be $170,000. I bet he is unhappy with you! I bet he is terrified of this government. If you go off his full salary for last year, it would be a $246,000 tax cut.

So, they spent all this time defending the banks, backing the banks in, and then out of the blue comes this bank levy, put in the budget at the last moment, having been leaked to sky News—$14 billion was wiped off the share market; there was probably a bit of trading going on, with a few people making some dollars on information that had leaked out of the budget, but never mind that. They come in here, they beat their chests about the banks, but the truth is that this bank levy is pretty badly designed and the cost almost certainly will be passed on, from what the banks are saying—Ken Henry says it will be passed on, and Westpac says it will be passed on to shareholders, to customers, to staff. We know this is basically going to morph into a consumer levy. That is where it is going. That is where the banks are pushing it. Bank CEOs are openly thumbing their noses at you, and yet your response is to come into this House and say, 'Oh, don't worry, they won't be able to pass it on.' How can you say that? I defy any member opposite to tell me how they can prevent the banks from passing this on.

This whole meandering along the policy continuum from one end to the other indicates the last days of a Prime Minister who is floundering around. It is the last days of a backbench who, a bit like wombats, are going round and round in circles, not knowing what the government lines will be next week or the week after. As the Qantas CEO says, who knows who is next? So you had better buckle up for the Prime Minister's next great gambit to save his prime ministership. We all know you have a leader in waiting up the back. Here is the member for Goldstein! If Angus Taylor can give it a go, why not you? The reality of this government is that they are confused and they do not know what they believe in. (Time expired)

David Coleman (Banks, Liberal Party) Share this | Link to this | Hansard source

Let us talk about banks and rewind to a very difficult period in Australian history, between 2010 and 2013—the Rudd-Gillard-Rudd era. We hear a lot from the opposition about banks and the evil of banks and all the things they are going to do to banks, so I went back and looked at who was actually responsible for banks between 2010 and 2013—who was the Assistant Treasurer from September 2010 to December 2011, and who was the Minister for Financial Services and Superannuation from September 2010 all the way through to the election in 2013? And who, during that time, did absolutely nothing about banks? It turns out it was the Leader of the Opposition—the Leader of the Opposition was responsible for regulating the Australian banking system for three years, during which CBA had to pay $136 million compensation over Storm Financial, NAB had to pay $115 million in relation to a class action by shareholders, a Macquarie fund manager was jailed over insider trading, and a whole range of other things happened.

I looked at what the then government did in the regulation of banks in that period, and I could not find anything substantial at all that happened in those three years. We hear them rail against the big end of town and the evils of banks, but when in power they did absolutely nothing. In contrast to them, this government is doing a huge amount when it comes to banks. Those opposite have one policy, which is to hold a royal commission, which will take years and cost hundreds of millions of dollars; they have not offered one constructive solution to any practical problem in the banking system at all. There was nothing three years ago, and there is no specific constructive policy at all today. That is a great indictment of them.

What are we doing? A lot. Firstly, those opposite had a system with three different tribunals and ombudsman services. It was very difficult for consumers—you had the Financial Ombudsman Service, the Superannuation Complaints Tribunal and also the Credit Ombudsman Service. It was really hard to navigate; it was difficult for consumers with three different bodies to go to. We say let us create one body—straightforward, simple for consumers, very low cost and able to have real teeth—to address those situations where consumers are ripped off by banks, and that is the Australian Financial Complaints Authority. It is this government that is delivering it and its introduction is going to be a very positive event for consumers.

Those opposite did absolutely nothing about executive accountability in banks. One of the things we learned in the recent House Economics Committee inquiry was that not one senior executive from any of the major banks has been terminated for any of the substantial number of incidents of poor treatment of consumers that have occurred in recent years. So not one executive suffered any consequence under those opposite, and there was no regime in place to deal with this very serious situation. So we are going to create one. We are going to create a strong executive accountability regime. We recommended a regime through our committee. It is pleasing that the government is taking such a strong action here—regulated by APRA, a register of senior banking executives, fines of up to $200 million. It is called actually doing practical things to improve the situation.

Those opposite huff and puff when interest rates change and rail against the banks, and so on. But in their time in government there was not one regulator with any focus on the issue of competition in banking. Of course, in a perfectly competitive market it is very difficult to pass on price increases because competition will make that so much harder. No regulator under those opposite ever looked into this most fundamental issue.

In the budget, the government announced that the ACCC will have $13 million of funding to focus in a very granular and laser-like fashion on the issue of competition in banking in the Australian sector. It is a very important issue. There is not enough competition in the Australian banking sector. The ACCC, for the first time, will systemically investigate this issue and put a very close lens particularly on interest rates through its mortgage residential pricing inquiry that will happen until June of next year.

How many new banks were licensed by Australian companies getting started under the previous government's six years? Zero. There was not one new bank started in Australia under the previous government, and that is a massive problem. We are changing the regulation to encourage new banks to get started. Competition is good for consumers. The more competition, the better the outcomes. This government is taking action. The Leader of the Opposition was personally responsible for this area in government. He completely failed, as did his entire team.

Sharon Claydon (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

It is with great honour that I stand to support the member for Perth for bringing to this House today the debate around the government's failing to protect consumers from the economic power of banks. At long last, this House actually gets to have a debate that might focus on Australian consumers—the people who should be at the very heart of our considerations and deliberations in this House.

Members opposite in this government have fought tooth and nail at each and every opportunity to block any of Labor's suggestion so far about bringing the banking sector and the financial sector in Australia to account for the destruction to tens of thousands of millions of Australians whose lives have been ruined by some of these banks. You are purporting to put a big levy on top, but we, in fact, know that that levy is immediately going to be passed on to Australian consumers. That is the problem. That is a huge problem.

Notwithstanding the muddled mindedness of members opposite when they try and articulate what exactly this levy is worth and what we expect to be delivering from it, the one thing that we do know and the one thing that all the big four banks' CEOs agree on is that the cost of this levy will be worn by either consumers, staff, suppliers or shareholders, but not the banks. So it is going to be the consumer or the poor staff that take a big cut in the neck. This is a time when our four banks last year recorded record profits and the same four banks in the same financial year sacked or shredded more than 2½ thousand full-time jobs. It is the same time when this government is doing absolutely nothing about the record low wages growth in this country. It is the same time when this government is delivering $65 billion worth of tax cuts that these four banks are going to take—thank you very much—$7.5 billion of.

The levy on the big banks is, in fact, a tax-deductible levy. How crazy is this scenario! You have a situation where the government finally says, 'We want to be seen to be doing something about these banks because we are too gutless to call a royal commission on them.' They are too gutless to actually make these guys stand up and be accountable to all of those men and women whose lives have been destroyed by unethical behaviour and by outrageous predatory behaviour by some of these banks.

This is a project that is far too big for the government to want to take on. So the Prime Minister goes to Westpac and gives them a lecture about how they need to behave better. He stands up in this House and says: 'We will hold these banks to account. We're going to ask them not to pass on any of this levy to consumers.' But absolutely everybody—everybody except members opposite—knows full-well that it is not the banks that wear the brunt of this tax at all.

Indeed, one of the other matters that I would like bring to light in this debate is the absolute furphy that this Prime Minister articulated that somehow this tax on banks would help provide a level playing field for smaller banks in Australia. We heard members opposite just now talk about how it is going to allow more new banks onto the playing field. I would just note the report today of the downgrading of the ratings for those smaller banks in Australia. I have two in my electorate: Newcastle Permanent building society and Greater Bank. All are being downgraded. Why? Because of the setback—the cost of borrowing has been pushed up by this strategy now.

So the notion that this is somehow creating a level playing field is complete nonsense. The Australian people will know it is nonsense. The customer owned banking sector is going to know it is nonsense. It is about time this government stopped being the gutless wonders they are and brought on a royal commission, which is what we need.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I think I should probably start by responding to something said by the previous speaker. In particular, I think it is disgraceful that she got up here and used the phrase she did at the end of her speech. In this parliament we set standards about conduct and manner, and sometimes we get a bit boisterous, shall we say. Sometimes we get up and say things that might challenge and we have robust debate. But when you get another member getting up and calling everybody on one side of the chamber 'simply gutless wonders' because they will not do what you want them to do on an issue of policy—where you might actually have a genuine disagreement—the person who says that stands condemned.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Poor snowflake.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

And you would think the people on the other side of the chamber might have a bit of class and just accept the criticism and move on. But let us move on and deal with the substantive issue, which is around this rather pointless motion, which frankly makes a mockery of this chamber: the idea that a government should stand condemned for a falsified debate that the opposition is running because they seek to achieve political advantage.

The previous speaker spoke about how eventually a person might pay a consequence of a levy. Who else is going to? Who? There are only people who live in this society, in this country, in this economy. Of course a person is eventually going to pay the cost of a levy, a tax. Just about everything you do in this place imposes higher costs and higher levies, and eventually it is paid for by people. But you have a fictitious idea of who exists in our society. There are these people at the top end who you envy and you promote hatred towards because you cannot stand them for their success. Why do you not actually recognise that everybody in this society has a responsibility to carry the consequences, to share the burden equally, and to make sure that we all have an investment in the future of this country?

So the fictitious nature of this debate—this class envy that has been pushed out there by the opposition, for no benefit apart from the rhetorical arms which they throw out in this chamber—simply makes a mockery of this chamber. There are some home truths. The reality is that banks provide a useful service to the Australian community. Last time I checked, most people could not just afford to buy their own home without some assistance from the banks. So what do they do? They engage in a transaction.

Mr Champion interjecting—

Mr Hammond interjecting—

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Perth and the member for Wakefield have had their turn.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

They go off and speak to the person at the bank. They show documents and they try and establish their equity. They then go off and buy a home. And then they go and build their family and their future, with security.

I think that is actually a pretty noble service, frankly. That somebody believes strongly in building a country from the bottom up, from the citizen up, the idea that individuals can form families, build community and the foundations for country is actually something of which we should be appreciative—all of us; it is a good thing. But that does not mean that sometimes even those service providers get things wrong. They do. People who get elected to parliament even get things wrong sometimes, believe it or not, such as this ridiculous motion.

The question is: how do you deal with it? When problems come up, do you address them? Do you try to get the banks to solve them themselves? If you do not, you design properly designed regulations and frameworks in law to make sure that they are held to account. Or, do you create a pointless and needless and expensive witch-hunt? Actually, those opposite have chosen the latter. And do you know what the government is doing? The government is creating a sensible and practical level of regulation for the banks so that people who have problems can have them addressed. If you have an issue today with a bank—it does not matter who you are; you could be on our side of politics or your side of politics, of the 24 million people in this great country—you can go to an agency that will help. We are setting up a one-stop shop, an Australian financial complaints authority, which creates an external dispute resolution model and greater transparency for internal dispute resolution by financial firms.

Opposition members interjecting—

I see the members opposite now starting to shift away and move around, because it might be making them feel a bit uncomfortable, when the government actually comes along and produces a practical, sensible, outcomes-driven improvement in the banking sector to address the problems Australians are experiencing, unlike the absurdity of what they are proposing in their motion. And in the end, banks will be held accountable, through both regulation and the marketplace.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

Before I call the member for Wills, I remind the member for Goldstein to address his remarks through the chair, and that goes for the other speakers as well. I also remind some of the members on this side who are not in their correct places that it is disorderly if they call out.

Peter Khalil (Wills, Australian Labor Party) Share this | Link to this | Hansard source

I thank my friend the member for Perth for raising this important issue in this afternoon's debate on the matter of the banks. And what a performance by the member for Goldstein! I mean, seriously: we have seen reports today that there is a $2 billion hole in the government's bank tax, a black hole. It is also a big lie. Australians will find out that the coalition government has lied to them. The first big lie is that there is a $2 billion hole in the revenue. Research by Morgan Stanley states that disclosures by the banks confirm that a levy of six basis points will not raise enough to meet the government's revenue-raising objective. That is the first big lie. The second big lie: the government has made the levy tax-deductible, because they were strongarmed by the banks. What a big capitulation by this shambles of a government. Thirdly, this is all wrapped up in the fact that they are too gutless to hold a royal commission. What an absolute shambles. What a mess.

Regardless, we know that there is this significant problem that is literally being ignored by this government: the misconduct in our banking sector—and it is something Australians have every right to be concerned about. We have all seen the criticisms in the media about the banking sector, which, rightfully, have raised considerable disquiet across the community. I doubt there are members in this House who have not had constituents come into their office to tell them about their experiences with their bank and the issues they face. I have certainly seen my fair share, and I have been in this place for only nine months.

Substantial numbers of incidents refer to the problems that people have, particularly with the big four banks, as the member for Perth has outlined. The vast majority of Australians bank with those top four banks, some 75 per cent of the market share. Such an extreme concentration alone would probably justify the significant oversight and ongoing scrutiny of the big banks. But how can anyone not demand action when we see examples of retirees having their retirement savings gutted, families being rorted out of hundreds of thousands of dollars, small business owners who have lost everything and life insurance policyholders who have been denied justice? One is Mr Pashalis, a man who was denied a payout by CommInsure after being diagnosed with terminal leukaemia. Mr Pashalis was offered a settlement by CommInsure only after the media exposed internal documents suggesting the repeated use of delay tactics to avoid paying out claims and the use of questionable and outdated medical definitions to deny him and other customers their fair due.

The tales of misconduct which come to light more and more often make this matter too egregious to ignore. To be clear, Labor supports a strong and profitable banking and financial services sector. We know the banking sector is crucial to our economy. But Australians need to have confidence in their banks and financial institutions to uncover and deal with unethical behaviour that compromises that confidence. We will never support practices, systems or cultures that allow consumers to be ripped off, small business owners doing the right thing to lose their livelihoods and retirees to lose their life savings. So Labor went to the polls last year promising that we would have a royal commission into Australia's banking and financial services sector. But we did it because the number of scandals, and the many examples of misconduct and poor practice, simply demanded a response—something that this government is incapable of providing.

To be sure, media scrutiny has uncovered a lot. The media have fulfilled their role. But a comprehensive commission of inquiry is the only way to properly address the rip-offs, scandals and misconduct that we have seen in this sector over recent years. We simply need to get to the bottom of the systemic and cultural issues in an independent, thorough and transparent way. I do not understand why those opposite do not see the logic of this. It is plain. It is right before them. But they are too stubborn.

Sixty-five per cent of all Australian voters supported Labor's banking royal commission when it was first announced. So there is a clear and identifiable problem, which the government is ignoring. And we can see that a considerable portion of the public are justifiably concerned. They want action. Yet we have had nothing—no meaningful action; no steps taken by this government. Our Prime Minister is a former banker himself. There is nothing to stamp out the misconduct in this sector.

What we have instead is a joke of a so-called solution. When the Prime Minister called the CEOs of the big four banks to come before the House economics committee hearings, the hearings saw CEO after CEO refuse to answer direct questions, release important reports or take genuine responsibility for the failings of the banks.

The government are a shambles on this and on the bank levy, and they are doing nothing to stop the associated costs being passed on to customers. They are doing nothing to address the genuine issues in the banking and financial sector. They are merely tinkering around the edges and disregarding the public's interests. It is a disgrace.

Sarah Henderson (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I welcome the opportunity to speak about the ways in which our government is protecting consumers in their dealings with the banks.

Before I do so, on indulgence, Mr Deputy Speaker, as the chair of the UK parliamentary friendship group, I just want to associate myself with the remarks of the Prime Minister and the Leader of the Opposition in question time today on the abhorrent, senseless crime that has occurred in Manchester. Our hearts go out to Manchester and to the people of the United Kingdom in the wake of this terrible tragedy.

I have spent my working life fighting for justice for consumers, as a journalist with the ABC, including on the consumer advocacy program The Investigators, as a lawyer and now as the member for Corangamite. There is a glaring irony in today's MPI before the House. In contrast to members opposite, who have no policy to combat bad bank behaviour, what we are presenting to this parliament, as announced in our budget, is comprehensive reform. It is extraordinary that the members for Perth, Wills, Wakefield and Newcastle have not presented one idea in this discussion today about how to protect consumers—because proposing a royal commission is not a policy. Proposing a royal commission is a policy cop out. It demonstrates that the Labor Party does not have any ideas. It demonstrates that the Labor Party is prepared to put on hold the strong action that is required to deliver justice to consumers, to customers and to small businesses who are being ripped off, misled and deceived and who are being delayed and who are being denied justice by the banks.

Today in my contribution I want to focus on the significant reform that has been announced in the budget by way of the establishment of the Australian Financial Complaints Authority, which will be established by 1 July 2018. This is an industry funded, one-stop-shop disputes resolution body. What is so significant about this body is that it will provide free, fast and binding determinations for consumers. AFCA will be able to award fair compensation when consumers have wrongfully suffered a loss as a result of the conduct of a financial services provider and will therefore be able to deliver real outcomes for consumers.

The Turnbull government is focused on delivering genuine outcomes for Australian consumers—unlike those opposite, who are only interested in playing politics. Today was an opportunity for the Labor Party to present some policy ideas about what it might do about its aspirations—how it will stand up for consumers, how it will stand up for those who have been ripped off by the banks. But all we have seen from members opposite is a policy vacuum. This complaints authority is fundamental reform. It gives consumers the opportunity to go straight to this authority and get the justice they deserve. The Labor Party want to inflict years and years of litigation on consumers and businesses either in the Federal Court or in the Supreme Courts around this nation.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Think of the lawyers.

Sarah Henderson (Corangamite, Liberal Party) Share this | Link to this | Hansard source

Think of the lawyers, but let us think of the justice as well; let us think of the cost of justice. To subject consumers to the Supreme Court and the Federal Court as the only option is no option at all. That is what the Labor Party is saying. Do members opposite understand how much it would cost to litigate and to go to appeal and perhaps even go to a High Court appeal? The member for Isaacs might know, being a former silk, but that could run into hundreds of thousands of dollars. So, I commend the government on this absolutely fundamental reform. It shows that our government is serious about standing up for consumers, is serious about justice, is serious about free, affordable access to justice and is serious about action with real policy ideas, not the vacuum of no ideas from those opposite.

Luke Gosling (Solomon, Australian Labor Party) Share this | Link to this | Hansard source

The government are failing to protect consumers from the economic power of the banks—I think that is a truism. I am very pleased to join with the member for Perth on this, and at the outset I make it clear that Labor supports a strong banking and financial services sector; what we will never support, though, are dodgy practices that allow our fellow Australians to be ripped off. We will not allow Australians who have worked hard to save, small business owners and retirees to lose their livelihoods and their life savings.

Norma and Peter in my electorate are two hardworking people whose experience illustrates the need for a royal commission into the banking and financial services industry. They tell their story as they never want to see what happened to them happen to anybody else. Norma and Peter were told by their financial advisers that leaving their retirement funds in an account was a terrible use of their money and that they needed to do something more with it. They were lied to and urged to invest their $500,000 of retirement funds into a scheme. They did not suspect anything was wrong until a few years later when they had not received their distribution payment for that month and they began to get anxious about the solvency of their funds. Again they sought advice from their financial advisers, who said they could not get a safer investment. As they began to think things may not be right, they tried to withdraw their money and were told that their withdrawal was deferred for 180 days. Then they discovered they were not able to get one cent out of the scheme; Norma and Peter had lost it all. All their hard worked for retirement savings—gone. Norma and Peter were sucked in, ripped off and thrust back into the workforce in their twilight years. They were duped by dodgy advice from dodgy financial advisers to invest their retirement funds in dodgy deals. They were deliberately misled, and they deserve justice.

We need Australians to have confidence in their banks, financial institutions and advisers. We need to uncover and deal with unethical behaviour in our banks. We obviously believe that a royal commission into Australia's banking and financial services sector is the only way to truly get to the bottom of the rip-offs, scandals and misconduct. Retirees like Norma and Peter have had their retirement savings gutted. Families have been rorted out of hundreds of thousands of dollars. Small business owners have lost everything. Life insurance policyholders have been denied justice. The Prime Minister needs to take responsibility and call a royal commission. He needs to side with ordinary Australians and he needs to stop defending the banks.

In my electorate, I also have a constituent who was a financial adviser to one of the big four banks. He warns that any royal commission will need to be able to get to the bottom of dodgy practices, practices undertaken particularly by planners contracted to the big banks. The story of Norma and Peter is not a one-off—it is far from it. If those opposite were not so out of touch, they would know that to be true. The problems are systemic. That is why we need a royal commission.

The banks will blame customers: 'The customers were ignorant. They didn't understand what they were being told. They didn't ask the right questions.' The banks do not want customers to understand what they are doing at times—the ones that are not doing the right thing, that is. The royal commission needs to be able to get past any smokescreens. We need to concentrate on the ways in which the banks are being more responsible for ensuring the financial understanding and literacy of the customers they are dealing with. When the big four decide they are too big to worry about treating consumers well, treating Australians well, our whole country suffers. The government's reform is no substitute for a proper royal commission. Labor believes that a royal commission into Australia's banking and financial services sector is the only way to get to the bottom of these rip-offs, these scandals and the misconduct that we have seen in the sector over recent years. Recently the Prime Minister had the idea of bringing CEOs before committees to answer questions, and we saw that the answers just were not really there; they were not really forthcoming.

I have a final hot tip for those opposite. Your 'tough on banks' rhetoric is not believed by the Australian people. Give it up and sign up to a royal commission into the banking sector.

Julia Banks (Chisholm, Liberal Party) Share this | Link to this | Hansard source

In my years of working in the business world—granted, something which those on the other side have very little experience in—I found that the best people are the ones who come to you with solutions rather than being part of a problem. However, perhaps it is because most of those on the other side have not worked in business and have no regard for bank customers and no interest in having immediate solutions that, in relation to the banks, the Labor Party have clearly earned the title that they are part of the problem. The incidence of Labor harnessing and cementing their position as part of the problem is increasing every day. In fact, today in this House we saw Labor members become spokespeople for the four major banks as to why they should argue against the bank levy. Labor was part of the problem for the entire time they were in power, including the time when the opposition leader was minister for financial services. They did nothing. They were part of the problem. They were happy to let all the bank customers, average Australians, suffer at the hands of the various areas of misconduct of the banks.

However, by contrast, immediately the Turnbull government came to power we acted in relation to the banks. Unlike those on the other side, we put the interests of bank customers first, not politics. The Labor Party were becoming increasingly flummoxed by the Turnbull government's immediate, constructive and effective measures and recommendations that we put in place as a result of the banking inquiry. With respect to budget measures, the Labor Party are completely skewered. Why? Because their solutions have zero substance. In fact, all they can do is bleat about calling a royal commission without really knowing what it means.

The member for Solomon raised a few examples, including that of Norma and Peter. A royal commission would do nothing for Norma and Peter. It would last up to 10 years. It would line the pockets of bankers' lawyers. It would cost a lot of money, a lot of time and a lot of anxiety, and Norma and Peter would get nothing out of that, whereas the Coleman committee's recommendation of the one-stop tribunal is immediate, effective and constructive action. It is an immediate solution and outcome—something the Labor Party are not very good at.

The inquiry elicited much information about the banks, particularly in relation to the conduct of senior executives, mismanagement of cases and cases of misleading advice, all of which gave us the constructive context to provide effective recommendations. All of the inquiry recommendations deal with the here and now. We are acting here and now. We are not expecting Australian customers to wait another five to 10 years for lawyers to wield documents in and out of court and to deal with a royal commission with no act of compensation and nothing effective for the bank customers. We also put in place measures to make the banking sector more competitive—perhaps something else those on the other side do not understand. Competition is good for customers. We gave our very able corporate watchdog, the ACCC—which got nothing in terms of increased resources during Labor's regime—more resources in this regard.

A royal commission, as I said, will line the pockets of bakers' lawyers. What is more, the Labor Party cannot work out whether they are the banks' friend or foe. The bank levy is certainly being well received by constituents in Chisholm and broadly across Australia, but the Labor Party are quoting the four big banks in defence of why they should not be imposed on with this bank levy. They say, 'We don't like it because they will pass it on to customers.' They know full well that that levy is staying on the banks. This is a fair and reasonable tax on our banks. There is over $30 billion in pooled profits, and this is $1.5 billion out of that more than $30 billion. It is the bankers who make the decisions on where the money goes, and they will know that that tax should not go to their customers. Labor also did nothing in relation to the problem of the lack of competition. Our measures represent a fair additional contribution from our major banks in recognition that the concentration of the banks poses a structural risk to the economy. It applies to Australian banks, which are the second-most profitable in the world.

The Turnbull government is just getting on with it. The Turnbull government is delivering here and now. Only the Turnbull government have acted, delivered and put in measures to mean more choices, better services and greater protections for all bank customers across Australia. (Time expired)

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

The discussion has now concluded.