Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

The Greens have for a long, long time called in this parliament for a royal commission into the banking and financial services industry. We have had Senate report after Senate report and expose after expose of people who have lost their house and/or their life savings all because a bank sold them something that worked in the bank's interest but not necessarily in their interest. What we have also seen very clearly throughout all of those inquiries is that parliamentarians of all stripes and with the best intentions will do their hardest to get to the bottom of what is going on in our banking system. But when a banker fronts up to an inquiry and wrings their hands and says, 'We made a mistake,' and walks away and then comes back again a few months later and we find that no-one has lost their job as a result of it, that the practices might still be continuing, it becomes crystal clear that what we need is someone who can commit to and conduct that inquiry but do it with the powers that they need so that they can find out what is going on behind closed doors, so that this parliament and the people get more than some serial hand-wringing from bank executives, and we actually get a change in culture.

Quite some time ago, the Greens in parliament moved a motion for a royal commission; but, sadly, we didn't have many friends at that stage. Labor didn't vote with us, the Liberals didn't vote with us, but we did have some support on the crossbench. It's testament to the fact that, when there are people in parliament who will stand up for what is right, a good idea can ultimately win. Over time, the opposition have changed their position and come around to the idea of having a royal commission—and that's good. We're a vote or so away in the House of Representatives from calling on the government to have a royal commission. But what has become crystal clear is that, as long as the Turnbull government are in place, they will do the banks' bidding and form a protective shield against the banks. So there's something we can do in this parliament before the next election, where there may well be a change of government, and that is use the powers of the parliament. If the government is unwilling to step up and use the executive to call a royal commission, then parliament can step in and do it.

That's why we need a commission of inquiry. That's what a commission of inquiry is: it's parliament saying the people and the public interest should trump what the executive wants to do, because the executive is only acting as a delegate of the power of the people, and it's also saying that parliament should trump the interests of corporations and some of the biggest corporations in this country. That is why commissions of inquiry can exist. It's because it's the ability of parliament to then say, 'This issue is so important that it is time we established a full and wide-ranging inquiry.' It's why commissions of inquiry exist, why they have been used in the past and why they should be used now—too many people have lost too much.

At the heart of the Australian banking industry is a conflict. On the one hand, every one of us can't get by now without a bank account. We're funnelling money regularly through banks and financial institutions. They have a guaranteed income stream from us. The big four banks, as we saw during the global financial crisis, have the implicit backing of the government behind them. They know that if they ever get into trouble—because we have a too-big-to-fail, four-pillars policy in this country—they will get public support. But on the other hand, they have a business model that is based on fleecing people. It's not based on looking after and curating people's deposits with the maximum of care, as the other arm of the banks' business model is to sell us all products that are about increasing the banks' profits.

We've heard too many tales of people who have been hurt, ending up with products that they don't need, simply because the banks' primary obligation is to their shareholders. If the big banks in this country want public support and government support standing behind them, there should be a quid pro quo. They should open their doors and open their books, and a commission of inquiry is the best way to make that happen.

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

Those opposite did absolutely nothing about the Australian banking system during their time in office, and this government is taking action now on a very wide range of fronts. Let me run through a few of them. Firstly, there are interest rates. The ACCC now has the power to go into the banks and get documents about the process by which banks set interest rates. When the banks say they had no choice but to raise interest rates because of external factors, the ACCC will now be investigating that exact issue. They will be going into the banks, getting the board minutes, getting the interest subcommittee minutes and determining whether or not that is in fact the case. That's a very good thing for competition. It's happening because of this government, out of the House's Standing Committee on Economics inquiry. It's a very, very positive development. It's happening now. All Australian bank executives should be on notice that representations about interest rate policy settings are now subject to internal ACCC scrutiny. That's a very positive development.

We're also setting up the Australian Financial Complaints Authority. Previously, there were three different authorities in this area. It was quite confusing for consumers to know where to go and who to talk to. We're now setting up a one-stop shop for complaints against financial institutions: the Australian Financial Complaints Authority. The outcomes will be binding on those institutions. When the authority makes a decision, consumers can pursue claims up to $500,000 and small business can pursue claims up to $1 million. There's no need to go to court and spend the large amounts of money involved in court proceedings. It's a very, very important reform implemented by this government.

We've also implemented the Bank Executive Accountability Regime. It's true that there has not been enough accountability in senior executives in banks, as we have seen from the failures in the banking system. What we saw and what we recommended in the House's Standing Committee on Economics inquiry was for an executive accountability regime to be established. The government has done that. What we are seeing is that fines of up to $200 million can be enforced by APRA if banks are in breach of their prudential obligations.

We're also going to require the banks to have a very clear map of who's responsible for what so that there can't be finger pointing within banks to say, 'It wasn't my area; it was that person's area.' That will all now be set out in a very clear document, which will mean there is nowhere to hide and the bank executives who are responsible for divisions in which there is malfeasance will be held accountable. That's a very important development.

We've also seen concerning allegations recently regarding the Commonwealth Bank and its conduct in relation to cash deposits. These are allegations made by AUSTRAC which are very serious in nature. The government has set up an inquiry, led by Dr John Laker, the former chairman of APRA, and also supported by former ACCC chairman Graeme Samuel and company director Jillian Broadbent. This inquiry is looking specifically into the Commonwealth Bank's issues of governance and culture. It will investigate those issues and report back to the government by January with an interim report focused on the issues within the Commonwealth Bank. It will identify any problems and make recommendations to government about the ways in which the Commonwealth Bank should improve.

We also have competition. One of the problems in the Australian banking system has been a lack of competition. For instance, in the last decade there was only one licence issued for a new start-up bank in Australia. That's unacceptable. Consequently, we're changing the rules so that it will be easier to get a bank off the ground. Previously, you had to have $50 million of cash before you could even get a banking licence. You can imagine that, if you are trying to raise the money to get a bank off the ground, asking people to give you $50 million on day one, before you've even got a licence, is a very difficult thing. So now there will be a two-stage process. People will be able to get a bank off the ground with a much smaller amount of funds and then get a full banking licence later. That is what's happened in the UK in recent years, and we've seen several dozen new entrants to the banking sector as a consequence.

So there are very important reforms across a whole range of areas, including on accountability of banking executives, ensuring focus on competition and giving consumers a one-stop shop to address the problems they have with banks. This government is taking action very aggressively across a wide range of areas in the banking sector.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

The time allocated for this debate has expired. The resumption of the debate will be made an order of the day for the next sitting.