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

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

The failure of the Government to adequately support victims of banking scandals.

I call upon all those honourable 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—

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

Right around Australia there are people who look to those of us who work in this House to right wrongs, to assist them in difficult circumstances and to give a voice to the voiceless. I understand that not every problem is fixable. People by and large do not expect miracles, but they do expect their elected politicians to try to fix things, to make things better for people who have been wronged. It's this parliament's place to do what can be done so that they can have their say and their chance to have that wrong fixed. Despite all the distractions and occasional theatre that happen in this House, our job, at the end of the day, is to be focused on those issues.

Those of us who've been involved in the area of banking and financial services for some time know that those who've been victims of scandals in the financial system need that help. I have been seeing and meeting with these people for a long time now, first as shadow assistant Treasurer, then as Assistant Treasurer and Minister for Financial Serves, Superannuation and Corporate Law, briefly as Treasurer and as shadow Treasurer. I've been meeting with these people for 10 years, looking in their eyes and hearing their stories. I know these people deserve a chance to put their case before a royal commission, and nothing short of a royal commission. These people have committed no crime and have done nothing wrong, but have accepted advice from people they trusted in the financial system. In many cases they have lost huge amounts of money—and not just money; in some cases they have lost their dignity and their happiness as a result.

These people last week probably felt for a period a sense of relief and then a sense of bitter disappointment. I think they probably felt relief when they heard that, after years of calls, the Prime Minister had finally called for a royal commission into the banking and financial sector in this country, but I suspect very quickly that relief was followed by bitter disappointment and a sense of betrayal when they heard the details of the Prime Minister's announcement. We know what the Prime Minister and Treasurer really think about this royal commission. I'm often critical of the Prime Minister, the Treasurer and this government, and I have on occasion accused them of dishonesty, but I do not on this occasion, because on this occasion they told us what they really thought. They told us they think this royal commission was 'regrettable'. They don't want to hold this royal commission. They don't understand the need for this royal commission. This royal commission, for this Prime Minister, is all about politics and is all about his job—his wellbeing, not the wellbeing of the victims of financial scandals. We know what the Treasurer thinks about this royal commission, because, again, he told us. He told us, in fairness, before he called for it, but he said the royal commission was 'a political exercise for a political hack'. Well, it is for him; but it is not for us and it is not for the victims of the financial scandals.

We know they didn't want to do it. When Labor called for a royal commission more than 600 days ago, the government said no. When the victims of Storm Financial, Timbercorp and all the financial scandals called for a royal commission, this government said no. When the former staff and whistleblowers of the banks and financial services companies called for a royal commission, this government said no. But when the big banks called for a royal commission, they said yes straightaway, without hesitation. They were straight out the door to give them the royal commission.

We've had 18 wasted months when it comes to the banking and financial services royal commission. For 601 days, Labor called for this royal commission. We asked the government to convene it and said we would work with the government to get it. We were told we couldn't possibly hold a royal commission because it would take too long. Well, if this Prime Minister had listened when the Leader of the Opposition asked him to call a royal commission, it would now be over, we'd be discussing its recommendations, its proposals would be being implemented. But this Prime Minister has ignored those calls and he has ignored the scandals and the victims of financial services crises. This Prime Minister has twisted and turned for 18 months. He told us:

No, we're not having a banking royal commission.

… … …

… there is not going to be a banking royal commission …

… … …

We have made it very clear that we are not going to establish a royal commission …

He said it with all his normal authority, confidence and gravitas—almost as much as when he told us what the High Court was going to hold. With almost as much self-confidence and gravitas, he told us that there would never be a royal commission.

Now we know why, because this government has form. This is a government which has spent much of its first term working so hard to try and undo the financial reforms which I and the now Leader of the Opposition implemented when we were consecutively assistant treasurers, the Future of Financial Advice reforms. This is the mob who actually tried to repeal the requirement for financial advisers to work in the best interests of their clients. I didn't think that was a particularly controversial measure when I introduced it. I didn't think it was particularly radical—it's not part of a socialist agenda to say, 'You've got to work in the best interests of the people who are paying you'—but this government does. That's how much they hated it. They actually tried to repeal a prohibition on financial advisers keeping payments in perpetuity for doing nothing. That was their big priority.

Now we know that they don't want to hold a royal commission. And when they finally get a royal commission, they bring out weak, unacceptable terms of reference for it. This is a government which can't help itself. Instead of focusing on the victims of financial scandals, what have they focused on in the terms of reference? Industry superannuation funds. Of all the things they could find to worry about in the financial services sector, they have focused on industry superannuation funds! The minister for immigration, of all people, belled the cat. He said, 'Yes, we're going to have a good look at industry superannuation funds because they've got union officials and whatnot on the board.' I'll tell you what the 'whatnot' is. They are employer representatives. That's the 'whatnot'. Such a scandal are our industry funds that they are the best-performing superannuation funds in Australia when it comes to returns for their members! That's the big scandal. They've to get to the bottom of these outrageous returns that the industry funds dare to produce for their members, some of whom are rumoured to be members of a trade union. The scandal! It's an outrageous thing that this government is going to focus on. 'There are members of unions who are having a dignified retirement. We must get to the bottom of this at once,' the Prime Minister has ordered.

We know that this government is calling the royal commission because it was inevitable. We know that they're calling the royal commission because they were facing humiliation on the floor of this House. We know that this government is calling the royal commission not out of leadership but out of fear and out of desperation to avoid what has been so clear now for 18 months is necessary in the best interests of Australia's financial consumers. But this government can't help themselves. Even in the face of the most humiliating backdown and backflip we have seen in a long time—which is a big call for this Prime Minister!—we see them squirming for political purposes and engaging in juvenile and partisan political witch-hunts against people who dare to belong to a trade union in this country.

This nation deserves better than this government. Most importantly, the victims of financial scandals deserve better. They deserve their day before the royal commission. They deserve to be consulted on the terms of reference. I made the point that the Labor Party should be consulted. There's no convention about that. But since we've called for this royal commission for 18 months you'd think the government might come to us and say: 'We got this wrong. You got it right. Let's work together on the terms of reference.' But, no. I wouldn't care that we weren't consulted if they did consult with the people who have had the most to lose—those who have committed no crime other than to trust people in the financial services industry but have paid a big price. This government have ignored them. We on this side of the House will never— (Time expired)

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

The Treasurer called the member for McMahon a muppet in question time and he should come back and apologise. He should come to this despatch box and apologise to muppets! It is a watershed day today. The member for McMahon has been elevated to the lofty position of shadow minister for small business. He's had a crack at it before. He spent 49 days in the job from 4 February to 25 March 2013. He even wrote a book in that year called Hearts & Minds.

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

Have you got it?

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

I haven't got it—I'm sorry—but it's available at all good bookstores and all good garage sales for about $2, marked down in one of those little bins. In that book he told the story that tax cuts were a Labor thing. That's what he said—that tax cuts were a Labor thing. But now, as the shadow minister for small business, he should come to the despatch box at the next opportunity and say he supports the Liberal-National government's tax cuts. If he doesn't, he is a hypocrite. If he doesn't, he doesn't support small business. Why won't he fess up to the fact that he is beholden to the unions and beholden to high taxes? They want high taxes to fund all their ridiculous policies that they will put forward if ever they get the Treasury bench back.

We had the Leader of the Opposition, the member for Maribyrnong, come to the despatch box just after question time and give a personal explanation on the story that appeared today in The Daily Telegraph titled 'Bill Shorten declares war on business'. The largest selling newspaper in New South Wales did not get it wrong, because the member for Maribyrnong has waged war on business. Today we've seen confirmed what we've long suspected, and that is that the member for Maribyrnong will proactively destroy Australian jobs if it means that he can get the Lodge. He will. He's saying to Australian workers employed by business, 'Your livelihood does not matter.' That's what he is saying, so long as he gets the keys to the Lodge. That is confirmation of his anti-business, anti-jobs, anti-growth war with big business. It is a disgrace, but it is not a surprise. The new shadow minister for small business needs to support the tax cuts. Does he support the 27½ per cent tax rate for small businesses—the employers and job creators of our economy—or does he not? There is the challenge to the new shadow minister for small business. By his silence I know that he doesn't support that tax rate. He doesn't support the lowest tax rate since 1940. Shame on him.

The government recognise that, in some circumstances, people and small businesses have been treated poorly by the banks. We've taken action. The government released the report of the Ramsay review in May and accepted all 11 recommendations, including establishing the Australian Financial Complaints Authority, a one-stop shop for financial disputes.

AFCA will be a fast, free and binding dispute resolution service for consumers and small businesses in relation to all financial disputes. Small businesses will have access to redress of up to a million dollars if they are found to have a viable case. We've beefed up the Australian Securities and Investments Commission and adequately resourced it by putting a levy on industry not just to police the levy but to make sure that standards across the financial industry are lifted.

On this side of the House we act; we get on with the job of governing. AFCA will take effect from 1 July, 2018. The Australian Small Business and Family Enterprise Ombudsman has welcomed the government's landmark move to establish this new one-stop shop to respond to small business disputes with banks. Its principal adviser at the AFCA hearing on 9 October, Anne Scott, has said it considers that AFCA, as a single body where there's clarity and transparency around access to justice and oversight by ASIC, is appropriate. I have spent extensive time with the ombudsman, Kate Carnell, on my small business roadshow, which has visited nearly 80 electorates, including many Labor electorates. I have visited the electorate of the member for Lindsay, and we had a very bipartisan small business forum. The member for Macquarie is up there—I visited her electorate, too. This small business roadshow heard from small businesses what they wanted, what they expected and what they demanded of us as parliamentarians. There were, I admit, concerns over access to capital and there were concerns at times about the big banks' approach to small business. That is why I'm very glad that we have backed all 11 recommendations of an inquiry into reforms for cooperatives, mutuals and member-owned firms conducted by Greg Hammond OAM—the Hammond review.

The Turnbull government will increase competition in our banking sector. I was in Brisbane at the Business Council of Co-operatives and Mutuals annual dinner on 9 November, the night that the Hammond review recommendations were agreed to by the Treasurer, the member for Cook. I can tell you that the CEO of the BCCM, Melina Morrison, and all those present were heartily cheered by our agreeing to those 11 recommendations. Cooperatives, mutuals and member-owned firms make a significant contribution to gross domestic product in this nation. More competition in the banking sector means more options for customers and puts them well and truly at the centre of things, with better choices and more cost effective options. They represent a real alternative model for delivering important customer and community focused services, especially banking and financial services.

I was delighted to talk to Mike Lawrence, who just this week has succeeded Mark Degotardi at the Customer Owned Banking Association, and to hear his vision for COBA and indeed what he has in mind for small businesses. These co-ops, mutuals and smaller banks represent a real alternative model for delivering important customer and community focused services—especially, as I said, banking and financial services. The Hammond review highlighted that mutuals, co-ops and member-owned firms are an important part of our economy and could be making an even larger contribution. The government wants more competition and more options for customers. These organisations are all about the customers because they are owned by them. The Turnbull government is committed to ensuring the regulatory and legislative settings that govern the sector are up to date. Unleashing a stronger cooperatives and mutuals sector through the Hammond review will provide Australian consumers with better choices and more cost-effective options.

We also have the House of Representatives Standing Committee on Economics, headed by the member for Banks. The government is continuing to strengthen accountability in the banking sector. The committee regularly calls for the four major banks to answer annually on domestic and international financial market developments as they relate to Australian banking; developments in prudential regulation, including capital requirements and how these are affecting the policies of Australian banks; the cost of funds; impacts on margins and the basis for bank pricing decisions; and how individual banks and the banking industry as a whole are responding to issues previously raised in parliamentary and other inquiries, including through the Australian Bankers' Association's April 2016 six-point plan to enhance consumer protections and in response to the government reforms and actions by regulators. This has already resulted in very real, tangible outcomes for small business and consumers, with a commitment from the ANZ to cutting interest rates on credit cards following questions from the member for Wright.

But there's more. We've got the Banking Executive Accountability Regime to increase executive accountability and increase transparency and accountability. Financial firms will be required to report internal dispute resolution outcomes and strengthen issuer and distributor accountability on financial products. The regime will introduce greater intervention powers for ASIC and provide greater whistleblower protection and transparency improvements of beneficial ownership on companies. This is all coming. This government is delivering. The Treasurer said:

Today's national accounts is another encouraging set of numbers—

a set of numbers that the member for McMahon could have only dreamt of when he was Treasurer—

reinforcing an economic strategy that is based on driving growth through increased investment to secure the better days ahead.

This has been the heart of the Turnbull Government's growth strategy to support jobs, by driving investment that in the September quarter created more than 100,000 jobs. That's more than 1,000 jobs every day.

Delivering for Australia, delivering for Bennelong—that's the Liberal-Nationals government.

Susan Templeman (Macquarie, Australian Labor Party) Share this | Link to this | Hansard source

I have to say I'm a bit disappointed that, in his allocated time, the Minister for Small Business could only find a few minutes to talk about small business and the need for a banking royal commission to look after the small business victims. Small businesses are so much at the mercy of the big banks, the big financial institutions. They have challenges around access to capital, the interest rates they pay, the time in which their issues are processed and the terms of credit. They have so little ability to influence the big financial providers that they are welcoming a royal commission. Well, they're welcoming what they hope will be a royal commission that gets to the bottom of the issues. There is not a reasonable business relationship, and this royal commission needs to make sure it gives a whole lot of small businesses a chance to have their cases heard—actually, a chance for justice. But I am sceptical about whether any victims of the banking and finance sector are going to really get the hearing they deserve.

We talk about the Prime Minister. We say he has no spine and no values, that he backflips. This is a classic example of that. But, you've got to give it to him, until last week he had really stuck by the whole 'we're not going to have a banking royal commission' line. He did well. He almost held out till Christmas. Christmas is just around the corner. It is one thing to throw away your values on high-speed broadband and climate change—to throw them out the window—but on the banks we thought he would stay.

What did it take for the Prime Minister to get to a point where he was willing to back-pedal again? Perhaps it was the thousands of victims of financial fraud—the individuals, small businesses and families who have lost everything, whether in the collapse of Timbercorp or whether they were ruined by Storm Financial. Perhaps the Prime Minister had an epiphany when financial service whistleblowers brought to light some of the terrible practices that led to those scandals. No, that wasn't it. It wasn't even the extreme right of his own party that brought him across the line this time. What did it was when the big four banks decided that it was time for a royal commission and they gave the Prime Minister permission to announce one. What a joke! This is a royal commission where the terms of reference were not developed with the victims in mind—victims who have suffered shocking financial losses thanks to financial products and practices that were designed to get them behind the eight ball, not put them in front of their financial futures.

The government should be consulting with the victims groups, who have been working with the people who have lost the most. When I think about the victims and what this will achieve for victims I think one of my closest friends, Alison, who lives in the Northern Territory. She's in her 50s but she lost the bulk of her superannuation thanks to an unscrupulous financial planner. This is a woman who had worked in the financial sector. She knew what she was doing. But that doesn't help when someone is setting out to be unscrupulous. The questions are many. How can it have been allowed to happen? Where were the laws that were designed to protect and then offer recourse? Well, they don't exist. And when someone like Alison hears the words of the Prime Minister, that he has 'regrettably' decided to announce a royal commission, it gives absolutely no confidence that this has anything do with her loss or her pain.

In the Blue Mountains, in my electorate of Macquarie, we want to see the insurance sector hauled over the coals for what they do to people who lose their houses to bushfires. How is it that they can be sanctioned to continually underinsure properties? How is it that of the 200 houses that were lost, the bulk of them faced underinsurance—unintentional underinsurance—and those who suffered most were those who had been most loyal to their insurance company? How is that right and fair?

I want to say something briefly about the people who work at the banks and the big finance organisations. The Finance Sector Union, which represents these people, wants this royal commission to address the toxic culture of banks and financial institutions. There are good people working in these organisations, but the culture that they are forced to work in, the 'would you like fries with that' mentality to upsell products, is the sort of thing this banking royal commission needs to get to the bottom of, but I doubt it will. (Time expired)

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

I like the member for McMahon. He is in many respects the hope of the other side. I don't agree with him on many things but he writes highly readable and often quotable books. He is a protege of Paul Keating. But to use Paul Keating's phrase, this MPI is 'all sizzle and no substance' and is very much beneath the member for McMahon, because here, effectively, we have an MPI that's all politics, and that's been the Labor Party's problem in relation to banking royal commissions right from the start. When we talk about failures in the banking sector, we have to look at those opposite, particularly the Leader of the Opposition and the member for McMahon when they held the Treasury portfolio during the Rudd-Gillard-Rudd years and did nothing but preside over banking scandal after scandal.

I have been concerned about customer complaints relating to the Commonwealth Bank's takeover of Bankwest, which occurred in 2008 under Labor's watch. The Commonwealth Bank's conduct in the aftermath of the global financial crisis has seen it accused of impeding healthy Bankwest loans and forcing customers into foreclosure. It's been a long-running issue, and dates back to the Labor days. Labor had six years to act on banking misconduct but did nothing. When Storm Financial collapsed and other crises hit Australia under Labor, how did Labor respond? Their silence was deafening. When the coalition proposed a financial systems inquiry in opposition, how did Labor respond? They refused to support it.

Despite what others say on that side of the House, when those opposite sat on this side of the House they were a government defined by inaction. As we have seen time and again, it takes a coalition government to respond in a reasonable and responsible matter. The opposition leader has pursued a political circus on the issue of banks, preferring politics over people. He's led a campaign where political point scoring has drowned out victims' voices. For all the opposition leader's talk, where was he when Labor was in power? If only the opposition leader had been in a position to act, perhaps in his capacity as minister for financial services. Be it the opposition leader or the member for McMahon, Labor repeatedly rejected the need for a royal commission. Their contrast from rhetoric to record couldn't be clearer.

For all Labor's boasting and bank bashing, they didn't have terms of reference for an inquiry they were suggesting, so it is bizarre to hear the member for McMahon talking about Labor being involved in the design of terms of reference for a banking royal commission when they have been talking about this matter for years and haven't put anything up. They have effectively been acting in a way that gives false hope and misleads the victims of banking misconduct. They falsely flagged a royal commission and suggested it was a mechanism that could deliver compensation. While a royal commission may uncover instances that lead to recommendations of compensation, aggrieved customers rightly want action now.

Yet again we contrast Labor's legacy of inaction with this government's approach. The new Australian Financial Complaints Authority is a speedy solution, providing victims with redress—not just rhetoric. On the topic of rhetoric, the opposition should be ashamed at the way they have undermined Australia's financial stability through their alarmist attacks. In irresponsibly bashing the banks they have 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. The vast majority of Australians are not only customers of the banks but they have a direct stake in them through their superannuation. Labor has gone about this debate in a way that's damaged the economy. They've put at risk the very system that supports Australian employment and wages.

No-one in Labor has done more to bash the banks than Senator Sam Dastyari. Senator Dastyari's calls for a royal commission predate the official Labor Party position by some two years. Where Senator Dastyari has gone, the Leader of the Opposition has dutifully followed, so many are right to question whose policy this royal commission policy on the other side is. Is it the Leader of the Opposition's, is it Senator Dastyari's or is it the demand of some donor? You just can't tell with the Labor Party these days. Senator Dastyari's credibility is in tatters, alongside Labor's reputation as responsible economic managers.

Time and again it's taken a coalition government to pick up the mess left behind by Labor. 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. They didn't even bother to write terms of reference for their witch hunt of a royal commission. Shame on Labor for leaving a legacy of inaction. Once again it's taken a coalition government to pick up the pieces with the establishment of things like the Australian Financial Complaints Authority, the creation of the Financial Adviser Standards and Ethics Authority and the Banking Executive Accountability Regime.

This side of the House is proud to call a royal commission and has a strong record in relation to economic policy. (Time expired)

Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

It is amazing to listen on this side of the House to those that speak on the other side, just to see how out of touch this government and the party of government is with what is actually happening to Australian people and Australian consumers of banking and financial services. Only hours ago in this House I spoke about the role of government in assisting the poor, the marginalised and the oppressed. When it comes to the victims of banking scandals, this government could not be further away from this ideal. We have had a government that has finally been dragged kicking and screaming to the idea of the royal commission into banking, and, boy, is this one of the biggest backflips we have seen out of this government! As the Shadow Treasurer remarked earlier, that is saying something given the litany of backflips, retractions and changes of direction that we have seen this government have.

To pick one other example: I really love it when we're sitting here on this side and we listen to one of the many Dorothy Dixers aimed at the minister for energy around energy policy. The tail end of that question is always 'and are there any other approaches?' I'm still waiting for them to own up to the fact that they've had about five approaches all of their own just during this term of government.

But let me come back to the victims of banking. I think it is instructive to make sure that we learn from the words of the Prime Minister:

I can tell you we have as a government decided not to have a royal commission, we made the decision a long time ago, not because we don't believe there is nothing going on in terms of problems with the banks, it is because we want to take action right now and we are.

That is a very interesting choice of words from the Prime Minister. I'm going to come back to part of that later, but I think I want to start with the first part of it, because then we get these further words from the Prime Minister:

Government policy remains the same until it is changed.

There is no shorter way to sum up government policy from this government than those few words, because it is nothing but a litany of backflips.

But, when it comes to this particular backflip, what was instructive is the way in which the government acknowledged that the decision to hold a royal commission was, in its view, regrettable. It's not regrettable for the victims of the many scandals that we have seen throughout our banking and financial sector. It is not regrettable for them, except when we dive a bit more into the detail around things such as how the government could only agree to hold a royal commission when the banks let it agree to have a royal commission. This government is essentially a front for the banks, and it's the pun involved in what was mentioned before: that the government set up an inquiry through the House economics committee, and who from its side did it decide to be the chair of that committee? It was none other than the member for Banks! It said it all right there. They didn't see that sitting in front of them. I just don't believe it.

But let's come to some of the detail. When we look at these terms of reference that were agreed to with the banks—apparently, there was some consultation with the Reserve Bank and APRA. APRA is the government's favourite financial regulator at the moment. I do feel very sorry for our friends down at ASIC. ASIC is one of the twin peaks of financial services regulation, which this government says it is doing so well at. The government cut out one of those financial regulators. When looking at what it would do when holding a royal commission, it didn't even ask them about it. Whilst they wouldn't admit it, their faces told the story in our committee hearing last week. They're feeling just a little miffed that this government won't ask them about how to conduct financial regulation in this country when they are the experts at it, it would appear.

This highlights one of the key deficiencies in the terms of reference and the way in which the government is proposing to this conduct this inquiry—and that is that you can't just look at the banks and financial services sector on their own. A critical issue here is their culture, and part of that is determined by the regulatory environment in which these organisations operate. The necessity for a royal commission, and part of the reason why we cannot leave to our regulators the protection of consumers of financial services in this country, is that there is a critical need to make sure that our regulators are properly resourced and properly empowered to hold people to account—in particular, the senior executives of the banking sector. It is imperative that they are empowered to do it. This government has been a complete failure when it comes to that. It takes about a regime to keep the banks accountable, but it doesn't do anything to protect consumers at all. These victims have been left high and dry by this government. (Time expired)

Melissa Price (Durack, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on this MPI moved by those opposite. What an odd matter it is that they've decided to raise in the House today—maybe the Labor strategists are getting ready for the party tonight or maybe there were too many beverages last night and they're just not thinking straight. Those opposite argue that we've not done enough to support the victims of banking scandals. In reality, we know—and those opposite know as well, by the way—that we've already done more to protect the victims of bad bank behaviour than they ever did in government. We've heard that long list of failures here today from our speakers. We know that is what Labor is good at—the mental gymnastics, the conveniently short memories and the logical hoops that those on the other side seem to jump through often and systematically to get to their conclusions. They are simply outstanding.

The government has already introduced strong policies to curb that bad bank behaviour and the improper lending practices and scandals that have been exposed in recent years. We have already, in our time in government, created a banking levy to address many of the broader issues around banking in this country. By hitting the banks where they will hurt—their profit margins—we can reimpose on our big banks the community expectations they are required to uphold whilst they operate in Australia. The big banks, the banks that present systemic risk to our financial system, occupy an incredibly unique part of our social fabric in this country. Without them, we would not be able to function properly as a country. But that does not mean that they get to act without recourse and without oversight. The fact is that our nation's banks are the most profitable in the world. The anti-business bunch on the other side would, of course, see that as a draw back. But if they are successful, they can be profitable. That's a good thing. If our banks are strong and successful, we get surety of investment for all Australians and we get stability and we get growth.

We have the world's best financial oversight in this country. We have the world's best regulation in this country but we all know this can be better. Retaining and restoring trust in that system is paramount for all Australians. That is why we have now embarked on a royal commission. But before we do that it's worthwhile reflecting on what we've already done to protect banking customers in this country. We have already brought a suite of legislation into this parliament to further protect our banking customers. We've introduced a one-stop shop for complaints against the banks and established the Banking Executive Accountability Regime. We've streamlined the process for victims to take legal recourse against those banks that have wronged them. Those opposite say we have completely forgotten about the victims. What rubbish that is!

The Banking Executive Accountability Regime is a scheme aimed at prosecuting the executives of banks who wilfully engage in predatory lending practices. We're improving the safety net of regulation, which, as I have said, is already the best in the world, so that we can guarantee we are protecting those victims.

If Labor cared so much about these banking customers—I don't understand. We've heard today already there's a whole raft of things they could have done whilst they were in government themselves. Indeed, they could have had a royal commission, but they failed to do that. I ask myself: why didn't they do that? Why are they now complaining so loudly? The simple answer is that Labor's positions on these types of issues are, as usual, incredibly flexible, very dynamic, spineless and a little bit wobbly as well. It's always very hard to keep up.

Just going off topic now and speaking of failures, which is ultimately what we're debating—our failure—we know that Labor likes to talk about failure but we note that they've had a few car crashes themselves of late. We don't have to look far to identify them. We know they've had to sack Senator Sam Dastyari from the frontbench again—a repeat of that behaviour. I too join in the chorus that says he should be made by the opposition to resign from the party and from the Senate. Reflecting on citizenship, we have also had the feeble attempt by those opposite to attack coalition MPs on dual citizenship. On that point, I think it's worth reflecting for a minute that the argument carried by those opposite is that because those members on our side received their renunciation of their citizenship from a foreign embassy and not from the consulate here in Australia, they should be referred to the High Court. With this MPI they're clearly scraping the bottom of the barrel. Clearly they are on the ropes. (Time expired)

Michael Danby (Melbourne Ports, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

It's some 601 days since Labor called for a banking royal commission. The timing of its announcement only confirms public perception of collusion. On the very day the members for Wentworth and Cook announced their policy U-turn, the banks produced a media statement acquiescing to this banking royal commission. Let's remember that the government voted against the establishment of a royal commission 23 times in the parliament—23 times over 18 months. Let us remember that, just one week before the announcement, the Prime Minister said in three separate interviews 'No, we're not having a banking royal commission', 'There is not going to be a banking royal commission' and 'We have made it clear that we are not going to establish a Royal Commission'.

The Treasurer called it 'a political exercise for a political hack'. He said it was 'nothing more than crass populism seeking to undermine confidence in the banking and financial system'. Having said that a royal commission undermined confidence in Australia's banks, after the U-turn the Treasurer went on to say it would restore confidence in Australia's banks. What did the body language and faces reveal? The word 'regrettable'.

This royal commission will last only 12 months—in my view, not long enough for a serious inquiry into the vast damage that some of the banks have caused many hundreds of thousands of Australians. If the government had listened to Labor 18 months ago, the royal commission would have come back with its recommendations already. As the member for Riverina, the Minister for Small Business, admitted, Australians have been badly served by some of the banks, but it's only after a revolt by members of the National Party, including the member for Dawson, sitting here, that the government caved in. It was political circumstances and not the hurt of the Australian people that caused them to do the right thing in the end, or partially the right thing.

In October 2016, ASIC's Financial advice: fees for no service report revealed that Australia's big four banks had spent years charging over 200,000 customers fees for services they did not receive. ASIC's report said they were going to have to pay nearly $180 million to customers. The report found customers who had initially signed up for financial services had been charged fees for services they did not receive, in some cases years after they had been in any contact with their bank. There were great systems in place to record incoming revenue but very little to ensure customers were actually getting anything in return for the fees being charged. Customers were even charged fees for advice from financial advisers who had left or retired, and for services involving nothing more than unanswered telephone calls.

All members of parliament have had to deal with outraged constituents affected by Timbercorp or Storm Financial. A person in my electorate, Giulia Mandarino, lost her Port Melbourne home after her former fiance Leonard Anderson encouraged her to take out a $200,000 loan at a meeting with a Commonwealth Bank official, Mr Jordanou, on 3 March 2006. Ms Mandarino said the loan was increased to $450,000 without her consent and, as a single mother of two children, she had no means of repaying the debt. These people knew what they were doing. She said: 'They have financially ruined my life, and jeopardised my children's future. At one point I had four sheriffs at the door and the bank was after my blood.'

In May this year, the figures were revised upwards. ASIC revealed the four big banks were now having to repay over $200 million for services not provided. Another striking example was in August 2017, when, under cover of the announcement of Ian Narev's impending resignation, CBA quietly disclosed a list of more instances of bad behaviour by the banks.

Let's remember one of them that shocked all of us, whatever side of politics we were on: the failure to report ATM deposits of over $10,000 that should have been automatically reported. This is a terrorist financing issue, where people can wash money into the banking system. Ten-thousand-dollar deposits—how many breaches were there? Fifty-three thousand breaches by the Commonwealth Bank. This is an absolute disgrace to Australia. How could a bank with a licence from the Australian parliament and the Australian people be so negligent of its responsibilities that it would allow 53,000 deposits of more than $10,000 to be washed through the system?

The CBA also reported it would have to refund $10 million to 65,000 customers. And it reported a sharp increase in the number of superannuation— (Time expired)

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

When those opposite were in government, they did absolutely nothing about the problems in the financial services sector. It is relevant to have a look at the personnel on the other side when they were in government. Who was the Assistant Treasurer from 14 September 2010 to 14 December 2011 and then was Minister for Financial Services and Superannuation from 14 September 2010 right through until the 2013 election? Well, it was our old friend, the Leader of the Opposition. He was, in fact, responsible for all matters related to financial services and banking for about three years under the previous government, and he did nothing to address the very significant issues we've seen in the financial services sector. By contrast, this government has done an enormous amount.

One of the first issues that was addressed was the issue of consumers getting access to justice when things go wrong. There were legitimate complaints that it was hard to get justice, hard to get compensation, because you had to take your bank to court, and that's a very expensive and difficult process. So we're fixing that through the Australian Financial Complaints Authority. There will be no lawyers and no fees—a simple way of getting these matters resolved. That will come into being about seven months from now, on 1 July next year—delivered by this government.

Another issue that's been very clear in our House economics hearings and in other places is the lack of executive accountability in the banking sector, with effectively no senior executives being held materially responsible for a whole range of different, very significant issues. And that's why the government is setting up the Banking Executive Accountability Regime, or BEAR, which will hold individual executives responsible for their conduct. It will involve fines for banks of up to $200 million if they do the wrong thing, and it will be rigorously enforced by the Australian Prudential Regulation Authority. That will be a very important initiative.

The other thing we talk about so much in the Australian banking sector is when interest rates go up, and people complain—fairly and reasonably—about why those rates have gone up, especially when they are out of step with the Reserve Bank. But the reality is that, until a few months ago, there was no regulatory review or oversight of that very important issue of competition in the setting of interest rates. That is now fixed, because the ACCC now has a team called the financial services unit, which is exclusively focused on the issue of competition in banking, particularly as it pertains to the setting of interest rates. It's going to be very interesting to see the ACCC's first report, which is due early next year on this topic, and its assessment of whether or not banks have made misleading and deceptive statements about interest rate movements, particularly earlier this year.

Another issue that this government is addressing is competition. It turns out that between 2006 and 2016 the total number of new banking licences issued in Australia for a new start-up company was one—one new licence in a decade. That's not good, because it means a lack of competition, which means more power for the big banks, which is bad for consumers. So we're fixing that as well. New rules will make it easier for people to set up a bank. That is a good thing which is going to mean more competition and more downward pressure on prices and interest rates.

Another reform that's been implemented is reform to non-monetary default. This is when someone's been paying their mortgage on time, paying the bank, but the bank steps in and finds the person in default, even though they've actually paid all of their payments on time. That's wrong. It shouldn't happen. And this year the industry has moved, after recommendations from our committee and also the Australian Small Business and Family Enterprise Ombudsman, to rule out that process for loans of up to $3 million. It will help a lot of rural businesses because this issue has affected many farmers in the country.

And there are a range of other issues on the go at the moment, including tap-and-go payments, where merchants are being forced to pay hundreds of millions of dollars of fees in the processing of those tap-and-go credit card payments. There will be more to say about that shortly.

The royal commission is not an inquisition into capitalism, as those opposite would like it to be. It will focus systemically on a range of issues, including the governance of industry super funds, because the governance of industry super funds should be about returns to members, not supporting union mates. Directors on industry super funds should be independent, and it's very important that the royal commission will examine this issue. (Time expired)

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

I rise today to speak about this government's backflip in planning to have a banking royal commission. What a joke. This Prime Minister is so arrogant that he cannot see his own hypocrisy. He refuses for two years a royal commission into the banks, until: 'Nudge, nudge, wink, wink, say no more, say no more, Malcolm, Squire, let's have a royal commission into us.'

Steve Irons (Swan, Liberal Party) Share this | Link to this | Hansard source

The member will refer to members using their correct titles.

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

Sorry. That's a nudge from Westpac, a nudge from ANZ, a wink from NAB, a wink from CBA, 'say no more, say no more' from Macquarie, and, 'Malcolm, Mr Prime Minister, Squire, let's have a royal commission into ourselves,' right?

I'm a shareholder in all five banks. I ask for this royal commission, and I do so gladly as a member of the Labor opposition, which has been advocating for a banking royal commission for a very long time. Indeed, a banking royal commission should occur to adequately support those who have been victimised by banking scandals. These are everyday, hardworking people who've been mistreated, and they deserve justice. The banking sector needs to have a royal commission. The Liberal-National Party members admit that. These people deserve to have their stories heard, and reform must be undertaken to ensure that these banking scandals cannot occur into the future.

However, I truly fear that we will see very little action and even less justice for these victims under the Liberal-National Party government. It is not difficult to see where my scepticism comes from, when one considers the fact that this Prime Minister only announced a royal commission into the banks once he had received a signed permission slip from his mates in the banking sector. For 601 days, the federal Labor opposition have been championing a banking royal commission, and what we saw for almost two years was inaction from this Prime Minister and his government and his Treasurer. Actually, what I believe we saw was 18 months of complete resistance, with the government determined to protect their friends in the banking sector and trying very hard to pretend that they were doing something.

After 18 months where victims of banking scandals were essentially ignored by the Liberal-National Party coalition, one would think that the Prime Minister would seek to ensure that the opposition, which had been championing the cause, would be consulted in determining the terms of reference when the government performed its spectacular backflip and asked for a banking royal commission. However, this did not occur. Not only did this Prime Minister fail to consult with the opposition; he did not even consult with banking victims' groups. He consulted only with the banks. These are the people who've had most to say and least to do and who the royal commission should really not be working for—it should be working for the victims of banking disgraces. Yet this government has shown a complete and utter disregard for the people who have been most affected and for their opinions, their stories and their futures. It gets even worse. I would even go so far as to say that this government has treated these victims with contempt.

Before the royal commission has even begun, it appears that the Prime Minister's leadership will only amount to a slap on the wrist with a wet lettuce leaf for the banks. He's entirely beholden to the banks. Perhaps the banks even had input into the Prime Minister's announcement. If one looks at the content of the speech, one could be forgiven for thinking the Prime Minister made the announcement at gunpoint. He did not want to have to do it. The Prime Minister described the need to have a royal commission as 'regrettable'. That is a joke. He's announcing a royal commission which he says is regrettable. He said that not once but four times. Here are four regrets that perhaps the Prime Minister will have at some point in reflection in his life: No. 1, he may regret that the government could have taken action 18 months ago, rather than sitting on its hands; No. 2, he may regret that he did not have enough leadership to call for an effective royal commission long ago, instead having to wait to be told what to do by the banks; No. 3, he may regret that his government has effectively ignored the victims groups, whose members so desperately deserve and need inquiry into what's happened to them; and, No. 4, I suspect he may come to regret ignoring the needs of the constituents of the member for Dawson and so many others in this place.

The banking royal commission under this government could be a farce. The only reason the Prime Minister has made this announcement, 'regrettably', is that he cannot hold the numbers in his own party room. The Prime Minister made this backflip after months of inaction, to save his failing leadership. He and his government do not appear interested in standing up for hardworking Australians who have been victimised by large corporations. (Time expired)

Chris Crewther (Dunkley, Liberal Party) Share this | Link to this | Hansard source

I'm very pleased to speak on this matter of public importance today, as those opposite have been remarkably vocal on the subject and I believe that it's important to set the record straight. It is lucky that we are the ones in government, otherwise the hysteria surrounding the banking and financial services sector might have caused serious damage to the market and Australia's GDP, of which our major banks make up nine per cent, not to mention the risk to everyday Australians' super funds. It is correct when those opposite raise that it has been 601 days since the Labor opposition called for a royal commission. However, it has been 3,666 days since Labor got into government in 2007, in which they had 2,115 days in government to call a royal commission—and they did nothing. Labor's recklessness has also shown their manipulative intentions, taking advantage of people who have been victims of banking misconduct to systematically try to undermine the stability of our financial system to score political points. Perhaps we should be discussing not only the failures of the opposition to protect customers in the banking sector but also the vindictiveness of the opposition and the damage that they are prepared to do to our country and our economy in order to drag down our banks.

As my colleagues before me have explained, the Turnbull coalition government has acted with a comprehensive approach towards financial sector reforms, with substantial actions that work towards furthering the national interest, such as the Murray financial systems inquiry, establishing the Australian Financial Complaints Authority, providing the Australian Securities and Investments Commission with additional resources and powers, introducing a new Banking Executive Accountability Regime, backing the work of the House of Representatives Standing Committee on Economics, increasing competition in the banking sector and much, much more. If this is what the opposition consider a failure, their dogmatic behaviour towards a premature royal commission is worse than failure—and this is the mob who think that they're fit to govern!

To continue, we've introduced further consumer protection reforms, including limiting the up-front commissions that can be paid to advisers for the sale of life insurance, to remove incentives to churn consumers into new life policies that are not in their best interests and ensuring that retail client moneys are protected where financial firms become insolvent. Furthermore, the government is supported by the Reserve Bank of Australia and the Australian Prudential Regulation Authority in ensuring that this royal commission does not delay other actions we are undertaking—the Laker inquiry, BEAR and AFCA. The fact that those opposite believe that a royal commission will solve all the problems in the banking and financial sector simply proves the point that they are unfit and unable to govern.

This royal commission, as implemented by the Turnbull coalition government—not the one pushed for by Labor—is not a court or a compensation scheme. It is cruel, irresponsible and inappropriate of those opposite to imply as much. The royal commission cannot deliver compensation or restitution, and any suggestion that it can or will is providing people with false hope. Furthermore, it would be irresponsible to pre-empt any of the royal commission's findings and recommendations. The Leader of the Opposition and the member for McMahon have simply shown they are willing to use anyone, and to abuse the suffering of victims of banking misconduct, for their own political gratification. Let's compare this to Labor when they were in government, when they had situations like Storm Financial and so many other banking complaints. They didn't take any action, including when the Leader of the Opposition was responsible for these issues.

Let me return again to even more reforms that the Turnbull coalition government is implementing. We are taking action to develop design and distribution obligations, and to develop a product intervention power for ASIC so that ASIC can intervene to prevent consumer harm. We are also introducing, as I noted, a new Banking Executive Accounts Regime, with enhanced powers for APRA to remove and disqualify an executive or director, direct adjustments to remuneration policies, and the enforcement of new expectations on bank conduct with penalties of up to $200 million. We are cracking down on poor practices in the credit card market by introducing rules for how credit is provided and interest is calculated, and making it easier for consumers to cancel cards or reduce credit limits. And we are also looking into super fund governance. We are strengthening and enhancing the corporate whistleblower protection regime as well.

While those opposite have screeched about a banking royal commission, the Turnbull coalition government has been implementing solid reforms to protect consumers and to protect our national economy. It is getting on with the job.

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

The time allotted for the discussion has concluded.