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

The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 that we're debating today could perhaps be called the 'What a Difference a Few Days Makes Bill' because it is emblematic of the chaotic nature of policymaking at the heart of this government and, in particular, by this Treasurer. On 28 November last year, which wasn't that long ago, the Prime Minister said, 'We've made it clear that we are not going to establish a royal commission.' A couple of weeks after this legislation was introduced into the parliament, the Treasurer said on 3 November:

I'm not quite sure how spending $150 million on a QC's complaints desk, otherwise known as what others are pushing for, would help resolve any of those issues.

He was talking about a royal commission into banking and financial services. He quoted the measures in this bill, the Banking Executive Accountability Regime, as evidence that 'the government was taking action now', which is why, he said, they didn't need a royal commission into the banking and financial services sector. And then on 30 November, after 600 days of fighting Labor's call for a royal commission, the government announced a royal commission. That could be regarded as one of the more spectacular backflips of this government—and it's a very long list.

As I said, this goes to the lack of a coherent agenda and coherent policy narrative at the heart of this government. We know that the government doesn't even fully believe in what it is doing: at the time the Prime Minister announced the royal commission, he called it 'regrettable'. I don't think the victims of financial scandals would regard it regrettable; they would see it as essential. Sometimes it is said, and the government has said, the royal commission would take too long. If the government had adopted a royal commission at the time that Labor proposed it, it would now be over. We would be moving on. We would be dealing with the implementation of recommendations. All this wasted time wouldn't have existed, and we would have been getting on with these important challenges as a nation. This has been just the latest example of a government doing anything it can to avoid a royal commission. It's all about avoiding a royal commission, and yet now we have this bill as well as a royal commission.

We will be supporting this bill. In fact, the government can rely on more support from this side of the House than they can from their own when it comes to this bill. It's reported that the member for McMillan called this a contravention of Liberal Party philosophy. There were concerns also expressed by the members for Goldstein and Corangamite. So the government has some internal issues on this bill, but it will be enjoying the support of the opposition.

The bill does introduce an accountability framework for banks. Who the framework applies to, what the obligations are for the banks and for employees of the banks, deferred remuneration obligations for banks, a civil penalty regime for breaches of these obligations and other related issues are all covered by this legislation, which is said to take effect from 1 July this year.

We do have some issues and concerns about this bill, and I will be moving an amendment in the consideration-in-detail phase. While I'm not moving an amendment on this particular matter, it strikes me as odd that the government has empowered APRA, not ASIC, in this space, and this is something that will need to be monitored. We have well-respected regulators in Australia. We have had, traditionally, a very clear delineation of responsibility between the regulators. Based on what is being implemented here, it would be a natural fit for ASIC to have these responsibilities that the government has chosen to give APRA. I'm not going to quibble about that in consideration-in-detail amendments or try and change that. I just point that out as we go and say that that will need to be monitored in terms of how this regime is implemented, going forward.

What I will move a consideration-in-detail amendment about is the start date of the legislation in relation to small- and medium-sized banks. Now, this is a considerable regime. It will take considerable effort on behalf of the banks to comply with it. I'm confident that our large institutions will be able to do that by the proposed start date, but smaller institutions will struggle. Banking competition is an important matter in this country. We have a Productivity Commission inquiry into banking competition. I think most honourable members would concede that more competition in banking would be a good thing. We saw some hollowing-out of competition with the departure of St George and Bankwest, or their being subsumed by parent entities. We all, I think, would support the role of customer-owned banking, credit unions and the like, and smaller banks, and recognise they play an important role in the financial system. We will wait and see what the Productivity Commission recommends; that could potentially play an even more important role going forward.

What we don't want to do is put them at a substantial disadvantage. I think that this legislation as it's currently framed would put them at a substantial disadvantage. The Australian Bankers' Association noted:

Effective implementation of the BEAR regime will require material effort and reallocation of resources by ADIs and APRA to meet the proposed deadline.

The Australian Shareholders' Association said:

While we acknowledge the government’s desire to implement the legislation as soon as possible, we are of the view that ADIs will need time to undertake changes to policies, contracts and systems.

The Australian Institute of Company Directors, the AICD, have said that they reiterated their view that BEAR's implementation date should be deferred so that it commences on 20 January 2019. Customer Owned Banking Australia said:

In order to effectively and efficiently implement the BEAR there are a number of things that must happen prior to the implementation date.

They went on to argue that there was insufficient time to do that. So I do note that this has been raised by a number of stakeholders. Concern about the implementation date was shared by some government senators, who, in their report, recommended the date of implementation of the entire package be delayed for 12 months. But, for small- and medium-sized banks, the Labor Party has suggested previously that the implementation be delayed by 12 months—and that is the amendment that I will move when we get to consideration in detail.

The Senate inquiry clearly showed that small- and medium-sized banks are not afforded the same access as the big banks to the development of this policy. I make that observation in passing as well.

It was noted in paragraph 2.75 of the explanatory memorandum that discussions were held with the big banks in February 2017 about options to address accountability gaps. But evidence from the Customer Owned Banking Association is that they had no knowledge of or involvement in these meetings. Labor senators made it clear that our position was to delay the implementation for small and medium ADIs by one year. I note the Treasurer's comments in the media that there would be 'a slower pace of implementation for the smaller banks'—we welcome that. That is, in effect, him agreeing with the Labor Party's position. As I understand it, the amendment I move may well receive the support of both sides of the House. Obviously I don't speak for the government. That's a matter for them to talk about in the House, but I would be hopeful of that amendment receiving bipartisan support in this House.

I do think this is a bill which should receive the bipartisan support of the chamber. We don't, as I said, agree with every single element of it. We have made commentary on different parts of it, but none of that is enough for us not to support the bill as a step forward. None of it obviates the need for a royal commission—a point I would have made if the government had not already announced one. But, the government having announced a royal commission, quite evidently a royal commission is now bipartisan policy as well, so it's not in conflict with the fact that we are going to have a royal commission.

I note that some have said that this doesn't go far enough. The Consumer Action Law Centre said:

Treasury has restricted the application of the proposed BEAR so that it will apply to poor conduct or behaviour that is of a systemic and prudential nature. This misses the crucial element of the United Kingdom model that ties accountability measures to poor consumer outcomes, not just prudential matters.

CHOICE went on to say:

As it stands, what we've got is a bit of a teddy bear.

As I said, none of those concerns would be reason to oppose the passage of the legislation. It will receive our support, and I would hope for support for the amendment that I will move.

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

Before being elected to this place, I had several stages to my career. The first was here in Canberra as a policy adviser and director of corporate relations for the Australian Chamber of Commerce and Industry. I was privileged to spend four years working with Dr Peter Hendy, Greg Evans and Peter Anderson and learning from them. They all had extensive economic, business, industrial relations and policy reform experience. From them, from our state and territory chambers of commerce members, from our industry association members, like the Master Builders, the Hotels Association and the Printing Industries Association, and from the individual businesspeople who gave their time as volunteers on the ACCI board and on their committees, I learnt firsthand about the impact government regulation has on businesses.

Government regulation costs businesses of all sizes time and money. It means they are less productive, less profitable and less able to focus on expansion and innovation. Government regulation is imposed by local councils, by state governments and by the federal government. As a newspaper columnist before my election to this place, I regularly wrote about the impact government regulation has on business. As a lifelong Liberal, I know that it's my duty to be true to the principles our party and our members hold dear: small government, low taxes, low regulation and letting business get on with business. As our Liberal Party constitution says, we look 'primarily to the encouragement of individual initiative and enterprise as the dynamic force of progress'. For all of these reasons, I am speaking on this bill today.

Since 2013 Australia's financial sector has been the subject of no fewer than 24 reviews, reports and inquiries, including three by ASIC, three by the Productivity Commission, one by APRA, three by departments and statutory authorities, one by a House committee and seven by Senate committees. Our national financial institutions are subject to almost 40 regulations of varying degrees at any one time, from state governments, the Commonwealth and industry associations. The compliance cost burden on each of our financial institutions can run into the hundreds of millions of dollars per year. These costs are shifted straight onto consumers, who are hardworking Australians, their families and the businesses that they run and are working hard to maintain and grow. Since 2013 there have been 11 changes to the Banking Act and five changes to the APRA Act, further increasing the compliance burden borne by businesses and, ultimately, their customers.

Australians expect us as their representatives to establish and maintain laws that reflect community expectations. We must make laws that send a clear message to the banking sector as to what we expect from it, but equally these laws must be effective and efficient in maintaining ethical standards. The long list of reviews, reports, inquiries, active regulators and legislative tinkering over the past five years alone suggests that these laws have been anything but efficient. The establishing of a banking, superannuation and financial services royal commission and the general discontent in the community suggest they have been anything but effective.

Our job is to protect Australians—individuals, families and businesses. Another inquiry, another report and an expensive royal commission are not necessarily going to give redress to anyone who has been wronged. While the Banking Executive Accountability Regime reflects community expectations, the regime in and of itself is also not going to right wrongs.

The coalition government has a strong track record of cutting red and green tape for employers and wealth creators, particularly small and medium businesses. We've saved the economy billions per annum in regulatory costs. Now, as the nation's most responsible party for economic management, we must concentrate our attention on effective and efficient regulation in this area. As a fiscally responsible government, we cannot fall into the dangerous bank-bashing mob mentality which, while potentially politically beneficial in the short term, will hurt Australian businesses, their shareholders and employees and, most importantly, their customers in the long term. We must remember that around 210,000 people are employed in the finance industry, comprising 1.7 per cent of total employment in Australia. Of these 210,000 people, around 150,000 are employed by banks, with the rest working at credit unions, building societies and the Reserve Bank of Australia.

Australia must look to successful financial sectors for the world's best practice when it comes to effective regulation. It's clear that financial centres such as Singapore and Hong Kong have the balance right in terms of regulation, and they enjoy a strong financial services sector because of this. This means jobs; this means businesses. I'm contributing to this debate because I fear we are not adhering to world's best practice when it comes to regulating our financial sector. The Banking Executive Accountability Regime adds yet another layer of regulation to the ever-growing compliance burden faced by our financial institutions, adding another detractor to our competitiveness relative to those international sectors I mentioned earlier. It does this having only been subjected to a three-week consultation paper on the idea of the regime, followed by a one-week consultation period on the draft legislation itself.

Of primary concern is that the regime creates a vague obligation for accountable persons to take reasonable steps to prevent the institution's reputation or prudential standing being adversely affected. The wording of 'reasonable steps' has been adopted from the United Kingdom's own version of this legislation. However, it speaks about reasonable steps to avoid breaching specific regulations. The obligations created by our legislation are particularly nondescript, and, even though APRA have provided some examples to the sector, their list is by no means exhaustive. For example, what is considered reasonable where a decision taken by an executive might preserve the institution's prudential standing but damage its reputation? What is an accountable person to do in this situation?

Similarly, the BEAR bill proposes joint liability where two or more accountable persons share obligations within the institution. This means that an accountable person who shares obligations will be liable for a breach by the other person. While having bank executives look over each other's shoulders will help ensure compliance, executives need to know what compliance means. These two measures in particular have potential to slow a financial institution's decision-making process, and with it the potential to slow Australia's economic growth. While the parliament must hold bank executives to account, we need to get the legislation right the first time.

The condensed time frame that the BEAR has had to be considered by both the industry and the parliament is of concern. On the timeframe for implementing the BEAR bill, I note that it has been consistently raised, both in submissions on consultations and by the Senate economic committee's report on the legislation, that the start date of the regime on 1 July 2018 leaves very little time for institutions to adequately comply. This particularly disadvantages smaller institutions, who don't have as much capacity to absorb new regulations as larger institutions might, and I note the comments of the previous speaker on this very point. The Senate committee recommended that the implementation of the regime be delayed to begin not less than 12 months after the legislation passes. I believe the government should not be burdening smaller players in the financial sector, especially at a time when we want to see a more diverse and competitive industry so that lower costs and more competitive terms and conditions can be provided to consumers. I'm concerned about the burden we're placing on financial institutions, our global competitiveness and, potentially, our economic growth.

To reiterate, Australians expect us as their representatives to establish and maintain laws that reflect community expectations. We must make laws that send a clear message to the banking sector as to what we expect from them, but equally these laws must be effective and efficient in maintaining appropriate ethical standards. Our job here is to protect Australians, whether they're individuals, families or businesses. Equally, our job is to ensure we have the most competitive and thriving businesses in the world in the banking and financial services sectors—and businesses more generally—who generate income for our nation and employ millions of Australians each and every year.

Matt Thistlethwaite (Kingsford Smith, Australian Labor Party, Shadow Assistant Minister for Treasury) Share this | Link to this | Hansard source

The Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017 represents one of the greatest political backflips of all time. Just 12 months ago the Treasurer, the Prime Minister and members on that side of the House were saying that there were no issues with executive remuneration in the banking industry, there was nothing to see here, there were no problems and we didn't need a royal commission into banking and financial services in Australia—everything in our banking industry was hunky-dory—despite the fact that millions of customers were being ripped off and there were scandals in wealth management, insurance and retail banking. The government chose to ignore those, and it was only when the banks agreed that they were dragged kicking and screaming to agreeing to a royal commission. This bill does represent part of that backflip on the issue of executive remuneration in the banking industry, because for many, many years now there have been cases of rip-offs of customers and scandals, particularly in wealth management and insurance, where customers have lost millions and millions of dollars, lost their homes, lost out on insurance in cases of severe illness and death, lost their jobs and lost their ability to pay the household budget, but no-one was held accountable—particularly the big banks and the Australian deposit institutions that were responsible for those activities and left those hardworking Australians in those difficult positions.

This bill seeks to implement an accountability regime for executive remuneration in our banking industry. It proposes to strengthen the responsibility and accountability framework for senior directors and executives of authorised deposit-taking institutions, or ADIs, and their subsidiaries. The banking executive accountability regime, or the BEAR as it's become known, is part of the government's more accountable and competitive banking system program, which was their response to issues in the banking and financial services industry and their claimed credible alternative to Labor's proposal for a banking royal commission in banking and financial services. It would be remiss of me not to mention the fact that the government has had to be dragged kicking and screaming to the measures contained in this bill, and that's been put forward as a way to silence calls for a royal commission into banking.

Look at all of the scandals that have occurred over the last decade or so in banking. The wealth management scandals that we saw in the Commonwealth Bank and that have subsequently been identified in all of the big four major banks—which have meant they've had to pay back money to customers in those circumstances, many of whom have been fighting for long periods of time to get recompense, and some of whom are still fighting—were uncovered over the course of the last couple of years. There have been rip-offs in insurance, particularly CommInsure but also in other insurers throughout the country. There was the scandal relating to AUSTRAC and the Commonwealth Bank not reporting transactions through their intelligent deposit machines that were meant to be reported, because they were above certain thresholds contained in our antiterrorism and financing laws. People have been ripped off. Millions of Australian customers have been ripped off. Businesses, including small businesses, have shut down because of some of these rip-offs. Jobs have been lost. The pressure and stress that this put on a number of Australians and their households and businesses was immense, and the government chose to ignore them. The Turnbull government chose to ignore them for many, many years, saying that there wasn't a need for a royal commission into banking.

It is only when the executives of the big four banks wrote to the Prime Minister and said to him, 'We want a royal commission now, because we're sick and tired of the blame game and all of the damage that it is doing to our reputations,' that the Prime Minister rolls over. It's only when the big four banks say, 'It's okay to have a royal commission,' that this Prime Minister and this government roll over and finally give the Australian public what they want.

Then, in the process of doing so, he seeks to obfuscate the issues associated with banking and tries to point the finger at the industry super funds, where there've been no examples of rip-offs and scandals to the degree associated with the big four banks. Yet it's as if the Prime Minister spat the dummy and said, 'Well, if I have to give them a royal commission, I'm going to make sure that I go after the industry super funds as well, because they've got union representatives on their boards.' It says everything about this government's approach to financial services and banking in this country and to dealing with the issues and working in the interests of small businesses, families and pensioners.

It's lamentable that the government has ignored the pleas of the Australian public for greater accountability, particularly in the big four banks. Only the coalition have had such contempt for the Australian people that they would side with the big four banks over the course of the last few years in avoiding a royal commission. It's particularly the phrase 'executive accountability' that didn't seem to exist in their lexicon up until late last year, when they capitulated to calls for a banking royal commission.

It is worth noting what the Treasurer said just a year ago about the regulation of executive remuneration. He said:

In terms of those in senior corporate positions and what they are paid, they are matters for their boards … it is up to those companies to get the balance right, in terms of how they set those arrangements with their shareholders and their overall accountability to the Australian public for the social licence that they have to operate in Australia.

That was the Treasurer less than 12 months ago saying, 'Nothing to see here—no issue with banking accountability,' in terms of what they were paying their executives, despite what had been uncovered through successive parliamentary inquiries and investigations by journalists and the regulatory bodies into what was actually going on with the management of our big four banks and executive remuneration.

Finally, they've acted, and they've acted through this bill—a bill that creates an accountability framework that ADIs must comply with, with exemptions granted by the Treasurer or where it's a foreign ADI not operating a branch in Australia, or where they may have contravened a law of a foreign country. It defines an accountable person, for the purposes of the framework that's being developed, as a person who:

… has actual or effective … responsibility:

(i) for management or control of the ADI; or

(ii) for management or control of a significant or substantial part or aspect of the operations of the ADI or the relevant group of bodies corporate that is constituted by the ADI and its subsidiaries.

The bill sets out the accountability obligations of the ADIs and accountable persons. For instance, an ADI must take reasonable steps to conduct its business with honesty and integrity, and with due care, skill and diligence. It must deal with APRA in an open, constructive and cooperative way and, in conducting its business, prevent matters from arising that would adversely affect the ADI's prudential standards or prudential reputation. The bill sets out deferred remuneration obligations of an ADI, meaning an ADI must defer a proportion of the remuneration of an accountable person for a period of four years, the proportion generally depending on the size of the ADI. It also sets out notification obligations of an ADI, with ADIs to give APRA statements detailing the roles and responsibilities of each accountable person, and accountability maps identifying the lines of responsibility through the ADI group. It sets out a civil penalty regime for ADIs where they breach obligations—up to one million penalty units, or $210 million, for large ADIs.

A number of issues have been identified with the implementation of this particular package, through a Senate inquiry, and the shadow Treasurer has outlined those. I won't go into those in detail, but they relate particularly to smaller ADIs and their ability to meet the compliance obligations under this proposal within the time frame. Labor is suggesting and the shadow Treasurer will move, in the consideration in detail stage, an amendment to that effect to give more time to some of those smaller ADIs.

In conclusion, the case for greater accountability in the banking sector has been made out repeatedly by the tragic losses and the cases of fraud and deception that have befallen many across all corners of the country. Through the House Economics Committee, which I've been privileged to be a member of, and through the banking inquiries with the big four banks, we've identified some of those issues. But, unfortunately, we were given precious little time questioning the big bank CEOs to get to the bottom of the various injustices that have been perpetrated upon banking customers. Twenty minutes simply isn't enough time to question one of those CEOs about all of the scandals and rip-offs that have been going on in the banking industry over the course of the last decade. Nonetheless, I think the committee was very effective in hearing some of the revelations that have occurred in this industry, particularly around executive remuneration, most notably: the current, soon to be former, boss of CBA, Ian Narev reminding us that 40,000 customers had been charged for financial advice that they never actually received; and CBA admitting that no executives had lost their jobs over the wealth management scandal or the CommInsure scandal or the AUSTRAC financial advice scandal. All the CEOs refused, during those inquiries, to make public the number of executives earning above $1 million. But at the end of the day, we saw that that banking inquiry was hopelessly inadequate to get to the bottom of the toxic banking culture that we've had in this country for some years now.

Labor knew from day one that the only way to shine a light on what was actually going on in this industry was through a fair dinkum royal commission: a fair dinkum royal commission that provided an independent arbiter, with the probative powers necessary to call the banks and get to the bottom of what was going on in this industry. And that's what the Australian people have wanted for some time now. They are sick of the rip-offs and the scandals; that's left a bad taste in their mouths about banking in this country and they wanted a royal commission, but the Prime Minister denied that—only agreeing once the banks had given him the okay for it to occur. For 18 months Labor has been calling for a royal commission and it has been met with only obfuscation and ridicule by the government. Rather than listen to the victims, the government stuck with their talking points slamming the idea. It was only when the banks themselves realised that the writing was on the wall that the government came around.

This is not the first time that this has occurred in financial services. We look back to the Future of Financial Advice reforms, the FoFA reforms, which introduced a 'best interests' duty—a duty that ensures that a financial adviser must act in the interests of their customer, their client: the person that they're supposed to be working for. And what did those opposite do, when Labor introduced those laws in the parliament some years ago when we were in government? They opposed them. They opposed financial advisers operating in the best interests of their customers. It says everything about the government and what they stand for. Then, when they got to government, they tried to overturn those laws. They tried to water down that best-interest duty in the parliament. They got it through this place and then they got it through the Senate. It was only when the Senate saw what was going on in banking—that there was a problem there—that they changed their minds and removed their approval for those changes to be made. The same happened with superannuation reform as a result of the Cooper review into superannuation and the establishment of MySuper accounts. Again, there was opposition from the government to those sorts of things.

Even when Labor introduced its executive accountability regime generally—the two-strikes rule, as it's known—it was again opposed by those opposite because they didn't want to shed a light on what was actually going on in Australian corporations and give shareholders a say in the management of those companies that they had a stake in and that were paying ridiculous salaries and bonuses and providing share schemes for executives who were doing the wrong thing by them. It says everything about the government's approach to banking and finance and whose side they are on. They're certainly not on the side of the customer, of the client, of the small-business person, of the family or of the pensioner when it comes to banking. It was only when the banks agreed to a royal commission that the government rolled over and changed their view. They've chosen a piecemeal approach to solving this problem of executive remuneration and the problems in banking, and it's sad that they have had to be dragged kicking and screaming to the table on this issue.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brian Mitchell (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

This bill, the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2017, to introduce a banking executive accountability regime is nicknamed the BEAR. To quote financial sector expert Pat McConnell, a visiting fellow at Macquarie University:

Rather than being a terrifying polar or grizzly, it is already an old teddy bear that has had the stuffing knocked out of it.

So, rather than growl, this bear purrs like a pussycat. When it comes to the banking sector, that is how those opposite like it: purr like a pussycat and have your belly scratched.

Pat McConnell further states:

The government's new Banking Executive Accountability Regime (BEAR) legislation is a confused mess that is not going to do what it claims to do, which is make bankers accountable for scandals.

It is hardly a ringing endorsement of the government's approach.

This bill appears to echo the Senior Managers and Certification Regime, established by the May government in Britain, which came into force last year. Copying the British Chancellor's homework, our Treasurer proposed the BEAR in last year's budget, initially in order to take effect from 1 July this year. I'm pleased that I understand the Treasurer has now agreed to an amendment put forward in the Senate that that implementation be delayed.

For years, Labor has kept pressure on the government to act on the concerns of the tens of thousands of Australians and small businesses who have smelled something rotten going on in our finance and banking services sectors. It is why Labor has been calling for a banking royal commission. I couldn't understand the member for Berowra, who just spoke on the bill. One minute he was belting Labor for not supporting a banking royal commission early enough, and then he was belting us for supporting one two years ago. I didn't understand his logic, and I don't understand it now.

Labor has been on the record consistently as wanting a banking royal commission to get to the heart of the scandals in the banking sector in this country. Too many people and too many businesses have been ruined by the scandals engulfing this sector. We're pleased that the government's finally come to the table—kicking and screaming—on a banking royal commission. It took too long to get there, and it shouldn't have taken so long. This government's been reluctant to do anything regarding the banks, but finally it's been dragged into action, not because it wanted to, not because of the evidence provided to parliamentary committees of ruined lives and ruined businesses, but the consequence of banking malfeasance—

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

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. The member for Lyons will be given an opportunity at that time to conclude his contribution.