Sam Dastyari (NSW, Australian Labor Party) Share this | Hansard source

I thank Senator Canavan for his contribution in this debate. Clearly, he has thought about and worked on these matters, and he brings a level of experience and thought to the debate. In some areas, I agree with him; in others, I disagree. It was fantastic to learn tonight that Senator Canavan has read a book recently and I think that sharing that fact was especially meaningful.

I am sympathetic to this motion, but I will not be supporting it and the Labor Party will not be supporting it. The premise of what Senator Whish-Wilson has proposed is very interesting. The motion raises the question: if we are going to have the level of social services and social welfare that we want to have as a society, who should be paying for it and where should the pain be shared? Our society has decided that our banking sector is too big to fail. If the banking system is in trouble, the government of the day will intervene and take whatever steps are necessary to protect the banking sector, which begs the question: do banks have a greater responsibility to contribute to the finances of the nation?

I think that Senator Whish-Wilson was saying in his contribution there should be a separate debate on the concept 'too big to fail', on the role of government in the banking sector and whether government should or should not be involved in propping up these kinds of institutions. Largely, as a society, we have made an economic and social decision that we do not want a banking sector that can fail. As a result, when these difficult decisions need to be made, there is a tendency of government to make these decisions. If the big banks and the banking sector are going to get the benefit of being able to rely on the government in difficult periods to shore of their risk profile as institutions, then at what point should they have a responsibility to provide more during the good times?

I think that this is an interesting idea and there is certainly merit in discussing it. The reason I am not supporting this motion is that we have not given careful consideration to the issues of at what point do we move towards a system of greater taxation, levies or charges on the banking sector and of how that system would pay for other needs.

However, I do agree the Greens on the point that Senator Whish-Wilson made about the Abbott government's twisted priorities, which have been on full display in this budget. They are an unfair, unjust and often unbelievable demonstration of a corrosive ideological crusade to punish the poor, the unemployed, pensioners, students the sick and families. This week we saw an attack on superannuation. Those opposite decided to turn on hard working employed Australians. Even the children of war veterans will be hit.

Senator Canavan tried draw some inferences on how the Labor party, when in government, dealt with issues of banking, taxation and the placing of levies. He tried to present the government as following a calm, sensible, rational process. When it comes to banking sector reform, we sat in this chamber and watched over a period of one hour a deal done on regulation for the provision of financial advice. In a spectacularly embarrassing move, the member for Fairfax from the other place sat in the public gallery and watched the minister read a letter that had been signed minutes earlier as part of a deal done in a hallway outside. Yet we are being told that is how we should be making policy and that is how we should be making banking reform. Those opposite claim to have an incredible history and ability in this area, because they have palmed off a series of difficult decisions to one review being led by David Murray and now say on every issue 'We are going to wait for the report'. We all know what is going to happen: they will get the report, they will sit on it for another three or four months—maybe even a year— they will leak out little bits of it that they want to leak out, and, then at the end, they will adopt a very small part of it.

Frankly, I share the concerns that Senator Whish-Wilson has aired in this place and in others about the entire review process as it is currently being conducted. You really have to question whether David Murray is the appropriate person to head that kind of inquiry. The current CEO of the Commonwealth Bank, Ian Narev, says that in his opinion and in the opinion of the bank and in the opinion of the lawyers, the financial misconduct that occurred in Commonwealth Financial Planning goes back to when Mr Murray was CEO of the bank. And then we say that the person who is going to conduct the financial system inquiry is the person ran the bank when improper actions began, as the bank itself states. Senator Whish-Wilson has made these comments previously, and I echo some of his sentiments. You really have to question whether this is the appropriate system and the appropriate pathway.

The banking sector in Australia should be congratulated on having a very successful year. No-one should begrudge them that. I have been heavily involved in public inquiries into the conduct of Australia's big banks. I am on the public record delivering some heavy criticisms of their behaviour. I expect that, in relation to the inquiry that has just begun, I will probably have more to say. But, at this point in time, I do not think a public insurance levy is the right way to handle these concerns. No-one should begrudge the banks their profitability. We are talking about a figure of around $29 billion for last year. My criticism of the banks is not that they have been incredibly profitable; they have a right to be profitable. We want them to be profitable and we want them to be strong. But the behaviour in some sections of the Australian banking sector is deplorable. There has been wilful ignorance and malpractice. As for admissions of wrongdoing, we sat through inquiry hearings where the Commonwealth Bank came along and lied. They lied about what had happened. They covered it up. They will claim they did not know. They will claim the evidence got changed. But, frankly, either they did not know what was going on within their own organisation or they were lying and got caught, and each alternative is horrible.

For too long, other banks—I do not want to go into the business of naming them all—have allowed some really horrible financial planning practices, done in a vertically integrated model. They have propped up, supported and bankrolled a handful of crooks, criminals and con men who have pushed products that in a lot of instances the banks knew were not good products; they knew they were damaging and they knew they were high risk. They knew this because they priced it themselves at 18 to 22 per cent in some areas. Then financial planners vanished and collapsed, and some of them went to jail. Some of them were able to bulletproof themselves. The banks started calling in some debts that should never have been provided in the first place. While the banks may not have committed any crime, and in many cases they acted well within the law—I am not making an accusation that they did not—their behaviour was not conscionable when they knowingly put people in a position of such high risk with financial planners that they knew should not be doing this.

Now we have the CBA open review process. We are looking at somewhere in the area of 400,000 customers. I share the concerns of others in this regard. We have a sector that has been massively protected by government. The government took really strong action when those in the sector were having a difficult time. Obviously they did it for the public good. If the banking sector are going to be the beneficiary of public good, what is the responsibility of the banking sector when it comes to contributing to Australian society?

Labor has a strong record of sensibly regulating the banking and financial sectors. We are highly proud of the broad public consultation that we conducted with financial experts, academics, lawyers and consumer groups, and of course the banks and financial service providers, to put together the Future of Financial Advice package of reforms. In coming weeks we will have a large debate in this place on legislation to repeal those reforms. Labor's financial advice reforms were essential consumer protections. By watering down the best interests duty, by removing the opt-in provision, by scrapping annual fee disclosure statements and by allowing for the return of previously banned forms of conflicted remuneration, what the government is doing is really worrying. Elements of the banking and financial services sector have argued for minimal regulation. But one person's regulations are another person's protections. It is even more deplorable that sections of the banking and financial sector have consistently argued against regulation when you realise that this is the same sector that has massively benefited from the protections provided to them during the global financial crisis.

We will have a debate about the reforms to financial planning advice. But what Senator Whish-Wilson is proposing in the motion he moved today goes to a somewhat different space—that is, whether there is a greater role for the banking sector to put more money in, whether a levy should be placed in some kind of rainy day fund, as Senator Canavan was referring to, or whether that money can be spent and used by government. That is a fine debate to have and a healthy debate to have. We should be having that debate and more people should be participating in it. I do not believe we are in a position, right here, right now, to predetermine that debate and say, yes, that is the path we should be taking. I think we should be having contributions. I think we should be hearing what people have to say.

I was interested to hear some of the figures that were being quoted by Senator Whish-Wilson, and I think if the opportunity arises to place them on the public record then that would be an appropriate thing to do. I think using the Senate committee process over time to explore some of these ideas in more detail would be a very appropriate way of having some of these conversations, having some of these debates and being able to nut out some of these figures. And I do not think it is unhealthy for us to ask the question, at what level should there be a greater burden on the banking sector? How do you create that in a way that is not just going to be passed on to Australian consumers? We do not want a situation in which you are simply creating a levy or a form of taxation in one way or another that simply ends up being passed down the line to consumers.

So, I think it is very healthy for us to have that discussion and to hear the different views. And I am sure that the Australian Banking Association and others will have very strong views on this, which they are entitled to have, and the banks will have strong views on this. I think that will be a more appropriate path for us to have a detailed discussion about this, rather than simply saying that at this point the Australian Senate is of one particular opinion. The truth is that we are not of that opinion yet. But that does not mean we cannot debate it, that we cannot share some views.

I do want to say that I share the concerns that were raised. I think it is an interesting debate to have—to say that if we as a society want to have all these social programs then naturally there is going to be a question about who pays for it and how. And we should within that debate have a look at the Australian banking sector, a sector that has particularly benefited from the goodwill of government over the years. I think what Senator Canavan was saying earlier about the role of APRA, about prudential standards, is an important one. We have an incredible system. Our prudential regulators do a fantastic job. But that does not negate the fact that when bad international events happen, when we start moving towards very difficult environments, then there still will be a role for government to step in. There still will be a role for government, as has consistently been shown, to do what it can do to protect the Australian banking sector. And if that is something that is now being priced into the risk associated with the Australian banking sector, then, frankly, there may be a greater responsibility for the banking sector to financially contribute to pay for it. I have been making a slightly different point: that it also gives them a greater responsibility as to how they behave as corporate citizens and the extent to which things like financial advice reforms—how they do their financial planning and the role banks play and have consistently played in propping up some questionable financial planners—are related.

In conclusion, I do not believe that now is the time, the place or the right environment to be making the kinds of declarative statements that this motion seeks to make. But that does not mean that there is not a greater role for the Australian banking sector. And it certainly does not mean that there is not a role for the Senate to be scrutinising these ideas, to be participating in this debate and to be presenting alternative views.