Cory Bernardi (SA, Liberal Party) Share this | Hansard source

I may not be alone in finding extraordinary the demands by those on the other side, and Senator Dastyari in particular, to have a royal commission, given their intransigence and refusal to acknowledge that the Cole royal commission came to a number of very relevant findings about systematic abuse within the union movement. That is not to damn all unions with the same condemnation, but I do find it extraordinary that they think in this case a royal commission into the banking sector will somehow give victims a chance to ventilate their grievances and relate their cases and stories and yet, somehow, the Cole royal commission did not allow genuinely aggrieved people to do the same.

Senator Dastyari—and I quite genuinely think that he does believe that there needs to be further investigation in this area—is ramping it up, if I may characterise it like that, for political purposes, when he says that not only have there been substantial inquiries and a 530-page report by the Senate Economics References Committee that display some of the egregious offences by the banks, but that that is not enough and that we need to go further. Well, what I would respectfully suggest to Senator Dastyari and to my colleagues here in the Senate is that we need to implement some significant reforms arising from that Senate committee before even contemplating having another inquiry of any description into it. There is no doubt at all that the banking sector in this country needs to be reformed. There have been calls all around the world for reforms like this to take place.

One of the great issues that has been facing Western economies is that many of the banks have become trading banks—transactional banks—instead of relationship-oriented banks. They are looking at their customers as merely a means of turning a profit rather than as custodians of their customers' wealth and savings. They are using those savings to go out and punt in forex markets, to rig markets or engineer financial products, and then, ultimately, when it all turns turtle and goes bad, the government, because they are the guarantor of these banks, have to bail them out. That is one of the fundamental problems we have: the government is backing these banks, and the banks are not treating that guarantee in a respectful light.

One suggestion, which is in the process of happening internationally, is to separate the trading functions from the custodian functions of the banking sector—that is, to allow the custodian banks to make their margin in lending and things of that nature but not to engineer financial products. They have to separate and isolate their various units around the place. Now I am not saying that that is the answer, but it is one suggestion that perhaps should be examined. We do not need a royal commission to do that. We have to look at the problems with banking all around the world and ensure that they do not manifest themselves in this country any more than they have already.

But I make this point, which goes back to the union royal commission and the ABCC bill that is before this parliament—I am not going to get into that, though. We are trying to make people more accountable for the choices that they make on behalf of their organisations. Where we have circumstances where there is systematic abuse within sections of the banking community or the union community or anywhere else, then individuals need to be held to account.

It is not good enough to slap a corporate and say. 'You've got to pay $5 billion worth of fines', like they did recently with Goldman Sachs in America, or with any of these other investment banks that have been operating around the world, where they were caught rigging, stealing and conning people out of their money. That is not good enough. People need to be held to account. You should not be able to buy your way out of a corporate malfeasance of such significance that it risks bringing down the financial system, or imperils the savings of millions, thousands, tens of thousands—whatever it is—of Australians and which may result in the government having to bail out that sector of the community. It is not good enough that people are not held to account for it.

I want to go back to 2008 in America. The Lehman Brothers crisis was brought about by poor lending standards, misrepresentation and poor practice of the banks. I do not know that anyone has gone to jail as result of that. Sure, billions of dollars of fines have been paid. But those fines have been paid out of the profits that have been generated by ripping off the system, and the government bailouts in America have only enriched bankers. We have to prevent that from happening here. We do not need a royal commission. We need tighter standards in force, and that requires legislative action. (Time expired)