Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

This bill is big. This bill is bold. Only once before in our parliament's history have we ever commissioned an inquiry in the way that this bill, the Banking and Financial Services Commission of Inquiry 2017, sets out. This essentially is a royal commission that is instigated by the parliament and that reports to the parliament. This is a parliamentary commission of inquiry. Only once in Australian history have we done this.

The UK had a select committee looking at the use of parliamentary commissions of inquiries, and drew the conclusion that in a modern parliament we should see a lot more of this kind of stuff, because ultimately this is the parliament holding the executive to account.

When we went down this path, we thought to ourselves, 'This Prime Minister is never going to call a royal commission into the Australian banks; this Prime Minister is running a protection racket for the financial services industry in this country,' and we looked at how we could hold the Prime Minister to account, to do the job that the Australian people put us in parliament to do.

Recently the Small Business and Family Enterprise Ombudsman, Kate Carnell, highlighted the fact that there have been 17 parliamentary inquiries over the last decade into financial misconduct, broadly, in the financial services sector, and into the banks. She lamented the fact that there has been little change following those parliamentary inquiries. Greg Medcraft, the head of the Australian Securities and Investments Commission, at Senate estimates only a few weeks ago, said he still thinks there is a cultural problem in the Australian banks and in the Australian financial services industry. I have had another count, and there have been 28 different parliamentary inquiries across different states.

What is a parliamentary inquiry? All the senators in this chamber are familiar with parliamentary inquiries: Senate inquiries. It is what we do. The key part of our job is holding Senate inquiries. I have sat on dozens of Senate inquiries in the five years that I have been in the Senate. We do the best possible job that we can, but we are limited in our time, our resources and, ultimately, our powers to get to the bottom of these issues.

I want to give senators in the chamber here today, and anybody else listening, a very brief history. Back in 2013-14, this Senate, through the Economics References Committee, instigated a very important inquiry looking into the Australian Securities and Investments Commission—what kind of job it was doing, what kinds of resources it needed and what kinds of powers it needed to better do its job. During that inquiry, a whistleblower came forward, a brave whistleblower called Mr Jeff Morris, and gave the committee evidence of a financial scandal that had been uncovered at the Commonwealth Bank. That inquiry ended up running for nearly nine months—nearly nine months of work—and went across a whole range of things.

At the end of that very long and important Senate inquiry, our conclusion and recommendation—and it was the key recommendation from the chair, who happened to be a Labor chair, former senator Mark Bishop—was that we needed a royal commission into this scandal of the Commonwealth Bank. An economics committee made the recommendation that we needed a royal commission. I was sitting on that committee during that inquiry, and I can tell you that the reason underlying that key recommendation was that we did not have the powers that were necessary, and neither the resources nor the time, to get to the bottom of this scandal. We also did not believe, based on the evidence we saw in this inquiry, that the regulator was sufficiently able to get to the bottom of this issue, levy penalties and implement deterrents to make sure this kind of thing did not happen again.

Senate inquiries very rarely, if ever, compel witnesses to appear. We do have the power to do so, but it is extremely difficult. We need to get political support to do that. Unlike a royal commission or a parliamentary commission of inquiry—which is what the bill we are debating today is about—we cannot search premises, seize documents or offer immunity to witnesses. We know that in the US parliamentary system their Senate can do those things; certain US Senate committees are set up with those kinds of powers. That is why we have royal commissions in this country—because of the separation of powers. A royal commission that reports to the executive has those kinds of powers and has the resources. And, no, they are not cheap; they are expensive. But how much do 17 parliamentary inquiries cost over 10 years? And what is the cost to us if we do not act on those recommendations? This parliamentary commission of inquiry into banking and financial services will have the resources, and it will take time to get to the bottom of these issues.

That was one recommendation of one inquiry. Then the whole issue went quiet. It was not supported by the Liberal and Labor parties at the time because it was a pretty bold thing to do—for the Senate to put their hands up and say, 'We have done all we can, we have done the best job we can; we need another avenue to get to the bottom of this.' I went along with that, and then a couple of years later we had another important inquiry in the economics committee. It was an inquiry into the disaster, the calamity, that was forestry managed investment schemes, FMISs, where $4 billion of investors' money was wiped out in this country. It was a miniversion of the GFC here in Australia. In many ways it was entirely predictable. Senator Dastyari, who was chairing the committee, is in the chamber. We heard from so many witnesses not only heartbreaking stories about how they had lost their money investing in those schemes but also that they had even been leveraged into those schemes. Their financial planners and accountants had suggested that they borrow the money to get a tax deduction, which you get in a managed investment scheme, and they were losing their houses. Even today they are having their assets repossessed by the banks—which, by the way, underwrote, in the majority of cases, the finance companies of these forestry managed investment schemes. Let me tell you that those banks were all care and no responsibility.

When we heard the evidence, I lamented the fact that this was so big and so complicated. There is no way our committee could get to the bottom of just this issue, so the Greens, in a dissenting report, also called for a royal commission. But that was the turning point for me. Most of these people have not been let off the hook, often because of financial misconduct. There have been a few advisers involved in these companies and promoters who have been held to account, although, effectively, they have had a slap on the wrist, whereas literally hundreds and thousands of Australians have lost their savings and in some cases their homes.

Fast forward to now, a couple of years later, and what have we seen? We have seen pressure being brought to bear. The regulator has been given extra money. It has been trying to step up, being a cop on the beat. We have seen more parliamentary inquiries. We have seen CEOs being called into parliament in dog and pony shows to answer questions. We have seen that, but what else have we seen happen? We have seen a whole number of scandals brought to the surface in this country right across the board. Just about every bank and major financial services company has had a scandal.

I remember asking a question of Senator Brandis a couple of years ago on the need for a banks royal commission, and I have asked the same question of Senator Cormann. No doubt there will be some conservative politicians in here today who will say the same thing: 'It's just a few bad apples.' I would argue that the culture within these organisations has a systemic problem, and I am not the only one arguing that. Mr Medcraft himself admitted this in the recent estimates. He still does not believe that that culture is changing fast enough.

We have the power to institute our own royal commission that reports to parliament, a parliamentary commission of inquiry. I will say today that, yes, it is going to be a bumpy ride. It is going to be a bumpy road, although I have crossbench support for this bill already—a number of them have signed it today—and I have Labor's support, and I thank them for that. I have no doubt there will be plenty of back-seat drivers on this journey, and there will probably even be some attempted carjackings. There will even be some obstacles put on the road. I am expecting everything to be thrown at this inquiry by the Liberal government. They will do anything to prevent a commission of inquiry. But let me tell you that we are very close. We believe we have the numbers and the support in the Senate, and I think we have the support for a vote in the House. I am confident. It is a bit tricky because we need a majority of 76 to get standing orders suspended in the other place.

Senator Smith interjecting—

We are just one short, Senator Smith, and that is one scandal away from getting the person we need, I can tell you. There are a lot of people in rural and regional Australia who want to see a thorough examination of the issues that matter in this country.

The terms of reference in this parliamentary commission of inquiry bill are deliberately broad. That is the legal advice we received. But they also cover matters of significant public importance because we under law are legislated—parliament is legislated—with responsibilities around banks, insurance companies and financial services companies. That is the law. We provide bank deposit guarantees to the banks. We are here to represent community standards. I am still receiving emails every day about people who feel that they have been victims of misconduct. We have a very important role to play here as a parliament.

I have to say that those terms of reference will look at some really important issues in this country, not just the extent of misconduct; that is just the first one. There are a whole range of things there about the vertically integrated structures within banks. Have a look at the terms of reference. I implore all the senators here to have a look at those things. They are all very important. I appeal to Senator Hume, who is here today, who does a good job chairing the Economics Legislation Committee—

Senator Smith interjecting—

and Senator Smith. I know how busy you are. I know how many inquiries you have on at the moment and your workload. Understand this: if we had someone—an individual, a QC—appointed with the resources to go with that just to look at this specific issue, and we had a couple of years to do it, imagine what we could actually achieve.

I believe, and I know from individuals who have spoken to me, that more people will come forward with allegations about misconduct. We in this place can take confidential information. We can have in-camera briefings, but the committee can decide if it is for the public good to release that information. We cannot offer immunity, but this commission of inquiry will be able to. I have no doubt, from what I have been told, that people will come forward, and this is what we need to do.

Let me say that, for all the BS that I have heard about how this is going to be bad for the financial system, how it is going to cause instability and how it is going to cause damage to the reputations of the banks, I actually argue the opposite. I think this is what is needed to restore faith and trust in the banks and the financial services system. And do you know what? If I am wrong, I will stand up here and admit it. If it uncovers nothing, at least we will have had a look at it, and the issue will go away—because, the next time we get a scandal, we will have another parliamentary inquiry and nothing will end up getting done, or we will get sweet nothings whispered in our ears by a bank CEO when they come into parliament for their dog and pony show.

This will give us the ability to get to the bottom of some of these scandals. I do believe, especially in cases like forestry managed investment schemes, that a number of people have not been brought to justice. The issue is so immense. The scale of loss is so big. The misconduct across a whole range of different groups is so great, from promoters to the companies themselves to the people who value these companies to the people who finance these companies. It is such an incredibly big scandal.

One thing this commission of inquiry will look at is law reform and what is necessary in this country. Let's look at Storm Financial. Storm Financial was one of the biggest scandals we have seen in recent years, and ASIC did its job. It used civil prosecutions to go after individuals at Storm Financial, and it took five years to get a conviction under our current legal system, so one thing we want looked at is law reform. We want whistleblower protections looked at. We want penalties for white-collar crime looked at. These are all essential parts of a very important whole if we are actually going to tackle this problem. We want to see compensation schemes set up so that we can actually get a proper and, I think, more moral judgement on whether many of these victims we have met have been wronged.

This is actually very important for the banks and the financial services industry. This is an inquiry that could potentially give them a clean bill of health. Based on what I have seen, I would be surprised, but I think it is really important, if we are going to get cultural change in this country, to have a deep dive into this sector to get that cultural change. A slap on the wrist and platitudes are not going to do the trick. They are not going to fix this problem.

That is why I urge senators to consider what I am saying here today. Consider this bill and the fact that, in this day and age, we should be masters, not servants, of our economy. A lot of Australians feel like its servants. A lot of Australians have a social contract with the banks. I am one of them. I have a mortgage with a bank—and, by the way, in my case it does a very good job. But remember how many scandals we have seen in this country. And it is not just banks; it is other financial services companies and financial planners right across the board. This will give us the ability to actually get to the bottom of this. I urge senators to consider that, in this day and age, the process and the legislation before you are something we should be considering in a modern parliament. Having the ability on really important issues—and this is what the UK parliament select committee found. There is a need under the Westminster system to have more parliamentary commissions of inquiries.

If this gets sent off to committee, so be it; let's have this discussion. But in a modern parliament, on critical matters, why can't we have a system that gives us the resources and the focus that we need to get to the bottom of some of these issues, especially if the executive will not act? In the case of the UK parliament, it was about getting an inquiry into their involvement in the Iraq War—which, as a small adjunct, would be a very good thing to do here too. Nevertheless, where the executive will not act and it is a significant matter of public interest—and nobody can argue that an inquiry into misconduct at the banks and in the financial services industry is not one of the biggest political issues we have seen in this country. This is a significant matter of public interest.

This is a bold and brave piece of legislation that has only been seen twice and introduced into this parliament. I do not have the details to go into why it was introduced last time—it was a different set of circumstances—but we have provided an explanatory memorandum that gives you this detail. I look forward to the debate today. Unfortunately, we will not have a chance to vote on this, but I look forward to the debate from all senators. I hope that we can do something different in a modern parliament: actually do our job and get a result for the people that put us here who are, rightly or wrongly, losing trust in us and are sceptical about us being self-serving. This is a chance to represent them and do the job properly.