John Williams (NSW, National Party) Share this | Hansard source

I rise to contribute to the debate on this bill, the Banking and Financial Services Commission of Inquiry Bill 2017. It is not a secret—even you, Mr Acting Deputy President O'Sullivan, know—that, in a bit over two years' time, I will be leaving this place. And one thing I do not want to do while I am here is to make a hypocrite of myself.

How did I ever get involved in this finance space? Let me explain. In January 2009, I had been in the Senate 6½ months. I got a call from a John McLennan who used to work for Westpac. It was when the Storm Financial crash was about. And many, many people—of 60, 70 or even 80 years of age—were looking at being thrown out on the street. Why? Because they had gone with Storm Financial. How did that work? Well, if you had a house worth, say, $800,000 and you were debt free and you were 65 years of age, then the banks would give you a loan for, say, $400,000—half the value of the house. That $400,000 would then be used as a deposit on a bigger loan to factor you up—to multiply you up into shares; it might be $3 million worth. The Storm Financial plan was: 'We will mortgage your house. We will buy all these shares. And these shares are going to be wonderful. They are going to pay the bank the interest; they are going to give you a pension of $50,000 or $60,000 a year to retire on and take it easy. And all is going to be just beer and skittles.' That was fine. But something happened: the stock market went the other way. And of course these people were very heavily geared. They were encouraged by the banks to gear up, to borrow more; they even, as we found out in the inquiry, revalued your assets and, if your assets had gone up, they would offer you more loans. The banks were happy to just lend the money out—until the wheels fell off the car. So that is how I got involved in the finance side of things.

In January 2009 I went to Redcliffe in Queensland, where I spoke to a gathering of Storm Financial victims. And it was not a pretty sight. I promised them that I would come back and pursue a parliamentary inquiry into this sort of thing and into Storm. When I made it public that I was pursuing that inquiry, guess what happened? The then Rudd government—Labor was in power—all of a sudden came out and said, 'Oh, we'll take control of the inquiry under the Parliamentary Joint Committee on Corporations and Financial Services, chaired by Mr Bernie Ripoll MP.' So, quickly, it was taken off me. I wanted to run it through the economics references committee or even to have a select committee to look at these very issues. So we had the inquiry. We heard a lot of sad stories. That is what FOFA came out of—that very first inquiry into Storm Financial and the crashes and the devastation. That was the start.

Then I launched a bank inquiry in 2011. One of the things that came out of it was this, for example. David St Pierre was a bank manager up on the Gold Coast in Queensland. He is now enjoying striped sunlight, because he is in jail. What he did was: he went to people and said, 'Look, I'll mortgage your house; I'll lend you the money'—because these bank managers had targets to beat each month. They were loans officers et cetera, and they were set targets—and probably still are today. I recall that at one of the inquiries I asked a representative of the Westpac Bank: 'Why did you give a 30-year loan to a 97-year-old lady who was in an aged care facility?' And Senator Doug Cameron interjected—which is not unusual—and he said: 'How old did you say she was, Senator Williams?' I said, 'Ninety-seven, Senator Cameron.' And he replied: 'It must be a bloody good aged care facility!' It must, if you are going to give a 30-year loan to a 97-year-old lady. Of course, it ended in tears. They were guaranteeing 15 per cent return on her money. A good return, 15 per cent; you can't go wrong! What is the old story? If it sounds too good to be true, it usually is. It ended in tears. Of course, ASIC got involved. And just recently ASIC had a media release, dated 9 February 2017: 'Former Westpac Home Finance Manager sentenced to 3 years imprisonment after pleading guilty to dishonest use of his position'. Now, when I grew up—that was a fair while ago, or am I still growing up?—you respected the people in your town. The bank manager was one of those people. I remember people like Malcolm Axford in Jamestown, where I grew up, got offered a job with the bank and it was the talk of the town. You got a job in a bank and you were set for life! Now, you do not get people staying in a bank job for life; so many of them are there for 10, 15 or 20 years and the next thing they are gone. The bank manager was one of the most respected people in your town. I hope those days return.

The Westpac home finance manager was just one case of wrongdoing. I said back then, 'We need a royal commission into white-collar crime.' I stand by that and I support this bill. The reason being that there are things in this bill that I do support. I refer to the industry super funds and their ties with the union movement. I just want to get some answers to some questions. Mr Acting Deputy President O'Sullivan, you might be amazed to hear this: millions of dollars each year—I think last year it was $4.8 million—go from the industry super funds to the union movement. Why and how I do not know, but I would like to find out. I will bet you London to a brick that if the union movement gets hold those millions of dollars, guess where it is going to end up? In the Australian Labor Party's coffers come election time, sure as I talk to you now. This bill includes industry super funds and their ties, so it will be very interesting to see, if this bill proceeds, whether Labor tries to amend the terms of reference to throw out the industry super funds because they might be a little bit embarrassed about it all.

Senator Doug Cameron and I are political opposites, but in actual fact we get on very well together. We were in Senate estimates and ASIC was in front of me—

Senator Dastyari interjecting—

Sorry, Senator Dastyari?