Kimberley Kitching (Victoria, Australian Labor Party) Share this | Hansard source

We had plenty there, let me tell you. We were the sunshine, Senator Williams. It is a famous declaration. It reads in full:

Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.

I do not want anyone to confuse Justice Brandeis and Senator Brandis. One was a very senior, respected jurist; the other is merely applying in the next round of judicial appointments or other appointments that might come along.

I rise to support the Banking and Financial Services Commission of Inquiry Bill 2017. Our position is that a royal commission into Australia's banking and financial services sector is the only way to get to the bottom of the scandals and misconduct that have plagued the sector in recent years. In the absence of any leadership from the government to establish one, we are broadly supportive of a commission of inquiry and the legislation, subject to it going through our normal internal party processes.

This bill responds to the numerous examples of misconduct that have been uncovered over the past few years, which have mainly arisen as a result of whistleblowers within the institutions themselves or as a result of regulatory investigation. The bill seeks to exhaustively examine, through a commission of inquiry, the extent of the misconduct that has occurred and establish the causal factors for the misconduct. This process will bring to our attention the key issues that lead to misconduct in the sector and point towards potential vehicles for change.

Labor's preferred position is a royal commission, which will most comprehensively address the issues facing the sector. However, as the previous investigations initiated by the government have been severely limited by the constraints of time and resources available to parliamentary committees, a commission of inquiry will bring us much closer to getting the answers that we need. A commission will dedicate resources to very specific terms of reference and allow for the use of expert legal cross-examination and forensic analysis.

The terms of reference outlined in the bill attempt to address the issues from a number of perspectives. It provides for the discovery of misconduct within the sector, an examination of the effect of misconduct on the financial system and on the economy more broadly, as well as the examination of incentives both for individuals and embedded within corporate structures that lead to misconduct. It also provides for an examination of the risk borne by the Commonwealth in acting as an implicit guarantor to the sector, theoretically responsible or obliged to bail out the banks when misconduct leads to misfortune, as we saw during the global financial crisis.

Labor supports a strong and profitable banking and financial services sector. That does not mean, however, that we condone the actions and ongoing practices that have led to this point. There are countless stories of families—the mum-and-dad investors that those opposite love to go on about—being ripped off to the tune of hundreds of thousands of dollars. We have just heard government speakers speak at length about how much they support small business, voting in favour of cuts to penalty rates. But, when it comes to supporting small businesses that have been swindled by the big end of town, their mates in the banking sector, this government is missing in action.

We know this government does not care about pensioners—that much is clear through its cuts to pensions, which came into effect on New Year's Day. We would have hoped then that this government would support those going into retirement attempting to be lifters, not leaners, and funding their own retirements, who have watched their hard-earned savings disappear as a result of banking malpractice. Some bankers have, as we know, 'taken advantage of fellow Australians and the savings they've spent a lifetime accumulating, seeking only dignity and independence in their retirement'. Those are the words of the Prime Minister—the Prime Minister who has failed to act so far.

The banking and financial services sector is built on trust and integrity. The reputation of our banking institutions is integral to their function in Australian society and in the Australian economy. Gone are the days of hiding your savings under the mattress or burying them in a tin in the garden. Generally, we trust that banks will look after our savings and will give us advice that is accurate and in our best interests. Such was the confidence in our financial institutions that Australians were able to weather the darkest days of the global financial crisis and continued to support our banks. But this confidence is eroded every time another scandal about malpractice or improper conduct comes to light.

There have been recent headlines—and I have pages of them, so I will not read them all—where tens of millions of dollars of penalties have been assigned to banks for breaching lending laws, for example, or about refunds of $1.1 million in brokerage fees, and $29 million was refunded by the ANZ as a result of more than 390,000 banking accounts having unclear fee disclosures—et cetera et cetera. There are too many prosecuted and proven cases of malpractice and misconduct to list, aside from the very real damage that is done to the victims of misconduct, those that lose their homes or their businesses. We should pause because it is very easy to just hear those words and not think about the effect that that has on families. When these victims of misconduct lose their homes or their businesses, there is the consequent erosion of trust in our institutions, which is the damage that the banks do to themselves. In turn, of course, this damages the economy at large. In my view, it is in the bank's interests to face a royal commission and start to work towards reform. It will benefit all Australians, not just the ones that have lost everything.

For the most part, we are very generous to and respectful of the banking sector. We do not begrudge them their big salaries, their massive bonuses or the megaprofits, because we know that a strong, robust banking system is vital for our Commonwealth. But it cannot be a one-way street. With great privilege must come a degree of accountability and scrutiny. As I said at the start, sunlight is the best disinfectant. Even in the words of the Prime Minister, the one who has so far failed to act, 'There have been too many troubling incidents over recent times for them simply to be dismissed.'

Australians, who have placed their trust in our financial institutions, are entitled to ask hard questions of the banking and financial services sector. These questions deserve to be answered, and answered properly. Once again I will quote the Prime Minister, who said, 'These questions are legitimate—dismissing them as bank bashing misses the point.' It is not class warfare or a vendetta against big business that leads the Labor Party to call for a royal commission. It is not bank bashing and it is not condemning all bankers as untrustworthy to call for a royal commission. It is restoring confidence in a system that is such a big part of the lives of all Australians and is vital to our thriving economy.

I will have to disagree respectfully with Senator Williams with regard to the industry super funds. Those funds have done nothing but provide greater security for their members, but, sure, let us include them in a royal commission so that we can prove that. After all, a royal commission ought not be calculated to punish but to shed light, without fear or favour, on previously unexposed truths. A royal commission into banking ought not be allowed to repeat the corruption of the Dyson Heydon royal commission, where a former judge turned Liberal Party fundraiser launched an attack on the union movement in a sad, desperate attempt to wound the Labor movement. I do not want an equivalent of that farce to inquire into banking. I want the banks to be able to explain their role and to explain it properly. I want to examine their mistakes and how we can make banking work better for everyone, because that is what it should do. I do not want a repeat of the outrage when MinterEllison won a multimillion dollar contract, in the order of about $16 million or $17 million, from a former employee of that firm. That is right, that would be the current Attorney-General, who was a former employee of MinterEllison, the very solicitors who acted in the royal commissions into trade unions. I do not want a repeat of the sham where Jeremy Stoljar and MinterEllison's James Beaton did not want to know about the corrupt practices of Kathy Jackson, who is currently facing fraud charges, because she was on side with the government. As I earlier assured Senator Williams, we were the sunlight.

We want a fair and balanced inquiry that will not only shed light on the problems in banking but will also positively focus on how it can work better for battlers, for farmers such as Senator Williams, and for pensioners, students, workers and stay-at-home parents. I understand why former merchant bankers like the Prime Minister do not want scrutiny on banking. They worry about what might be uncovered. Every industry, every business, has its embarrassments, its rogues and its mistakes. Labor wants accountability for the banking sector. Of course we do, it is in our DNA. My predecessors in the era of Chifley and Curtin saw what the panicked banks did to families and businesses in the Great Depression, and vowed 'never again'. My predecessors in the era of Hawke and Keating saw a sclerotic, uncompetitive banking industry that shut out too many from equal access to banking and delivered much more competition, in foreign banks, and a modernised banking sector that is, for all its faults today, much better than it was in the seventies, when you had to know a bank manager in order to get a loan, and of course when women could not get a loan without the guarantee of a male.

I think it is good that the Greens political party is on board with this. I note the excellent Facebook page 'Greens taking credit for things', but, given the wide support in the community and in the Senate for this inquiry, other than from the government, this inquiry should happen. As the Leader of the Opposition has said, we need Australians to have confidence in their banks and financial institutions, to sweep away the doubt and to uncover and deal with unethical behaviour that compromises that confidence. Retirees who have had their retirement savings gutted, families who have been rorted out of hundreds of thousands of dollars, small business owners who have lost everything, life insurance policyholders denied justice: there are literally tens of thousands of victims, if not more. Enough is enough. It is the Leader of the Opposition who has taken leadership on this issue on behalf of Australians.

Labor has a long history of being willing to fight for a banking system that works better for Australians. In this and in so many other things, Labor has had the courage to take on the big risks, the big challenges, without regard to the kind of cosy arrangements where prominent bankers can pull the strings in the Liberal Party. After all, in the Victorian division of the Liberals, there is reported to be a $100 million, largely secret, fund in the form of the Cormack Foundation, currently run by ex-mining boss Hugh Morgan, but established and run for many, many years by ex-banking titan and long-time ANZ chair Charles Goode. They owe him plenty. That is why the government cannot be trusted to deliver anything like real accountability from banks—only Labor can. Only Labor's royal commission into banking can begin the long struggle to make banking relevant, accountable and a strong, robust servant to the people of Australia.

We are coming up to a year since Labor first called for a royal commission. Since then there have been around 30 different inquirers launched into the banking and financial services sector. Those inquiries have been predominantly an attempt by the government to deflect attention from their failure to initiate a royal commission, and although they may lead to some positive change, it will always be piecemeal. We need a holistic investigation of the issue using the scope and powers of a royal commission to get to the bottom of it and provide meaningful recommendations for change. Even Andrew Robb, formerly a senior minister in the Abbott-Turnbull government, has said that we should just get on with it. Get it done and restore confidence in the sector and to consumers.

What I do not understand is why, despite Mr Robb's advice, and when the facts speak so loudly for themselves, the government, and in particular the Prime Minister, is refusing to take decisive action on this issue by calling a royal commission. There was a procession of CEOs who went before the House Standing Committee on Economics. But when the CEOs of the big four banks attended the hearings, they refused to answer direct questions, release important records and reports or take genuine responsibility for the failings of their banks. It is not enough to call CEOs to hearings and let them avoid answering substantive questions. In Adele Ferguson's words, in the first hearings:

… complex questions were impossible to raise and answer, allowing many specific questions to be glossed over, evaded, put on notice or given enough spin to render them meaningless.

As a relatively new senator who sits on a number of different Senate committees, I can appreciate the value of committee hearings and the important information that comes out of these processes. However, it is clear that the issues with the banking and financial services sector are deep seated and require more evidence and deliberation than can be offered by a few hours with banking CEOs. We need to shine a light on what is happening in the sector and work through pathways to reform. We need a royal commission.

Last year, Prime Minister Turnbull spoke at Westpac's 199th birthday celebrations. This birthday is coming up again. (Time expired)