Chris Ketter (Queensland, Australian Labor Party) Share this | Hansard source

I too am indebted to Senator Anning for raising this issue as a matter of public importance. I'll talk a bit about the royal commission, but I do think it is appropriate to make the point that it is not for us to make a running commentary on the progress of the royal commission. It was a hard fight to get this royal commission. It's been established in circumstances which perhaps were not ideal. If Labor had been in government, things might have been done differently in terms of the establishment of the royal commission. But now that it is in place it should be allowed to do the important work that it has before it, and I certainly wish the commissioner well in those proceedings. Mr Acting Deputy President Williams, I acknowledge your advocacy for this royal commission. I understand that many small business people, consumers and farmers have expressed concerns in relation to their treatment at the hands of some of our major financial institutions and the ethical and cultural practices within these institutions. A royal commission has been long overdue but is now underway.

I think it's important to go back to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the impairment of customer loans. It was referred back in 2015 and there was a report in the first half of 2016. I participated in that inquiry. We heard a number of horrific stories about the way farmers were treated at the hands of banks at a time when they were most vulnerable—when we were experiencing drought conditions, particularly in my home state of Queensland. We saw how this played out post GFC with the Commonwealth Bank's acquisition of Bankwest and ANZ's acquisition of Landmark. The Landmark matter has come up in the royal commission's proceedings so far. But we did deal with the Landmark matter in the impairment of customer loans inquiry, and the committee noted in its report that ANZ, without admission of regulatory breach, admitted they had to significantly improve the financial circumstances of some of the customers with whom they have been in dispute. So ANZ did, by implication, recognise that the extant system of checks and balances was inadequate to protect small business customers and ensure a fair and transparent relationship with the bank.

By and large the Labor participants in that inquiry supported the ultimate recommendations. However, we differed from the majority view in one major respect, and that was that we did not agree with the finding that there should not be a royal commission. We found that there was a persistent pattern of abuse arising from the asymmetry of power in the relationship between lender and borrower, and we did not agree that the evidence received was sufficient to conclude that there was no widespread or systemic illegal or unethical behaviour by the banks. So we believed that there was evidence of banking misconduct that needed to be further investigated.

It was at that point that the dissenting Labor participants in that inquiry came out with our recommendation that a royal commission be established to examine the banking and financial sector. What we talked about was that we wanted in particular to look at the widespread instances of illegal and unethical behaviour within Australia's financial services industry; how Australia's financial services institutions treat their duty of care to their customers; how the culture, ethical standards and business structures of Australian financial services institutions affect the behaviour of these institutions; and whether Australia's regulators are equipped to prevent illegal and unethical behaviour. We wanted to look at comparable international experience and any other events that came up in the course of those investigations. I think we were on the money then. But I note, Mr Acting Deputy President, that you had come out earlier than that, and you should rightly claim some credit for that.

The royal commission has continued to uncover scandals which amaze us and are really a disgrace. We expect that the findings of the royal commission in the report ultimately will do some justice to the problems that have been highlighted so that we can see some fundamental reform occurring.

We have seen the ANZ expansion into agribusiness. It has come out that, it appears, they simply weren't ready for the Landmark customers and that, as a result, 162 farmers were forced from their land. This is, as I say, an issue that came up in our PJC.

We read, in The Sydney Morning Herald on 25 June, of concerns that banks were changing loan contracts for rural customers and deeming them a financial risk even if they'd never missed a payment—and Senator O'Sullivan has touched on some of these covenants and the devices used by the banks to find their customers in default, even though there was no financial default occurring. They used other things such as the loan-to-value ratio or the non-provision of reports et cetera. Last Friday, the Financial Review reported the heartbreaking story of the Ballabay Station owners in north-west Central Queensland who were evicted from their home, which was their only livelihood, by the police at the direction of the agricultural lender Rabobank. There are very many stories like that.

There are stories about rural properties being sold for half their original worth in times of drought. I know that I expressed some concerns about the behaviour of valuers, and I am concerned about the inherent conflict of interest that exists with the profession of valuers and the problem with major banks having panels of valuers and the inevitable conflicts that occur as a result of that. I think that's an issue that warrants further scrutiny into the future.

It was because Labor listened to these stories and we were concerned about rural lending practices that we called for the royal commission. It is regrettable—and I use that word 'regrettable', because it is regrettable that the Prime Minister took so long to announce the royal commission, but, even when he did, he indicated that the decision was regrettable. Again, that is an instance of how out of touch the Prime Minister is with the concerns of ordinary Australians.

Of course, in the whole of this process, the National Party—apart from you, Mr Acting Deputy President Williams—did not stand up for their constituency, and they allowed the Liberals to write the terms of reference. As I said at the outset, the terms of reference are not those which we probably would have supported. But let's just get on with the issue.

There was a lack of consultation on those terms of reference, which would've been better handled if the victims had been consulted. In fact, it would've been, probably, advisable for ASIC to have been informed and to have had an input into those terms of reference. But that didn't happen, because we know that the banks came out one morning at about 8.30, in writing, to indicate that they now supported a royal commission, and it was something like an hour later that the Prime Minister did one of the most enormous backflips in political history, by coming out and indicating that a royal commission would be conducted.

So we do have to have confidence in the process. As I say, I think we can see in the daily news what's coming out of the royal commission. And it is definitely an eye-opener.

In conclusion, Labor has led the way on financial reform, and we have led the way on the Future of Financial Advice reforms, which those on the other side have voted against, and when it comes to superannuation and payday lending laws. While our arrogant and out-of-touch Prime Minister prioritises tax cuts for the top end of town at the expense of health and education and at the expense of regional Australia, we, on this side of the chamber, are standing up for rural communities and the issues that they are experiencing. Labor will continue to listen to regional and rural communities.