Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Link to 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.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

I do not think it will come as any surprise at all to find that the government does not support a royal commission or a parliamentary commission of inquiry into the banking and financial services sector. Such a commission will not benefit consumers and nor will it benefit the Australian economy. A royal commission will cost taxpayers millions and millions of dollars. It will take so many years to complete. It would undermine the confidence that we have in our banking sector, and this is so important. It will harm investment in the banking sector, it will harm investment in the economy and it could put at risk our AAA credit rating, which is so important for our prosperity and progress. Not only that; most importantly, it will do nothing to assist consumers in any practical way at all.

While others in this chamber pursue headlines and populist politicking—and I certainly do not limit that criticism to the Greens, Senator Whish-Wilson—this government is actually delivering on some of the most ambitious financial systems reforms in modern history. The coalition's reform agenda is wide-ranging and it is comprehensive. It will strengthen the financial regulator, ASIC, and it will ensure that consumers get a much fairer deal.

The government's commitment to a strong and stable financial sector started long ago with the commissioning of the financial systems inquiry—the Murray inquiry. You may remember as far back as 2010, when the coalition made an election commitment to conduct a broad, root-and-branch inquiry into Australia's financial system. On coming to government , it delivered on that promise. It appointed David Murray to head that commission. David Murray is a man of great knowledge who has the admiration and respect of many people in this chamber but also so many people in the industry.

The Murray inquiry was arguably the most thorough report into the banking sector in a generation. It was an inquiry which, unbelievably, disingenuously, was not supported by Labor. In fact, when he was the Treasurer, Chris Bowen, said: 'The financial system is strong, well-regulated and well managed and I have not seen a case for a full-blown inquiry.' This is Chris Bowen when he was Treasurer: 'I have not seen a case for a full-blown inquiry.' The Labor Party opposed the Murray inquiry, despite the fact that most of the notable scandals and collapses such as Trio Capital, Great Southern and of course Storm Financial, which Senator Whish-Wilson mentioned, happened on Labor's watch. Yet Labor opposed the Murray inquiry, when the Leader of the Opposition, Mr Bill Shorten, was the minister responsible for financial services. The irony just abounds. What a surprise that in six years of government Labor did not call for a banking royal commission. Labor was in government for six years and never once looked to review our financial system.

Let me just remind the chamber of Labor's positions on the banking sector at that time. The member for Maribyrnong, Bill Shorten, now the Leader of the Opposition, was Minister for Financial Services and Superannuation for over 1,000 days. At that time he had the power to propose inquiries and to draft laws and yet he did nothing. When Bill Shorten was the minister, he said:

Australia has some of the best banks in the world. It is partly because of our excellent regulatory system and prudent management.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Don't you remember FoFA?

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

Your leader said that, Senator Dastyari, when he was minister for financial services—

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Hume, if you do not mind, make your remarks through the chair. And Senator Dastyari, I certainly do not want to curb your enthusiasm, but your interjections are becoming much louder and more frequent, and the senator does have the right to be heard in silence.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

I will also remind the chamber of what the member for McMahon, Chris Bowen, said when he was Assistant Treasurer, again for more than 1,000 days. He had the power to propose inquires and to draft laws, but he also did nothing. When Chris Bowen was the minister, he said, 'Our two market guardians are the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission. The standards they set are world's best practice.' That is what the Labor Treasurer at the time said, and that was reported in The Sydney Morning Herald in 2008, yet now there is a call for a banking royal commission. The irony abounds.

In 2015, Senator Whish-Wilson will recall he put forward a motion for a royal commission into the financial services industry, and Labor voted against it. They voted against it in 2015. Let me remind you about the Murray inquiry, for those of you that have not read it. I in fact have, and I was employed to read it before I came into parliament. The Murray inquiry was—

Senator Dastyari interjecting—

I was.

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

I trust your judgement.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

Thank you very much. I was employed to read the Murray inquiry and to comment on it. The Murray inquiry was incredibly comprehensive. The government has accepted the overwhelming majority of that inquiry's recommendations, and it also included six additional measures that were consistent with the inquiry's underlying philosophy.

The government response included commitments to unprecedented improvements to consumer protections, to banking stability, to governance and to ASIC powers. And just so far since the Murray inquiry report was tabled, the Turnbull government has enacted critical consumer protection reforms that lift professional, educational and ethical standards of financial advisers. It has limited the incentives paid to financial advisers for sale of life insurance products, to limit the risks that products will be sold to consumers that are not in their best interest. The Turnbull coalition government has also introduced reforms that will ensure that retail client moneys are protected where financial firms become insolvent and it has strengthened the resources and powers of ASIC.

After completing the capability review of ASIC in April last year, you will remember that the government announced a $217 million funding package for ASIC to bolster its enforcement capabilities and to accelerate reform measures recommended specifically by the Murray inquiry. Mr Medcraft was questioned on that funding during the last estimates, and he said that it proved an adequate amount to do what ASIC needed to do to actually implement those reform measures.

The Turnbull government has for the first time called on the major banks to appear, at least annually, before the House of Representatives Standing Committee on Economics to explain pricing decisions and to discuss their progress in responding to various issues raised in previous parliamentary inquiries. This is a process that has been highly publicised, highly successful—

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

They all welcomed it.

Jane Hume (Victoria, Liberal Party) Share this | Link to this | Hansard source

Nobody wants to attend an inquiry where they feel they are part of a witch-hunt, yet the banks and the financial services organisations have approached these inquiries with an open mind and have been extraordinarily candid and extremely helpful. I do not think we could be expecting any more of them than they are giving us now. The first of those hearings was held on 4 to 6 October last year and 3 to 8 March this year, respectively, and the committee has already tabled its first final report in November 2016.

The Turnbull government has also commissioned a number of critical reviews, including the Ramsay review of the financial system's external dispute resolution, EDR, framework, headed by Ian Ramsay, a man of great respect and admiration on both sides of the chamber. The government has committed to establishing a one-stop-shop dispute resolution scheme that will provide consumers with independent and timely access to justice and access to compensation where appropriate. The Ramsay review released its interim report in December 2016 and it will produce its two final reports to government in March and June this year.

The government has also commissioned a review into the small business lending practices of the major banks—the Carnell review. The government has released the Carnell report and the government response. It released those on 3 February this year. The Carnell report makes 15 separate recommendations, four of which are for the government and the remaining 11 are directed to the banking industry itself. Those recommendations are targeting where reforms need to be made.

In total, the inquiry considered 23 of the most egregious cases that were presented to the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the impairment of customer loans. Of those cases, a third were a result of poor business decisions, another third were a result of both poor business decisions and poor bank practices, and the final third were representative of poor bank practices and possible unconscionable conduct on the part of the banks involved. The Carnell report has addressed those specific cases.

In respect of the recommendations for the banking industry, the government expects the industry to give the highest priority to very careful consideration of the 11 recommendations that focus on changes to the way banks deal with their small business customers and to provide a considered response to the report and a proposed plan of action to address the issues of concern raised in the report. In respect of the recommendations for government, the Carnell report provides further support for the establishment of the one-stop-shop EDR scheme that I mentioned earlier. That has already been agreed by the government. The government has extended and strengthened the Ramsay review terms of reference to allow that expert panel to make recommendations, rather than observations, on the merits and potential design of a last-resort compensation scheme and to consider the merits and issues involved in providing access to redress for past disputes as well. Finally, the report on extended issues will be delivered by the end of June this year.

The Turnbull coalition government has also commissioned a review of the specific allegations made against CommInsure—this is a very high-profile case; it was on the 7.30 report and has been in an awful lot of financial media as well as mainstream media—and also the broader insurance sector. ASIC released its report on the sector on 12 October 2016 and it will produce its findings on the CommInsure matter in the first quarter of 2017 as part of the ASIC reviews.

In response to the financial system inquiry, the Murray inquiry, the Turnbull government has announced the terms of reference for an ASIC enforcement task force, which is currently reviewing ASIC's enforcement and penalty powers, which is something Senator Whish-Wilson mentioned, and will report to the government in the second half of this year. Finally, it is worth mentioning also that the Minister for Finance, Senator Cormann, on behalf of the Turnbull government, recently announced the Open Government Partnership National Action Plan. This is a very ambitious plan that includes action across a broad spectrum of very important areas of government and, importantly, it commits to review and consult on the new whistleblower protection regime in the tax fraud area, which is again something Senator Whish-Wilson referred to in his broad terms of reference. This is something the government is already dealing with. That new whistleblower protection regime will provide significant enhancements to the current corporate whistleblower protection regime.

There are, as mentioned, 17 current or past parliamentary Senate, joint or House inquiries into the banking sector and financial services. My committee, the Senate Economics Legislation Committee, is considering a number of them as we speak. One thing Senator Whish-Wilson wants to cover is white-collar crime. We are already covering white-collar crime. We are looking at criminal, civil and administrative penalties for white-collar crime. The reporting date is 23 March. If you can just wait a day, Senator Whish-Wilson, we will have an answer and a report for you.

We are looking at Australia's general insurance industry. That report is due on 22 June. Again, this parliament is already looking at these issues. We have already looked at the scrutiny of financial advice. The reporting date for that is 30 June this year. Finally, as Senator Gallagher will well know, we are looking at consumer protection in the banking, insurance and financial sector. Again, it is another inquiry with very broad terms of reference. This parliament is already dealing with these issues. It is unnecessary to take it to a further inquiry with royal commission powers or a commission of inquiry.

The financial system inquiry, the Murray inquiry, the inquiry that Labor said was unnecessary, was unprecedented in its breadth, was very thorough, was highly comprehensive and was very well received by industry and by consumers. The Turnbull government's response to the FSI has been also equally wide ranging, comprehensive, extremely well considered and timely. There are an awful lot of recommendations in that report and the vast majority of them have been taken on board. They have been considered and they have been dealt with in a timely and comprehensive manner.

If a royal commission or a commission of inquiry goes ahead, all of these important initiatives will be delayed indefinitely. We will be plagued by inertia waiting for yet another inquiry—an incredibly expensive and totally unnecessary inquiry. A royal commission or a parliamentary commission of inquiry will cost the taxpayers millions and millions of dollars. It will take so many years to complete. It will undermine the confidence in our banking sector and our banking system. It will harm investment in the system itself and investment in the economy and, most importantly, it will risk our AAA credit rating. It is a witch-hunt; you are after a witch-hunt. It is totally unproductive. It will do nothing to assist consumers in any practical way.

Senator Whish-Wilson interjecting—

You are absolutely right, Senator Whish-Wilson, when you say this Prime Minister has no intention of holding a royal commission into the banking and financial services industry. You are absolutely right when you say this Prime Minister has no intention of holding a parliamentary inquiry into the banking and financial services sector. You have said that the executive will not act. On the contrary, this government is acting right now to respond to those 17 inquiries that you referred to. It is acting right now to strengthen our financial system. It is acting right now with funding to ASIC. It is acting right now with critical reviews into small business sectors. It is acting right now with critical reviews into white collar crime and the ERD framework.

This government is focused on implementing the reforms that are needed to strengthen the financial system, not risking delay to those reforms by holding unnecessary, expensive, time-consuming inquiries which are populist politics and a waste of taxpayers' resources. How many of these discussions do we need to have? How many of these discussions do we need to go through? Just in the economics references committee we have so many of these inquiries.

Senator Whish-Wilson interjecting—

Senator Whish-Wilson is involved with many of these inquiries—and yet he wants more.

Senator Whish-Wilson interjecting—

Senator Whish-Wilson has the opportunity to commit to those inquiries, to attend those inquiries, to hear from the witnesses who are in front of those inquiries and to contribute to the reports—and yet he wants more. This is yet another popular stunt. In the past, it was the Labor Party that put the kibosh on the Murray inquiry. Now they disingenuously call for a banking royal commission and the Greens are calling for a parliamentary inquiry. When does this end? Let this government focus on implementing the reforms needed to strengthen the financial system rather than risking further delay to those reforms by holding unnecessary, expensive, time-consuming, populist politics driven inquiries.

Katy Gallagher (ACT, Australian Labor Party) Share this | Link to this | Hansard source

Senator Hume finished her contribution by saying, 'When does this end?' Well, it will end when there is a royal commission into Australia's banking and financial services sector; that is where all the continual inquiries we have been having over recent years should culminate. Labor is strongly of that view. The reason we are debating this legislation on a commission of inquiry, the reason the bill has been drafted, is the complete lack of leadership from the Turnbull government in tackling issues that are publicly well-known—and, we suspect, many more perhaps are not—that are affecting Australians in terms of their interactions with the Australian banking and financial services sector. That is why this legislation is here and that is why we are having a debate: the complete absence of leadership and the seemingly unending protection racket for the banks that this government seems intent on keeping in place.

Labor's firm position is that a royal commission into Australia's banking and financial services sector is the only way to get to the bottom of all the rip-offs, scandals and misconduct we have seen across the sector in recent years. However, in the absence of leadership by the government in refusing to establish a royal commission—and, indeed, arguing that there is no reason for one—Labor is supportive of the commission of inquiry legislation in a very broad sense, subject to going through out normal party processes.

Labor welcomes this bill because it reflects the government's complete lack of action when it comes to standing up for consumers, small businesses and ordinary Australians who have been victims of poor practice, misconduct and scandal across the banking and financial services sector. The message that this bill sends is loud and clear, particularly with those members of the crossbench who have signed on to this approach. In fact, it really is only the Liberal Party and the National Party that are not getting behind this approach here in the Senate.

We believe the Prime Minister needs to take responsibility and call a royal commission . Certainly, Labor will not stop arguing for that. As Prime Minister of Australia, his first responsibility is to stand on the side of ordinary Australians and not continue the protection for the banks and his banking mates. Labor strongly supports a strong, profitable and well-led banking and financial services sector but we do not think that should come at a cost to ordinary Australians. Our decision to call for a royal commission was not taken lightly. It was a decision taken under very careful consideration over a long period of time, and it was in response to the fact that there have been too many scandals, too many examples of misconduct and poor practice. Since we announced our support for a royal commission around a year ago—it was actually probably longer now—more examples of misconduct have come to light. I will go through some of those later in my speech. We need to get to the bottom of the systemic and cultural issues in an independent, thorough and transparent way. We need Australians to have confidence in their banks and financial institutions to uncover and deal with any unethical behaviour that compromises that confidence—and that is exactly what a royal commission would do.

Again, it is important to say that we support a strong banking and financial services sector. It is crucial to our economy. What we will never support is practices, systems and cultures that allow consumers to be ripped off, small businesses owners doing the right thing to lose their livelihoods and retirees to lose their savings. I have spoken to many people who have been affected by banking misconduct since taking over the role of the shadow minister. Their stories are almost unbelievable, traumatic and devastating not just to them but to their families, their livelihoods and their health. It has affected their lives very, very deeply. Some have lost loved ones over this. Families have been rorted out of hundreds of thousands of dollars. Their life savings are gone and they have no access to compensation and no ability to get back what they have lost, often under shonky arrangements with dodgy providers doing dodgy deals. I have met small business owners who have lost everything despite paying their bills on time, paying their debts to the bank on time and having those contracts renegotiated or determined by the banks. They have been called in, having no ability to pay, and have lost everything. Life insurance policy holders have been denied justice. I have spoken to plenty of those as well.

Over the last year, since Labor first called for a royal commission, we have seen around 20 inquiries launched into the banking and financial services sector. They have included inquiries set up by the government to try to deflect attention away from its inaction on a royal commission. They have included those various processes by the Australian Bankers' Association, which admitted recently that the banks had been galvanised to do something after Labor's calls for a royal commission. While any positive change that comes out of these is welcome, these inquiries can only ever be piecemeal. They do not have the powers of a royal commission to investigate and to get to the bottom of what is going on, and they do not have the scope of a royal commission. In relation to the processes by the Australian Bankers' Association, these are inquiries that relate to their members only. Although a number of them are headed by independent and eminent Australians, they are paid for by the ABA and their members. I think there is an argument there around whether they are truly independent reviews. Even Andrew Robb, a former senior minister in the Turnbull government, has said in recent times: 'Let's get on with it. Let's have a royal commission. Let's get it done and restore confidence.' But the Prime Minister is refusing to listen to Mr Robb's advice and respond to that.

If we turn to some of the inquiries we have going on at the moment, there are a number of government-initiated inquiries, parliamentary committee inquiries and industry-led reviews. I note that Senator Hume was using this as an argument to not have a royal commission or, in the case of the legislation being debated today, a commission of inquiry. I would argue that the fact there are 20 various reviews going on is exactly an argument for why we need a royal commission into the banks. The reason we have these inquiries is every single person, every member of parliament and every party knows that there is a problem.

The government acknowledges there is an issue here. They acknowledge it by commissioning various reviews, strengthening the powers of ASIC and providing some more funding. But they acknowledge that there are problems, that customers have been let down and that there has been unethical conduct, misconduct, illegal activity in some cases and failure to protect consumers' best interests. That acknowledgement is there loud and clear in the fact that these various reviews have been commissioned by the government. Labor argues and acknowledges the same problems, but we argue that the vehicle is best met through a royal commission, and other parties support that approach. So let's not pretend that there is not a problem to address here and that everything is hunky-dory. Everybody acknowledges there are issues around banking culture and behaviour which has let Australians down and needs a strong response. We have the various inquiries from the government. The parliament has acknowledged the extent of the problems and instigated various reviews into life insurance, whistleblowers, consumer protection and general insurance. We now have the One Nation Select Committee on Lending to Primary Production Customers. They all acknowledge particular elements of the problem, but there is nothing that looks at it holistically.

We also have, of course, the review of the four major banks that the House Standing Committee on Economics schedules. This was one of the responses from the Prime Minister: to bring the CEOs of the four major banks before the House economics committee, which is chaired by the government and controlled by the government. We have had two of these sessions of the CEOs coming to town for a three-hour session and a cup of tea and then heading off again. The hearings saw each CEO appear before the committee. I think, certainly in the first round and to a certain degree in the second round of hearings, they spoke of very common themes, with very similar answers and very similar approaches: apologies for previous behaviour, acknowledgement of failure to meet customer expectations and promises to do better. But there were examples when the committee asked questions and those questions were not answered, where important reports were not reports and where responsibility for the failures of their own organisations was not really apparent. Adele Ferguson said after the first hearings:

It meant 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.

The fact is that the government's response has been to bring the bank CEOs in front of a government-dominated committee which can never get anywhere close to the bottom of all of the issues have been raised. The members of parliament, it is clear from the two sessions that have been held, have limited time. The CEOs themselves, highly paid professionals, are professional in their approach but highly skilled in ducking and weaving in those hearings and leave the Australian people completely unenlightened about what is actually going on in the banking sector.

I often hear from people who do not support a royal commission, namely government members, that all of the problems that happened are problems in the past and everything is fine now. Many of the scandals that have wrecked so many people's lives have all been dealt with and the banks are going through their own program of reform and compensation. I think it is worth just having a look at the various instances of banking misconduct that have come to light in just the last 12 months—that is, the ones that we know about. You can go to any month, looking back to January 2016, and see example after example of the banning of bank advisers for misleading, deceptive conduct with Westpac, ANZ, NAB or Commonwealth Bank, and the banks having to pay millions of dollars in compensation whether it be for bad credit limit practice, breaching responsible lending laws and other penalties imposed by ASIC. Of course, banks had to refund $20 million here and $29 million there and there is the ASIC report into fees for no service. It is a staggering $180 million having to be paid back as compensation by AMP, ANZ, CBA, NAB and Westpac, because they failed to do the right thing by their customers. The report revealed that Australia's biggest bank has spent years charging over 200,000 customers fees for services they never received. The bank had to return $180 million to customers because of that seemingly 'standard practice'. It was not until they were caught out that they had to change their ways.

In terms of the job that I have been doing, going around and talking to people, the personal stories of how banking misconduct has affected individual lives have been the most difficult to listen to. I sat down with people who had done no wrong other than that they wanted to secure their financial future and were preyed upon, often by shonky financial planners or advisers, and then let down by the lending institution who doctored their documents or did not check the information properly or changed a few digits here so that they could lend more money to people who clearly could not afford it to get them involved in deals, lending and investments that they did not understand and did not know and were, in some cases, told the complete opposite. People who put trust in the professional advice they were getting have been screwed over and have lost everything. It is difficult to listen to a 70-year-old woman tell you that she has had to go back to work part time and her husband, in his early 70s, is not well and is still working, because they lost all of their super. They owe the bank hundreds of thousands of dollars and the bank wants to take their home to pay for it. What do you say to them? 'Don't worry. The bank is coming to the House's economics committee. They come down, and we ask them the tough questions, and then after three hours they all walk off again.' How can you say that to somebody who is working as a cleaner, because they have lost everything? You can't. These people often do not expect to get that money back when they are talking with me. They understand and feel guilty, because they signed a document at some point that holds them legally liable. They do not actually even feel like they can make a fuss about the fact that they were duped into losing their life savings, but they want to make sure that it does not happen to anyone else. They definitely want to see that. They do not want anyone else to have to go through what happened to them. They also want to make sure that, in the future, there is a fair hearing for people affected and that, if they are affected by banking misconduct, there are appropriate avenues to have that dispute heard.

Labor will continue to fight for a royal commission because of stories like that. From stories like that, there has to be an answer from the parliament to say that what happened to you is wrong and we can fix it, but we need to understand exactly how it happened, why it happened and how it can be stopped from happening again.

We have had inquiries going back some years now into this. The Senate Standing Committee on Economics for one has heard inquiry after inquiry, but nothing changes. Banks still get fined. You still have ASIC coming out and telling them that they should pull their socks up. Nothing changes. Senate committee inquiries are useful. They can pull out issues, identify issues and give a voice to those people that are affected, but they do not have the powers of a royal commission or, in this case, a commission of inquiry that would have significant powers to call for documents and take evidence, in camera or otherwise, to get to the bottom of what needs to be uncovered so that we can restore faith in Australia's banking and financial services system.

I agree with Senator Whish-Wilson when I hear the only argument put to me by banks when I ask them: 'Why do you fight so hard not to have one? Wouldn't it be in your interests, considering the 20 various inquiries underway? Wouldn't it be in everyone's interests to just have a royal commission and focus on the terms of reference and have it run as efficiently and quickly as possible and not necessarily stop all the other reforms,' as Senator Hume has argued?

They say it will shake confidence in the system and that is going to be bad. I say that confidence is shaken, well and truly, and the only way to restore that trust and that confidence is to allow a process that the Australian people have trust in and that they know is truly independent and has available powers similar to those of the judiciary to allow scrutiny and uncovering of those issues to occur. That is why we will continue to argue for one.

Derryn Hinch (Victoria, Derryn Hinch's Justice Party) Share this | Link to this | Hansard source

I am very happy and privileged to support this motion by the Greens for the second reading of the Banking and Financial Services Commission of Inquiry Bill 2017, and I also want to congratulate the Labor opposition for the years they have spent working on this, demanding a royal commission, because in this case the government of Australia has refused the people of Australia a royal commission into the banks for far too long. If the calls my colleagues are getting are anything like the calls and emails that I have been receiving over the years, long before I got into politics, you know that people are desperate and fed up, not with what is going on but with what is not going on—that nothing seems to be happening. They want answers, they need answers and they deserve answers.

A parliamentary inquiry into the banking and financial services sector is the closest thing you can get to a royal commission without actually having a royal commission, and it seems we will not be getting a royal commission, even though the sector is central and vital to the Australian economy, and even though a fair, functioning and honest system is vital for public confidence. The inquiry will, I know, try to call out misconduct, and you hope that, by doing that, it can protect everyday Australians, because the banking sector and the broader financial sector have the power, if unmanaged and unchecked, have the power to abuse people, rip people off and ruin people's lives. We usually only hear about the terrible instances of misconduct which have gone on after somebody has lost their life savings, has lost their home, has lost their health or has lost their life—because we know there have been suicides brought on by the misconduct of some of the banks, and losing the farm as well. We need to start stopping this from happening, rather than just reacting with the predictable sympathy. Sympathy only goes so far, because people's patience has run out.

I think the current system, as it is, does not pass the pub test. We need to fix it now. The government obviously knows that there is a problem, because, if there were not a problem, why would the government hold their Claytons inquiry, through the House Standing Committee on Economics, where they get the bankers down here, they come in front of the TV cameras, they stand there for three hours, they all go home and, as Senator Gallagher said, nothing happens? They have done two of these now. Nothing has happened.

So I warmly support the Greens on this one. I congratulate you on it. As I said, I thank the Labor Party for pushing it so hard.

James Paterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

Do you know what is more dangerous for the Australian people than bad practices in the banking industry? It is the full-on Corbynisation of the Australian Labor Party, and we have seen it on display here in the Senate this afternoon. This is an Australian Labor Party which has flicked the switch to full-on left-wing economic populism. This is an Australian Labor Party which has abandoned any pretence to responsible—

Senator Dastyari interjecting—

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Dastyari, I gave you a lot of indulgence when you were interrupting a previous speaker, but I would point out that the previous speaker Senator Gallagher was heard in silence, so I would ask for a little more respect for the speaker.

James Paterson (Victoria, Liberal Party) Share this | Link to this | Hansard source

This is an Australian Labor Party which has abandoned any pretense of responsible economic management and any prudent fiscal responsibility, and this is just the latest example of this. Of course I expect the Greens to indulge in bank bashing and economic populism, but from time to time the Australian Labor party has in the past shown some ability to resist that and not indulge in that. But I am sorry to say that this is one new instance where it has shown no ability to do so.

Unfortunately, this has been quite a recent road to Damascus for the Labor Party. This is quite a new position of theirs when it comes to banking. It was not that long ago that in this very place they were voting against motions put by the Greens to establish a royal commission into the banking industry. It was not that long ago, when they were in government themselves, that they said there was no need for a royal commission and did nothing to set up a royal commission of their own. It was, in fact, Bill Shorten himself, as Minister for Financial Services and Superannuation, who said, 'Australia's banking industry is largely well run, is largely well regulated, and there is no need for an inquiry of this kind.'

It is not the only area in which the Labor Party has embraced economic populism, but it is the most dramatic and the most recent. It was in June 2015, in this chamber, that the Labor Party voted against a royal commission. It was the Minister for Financial Services and Superannuation, Mr Bill Shorten, who said in 2012:

AUSTRALIA has some of the best banks in the world. It is partly because of our excellent regulatory system and prudent management.

Mr Shorten recognised as minister that, fundamentally, our system was sound.

I am not here tonight, and none of my colleagues are here tonight, to say that the banking industry is perfect—far from it. Any industry which has tens of thousands of employees and which has such large organisations is bound to make mistakes and should be held fully and absolutely accountable for those mistakes, and that is exactly what the government is doing. The government, though, is doing this in a responsible and prudent way. We are not doing this in a reckless way like the Labor Party. We are going about setting policy in this area in a sensible and rational way. We go to experts like David Murray to hold a holistic inquiry into the financial services system, look at it carefully and provide recommendations for us about that, and then we are implementing those recommendations. We are requiring bank CEOs to come before the parliament to answer for their conduct.

Senator Gallagher certainly thinks that that is insufficient and does not go far enough, but it is one thing more than your government did when you were in power. It is very easy for you to say now in opposition that this is a critical issue, but are you seriously arguing that, when you were in government only a few years ago, everything was fine, there were no problems with Australian banks and there was nothing to worry about but that all of a sudden, when the government changed in 2013, these problems emerged and this previously perfect industry now needs a tough cop on the beat in the form of a royal commission?

This is a very recent conversion. It is not the only conversion on economic policy. It mirrors very closely Bill Shorten's abandonment of his own support for company tax cuts. As a minister in the Gillard and Rudd governments he was an advocate for cutting company tax, because he believed that there were great economic benefits to come from it. Now, as opposition leader, he has gone down the Jeremy Corbyn line and is embracing economic populism and opposing company tax cuts that he, himself, had made very elegant arguments for. This is the Leader of the Opposition who, as a minister in the previous government, presided over the largest influx of 457 visa holders in Australian history—more than ever before. Now, as the opposition leader, he is suddenly the friend of the Australian worker, railing against foreign workers in the most crass and populist way, in the most xenophobic way.

Just because the Labor Party have abandoned their pretence of supporting sensible and measured economic policy does not mean that the government will. The government is engaging in this debate and addressing these issues in a prudent, responsible and reasonable way. We are following the advice of people like the former Treasurer, the member for Lilley, Wayne Swan, who said in 2010:

The last thing the system needs is another inquiry.

Crass populism does not work here. What works here is a methodical application, the detail of getting it right and getting it in place so that reform is enduring for the long term. Well, I wonder where that attitude has gone in the Australian Labor Party.

We have a bit of an insight into the way in which the Leader of the Opposition developed his policy in the area, because he was very frank and very open when he was on Neil Mitchell's program in April last year. He said:

There are problems with bank and some of the - I wrote down a little list as I was coming in here because obviously this is a key issue.

He goes on to say:

I think a Royal Commission will have to look at vertical integration—

and so on and so forth. So you have the Leader of the Opposition on the way to a talkback radio interview sitting in the back of a Comcar and taking down some notes that perhaps we should have a royal commission. This is his little list. This is sophisticated policymaking for serious public policy issues that the Australian Labor Party is engaged in today.

That is not the approach that the government will take. We will not do the easy populist route and go after easy targets. Yes, Australian banks are profitable, but what would you rather have: the profitable banking industry that Australia has, or the alternative elsewhere in the world where, during the global financial crisis, taxpayers had to bail out banks left, right and centre?

It is vitally important that the government of the day supports confidence in the financial system. That is not a trivial point. That is a serious point. If ever in the future there is a mass breakout of lack of confidence in our financial system, we will have a very serious problem on our hands. This is not an area to make cheap political points. This is not an area to make cheap political gains, as the opposition is seeking to do. This is an area which requires prudent, reasonable management and prudent policy, and that is exactly what this government is doing.

My colleague Senator Hume carefully and in detail outlined the measures and steps that our government is taking and the measures and steps the parliament has taken through its committees to examine these issues. This is not an area where there has been an absence of activity. In fact, there has been more activity in this area under this government than any previous government, and it is more than those opposite can say for their time in office. It is disappointing but not surprising to see them embrace economic populism here tonight. It is disappointing to see them being dragged by the nose to the left by the Greens, but perhaps it is not surprising.

I look forward to Senator Dastyari's contribution to this debate shortly, because I know, as a proud man of the New South Wales Right of the Labor Party, in times past he would have stood with the economic reformers like Paul Keating and Bob Hawke and supported rational economic policies. He might have even supported his colleague Chris Bowen, the member for McMahon, who, as Assistant Treasurer and former minister for financial services, said the following:

Our two market guardians are the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission … The standard they set is world's best practice.

Where is that attitude now? Where has that attitude gone? It has gone the way of Jeremy Corbyn as the Leader of the Opposition seeks to make cheap political points and make cheap political gains at the expense of serious policymaking to address serious issues, which we all acknowledge exist in the banking industry. This government has a plan and a process to address and deal with these issues; those opposite have no plan to address or deal with them, but hope that a handpass to a royal commission or commission of inquiry will fix the problems. It will not.

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

I rise to support some action in relation to the banking scandals that we have seen over too many years. Before I commence my contribution I just want to make a comment in relation to the contribution by Senator Paterson. He accused Labor, after having changed its position in recent times on the question of a banking royal commission, of being left wing and populist. If he had cared to look over his left shoulder whilst he was making those comments he would have seen a fellow senator on his side of the chamber, a person who is well regarded and respected in this place, who is well-known for his attention to detail in relation to the misbehaviour of banks over a number of years. Senator Williams has formed the view that there is a need for some dramatic intervention in relation to the banking industry and the financial sector, and he, in recent times, has called for a royal commission. I wonder if Senator Williams is a left-wing populist? Mr Entsch, from North Queensland, is a left-wing populist. I also note that Mr Robb, a former senior government minister, has come out and made his view clear: 'We just need to get on with the royal commission. Let's get it done.' Unfortunately, the arguments being advanced by government senators in relation to this matter are really scraping the bottom of the barrel. It is disappointing that we see government senators coming into the chamber with very little in the way of arguments against a royal commission into banking.

Labor believe that a royal commission into Australia's banking and financial services sector is the only way to get to the bottom of the rip-offs, the scandals and the misconduct that we have seen in this sector over many years.

It is true, as both Senator Hume and Senator Paterson have said, that that has not always been the Labor position. Both Senator Hume and Senator Paterson seem to suggest that that is actually a weakness in the opposition's principal position on this matter. Yes, it is true that at one stage we did not have that view that there should be a royal commission. But we continue to see scandal after scandal. We see bank executives coming before various inquiries—20 or so over recent times—apologising and saying all the right things when the cameras are there, but just going back to business-as-usual when they get back to the office. They refuse to learn about how to improve their behaviour. When we continue to see that over a period of time, the only rational response is to change our position and to adopt the view that there is something more dramatic needed other than a run-of-the mill inquiry, something more dramatic other than a slap over the wrist from the House Economics Committee a couple of times a year. That is not achieving the results that the Australian people are crying out for when it comes to our banking sector.

I also acknowledge Senator Whish-Wilson's contribution in this area. I note that he made reference to the contribution by former Labor Senator Mark Bishop, who was the chair of the Senate Economics References Committee, and made reference to the report that was handed down in June 2014 calling for a royal commission. I note that Senator Williams was a part of the committee at that particular time. So Labor have been looking at this issue for some time. There have been ongoing scandals and the fact is these banking institutions refuse to be accountable for what they are doing. They simply consider any fines and legal action as a cost of doing business in the sector. With such deep pockets, they are just going to continue on with business as usual until something dramatic happens. That dramatic intervention that I talk about is a royal commission. That is what is necessary.

In Australia, I believe we have a very proud tradition of facing up to the problems we have in our society. I instance our recent royal commission into institutional abuse of children. That was a very difficult situation and there was a great need for us to shine a light on that very difficult issue. When it comes to facing up to difficult issues, I am sure Australia is robust enough and our democracy is robust enough to grasp the nettle on this particular issue. After all, this is what the Australian people demand. Every Australian uses a bank. We all rely on the integrity of the banking system. It is fundamental to our economy. I note that Senator Paterson made this point, that we need to retain the integrity of our banking system. Unfortunately, the integrity of our banking system has been compromised.

Australian families trust banks with their home loans. Small businesses count on them for capital. Older Australians depend on banks for securing their retirement savings. So we would say that trust and confidence in the banking system is vital for the health of our economy. If you lose that trust then you need to do something to regain it, and that is the situation we are in right now. Unless we have a royal commission into our banking and financial services system, we are going to see ongoing lack of trust and that does have a negative impact on the economy.

We welcome this bill, but we would prefer a royal commission into the banking sector. However, in the absence of leadership from the government to establish one, we are broadly supportive of the commission of inquiry legislation, subject to it going through the normal internal party processes that we have. This bill highlights the lack of leadership on the part of the government to tackle this issue on behalf of thousands of ordinary Australians, who have been the victims of poor practice, misconduct and scandals in the banking and financial services sector.

The message that this bill sends is loud and clear. The Prime Minister needs to take responsibility and call a royal commission. He needs to actually side with ordinary Australians and he needs to stop defending the banks. He has become the chief shop steward for the banks. He is running a protection racket for the banks. In fact, after all of the misbehaviour that we have seen from the banks, the government is proposing, at least at this point in time, to provide to the banks, who are experiencing record levels of profits, a further $7.4 billion tax cut. That is the sort of payback that we see for the misbehaviour of the banking sector.

We do support a strong and profitable banking and financial services sector. Our decision to call for a royal commission has not been taken lightly. It has been taken after a long period of careful consideration. We have seen too many examples of scandals and misconduct come to light, and we need to get to the bottom of the systematic and cultural issues in an independent manner through a transparent means. We need Australians to once again have confidence in their banks and financial institutions to uncover and deal with the unethical behaviour that compromises that confidence.

On many occasions as chair of the Senate Economics References Committee I have heard Mr Medcraft, the head of ASIC, talk about the culture that exists within the industry which is driving this poor behaviour. Try as ASIC might to address these issues of culture, and ASIC itself is not immune from criticism, the issues persist.

I am going to talk about another recent example of this toxic culture within the banks that reinforces, in my mind, the need for a royal commission. We will never support practices, systems and cultures that allow consumers to be ripped off, allow small business owners doing the right thing to lose their livelihoods and allow retirees to lose their life savings. One of the things that the government has introduced to fend off a royal commission into the banking sector is the Small Business and Family Enterprise Ombudsman, who has certain powers to seek to provide access to justice for small business owners who are the victims of malpractices by the banks and, in particular, the major banks. I note the frustration of the ombudsman, Ms Carnell. The report that she recently authored into banking practices found that lenders are not being fair when they enter into contracts with small and medium-sized businesses. She said that the big four banks are the main culprits and that they refuse to improve their practices. This is the government's own mechanism for seeking to improve the situation identifying that there is an ongoing problem. In fact, Ms Carnell, who appeared before us recently, told us that she was fed up with the behaviour of the banks. She pointed to the fact that she had looked at 17 inquiries over quite a number of years where the banks had made promises that they were going to change and then did not. They then kicked the can down the road, as she said, to find another reason not to change.

This is a government that pretends to stand up for small business. It pretends to be interested in small business as the engine room of our economy. But we know that, as Ms Carnell has found, banks have a power under the contracts that are currently in place to revalue assets and do a range of things that mean that loans can be defaulted, even when borrowers are paying back the money that was stipulated under the contract. Senator Williams is well aware of this particular issue. The ombudsman looked at 23 of the worst examples of banking practices, but she made the point that the problem goes well beyond the small number of cases that she investigated. I reiterate that she believes that the big four banks are the main culprits. Ms Carnell has said:

I think though what we've got is a banking industry in Australia, particularly the big four banks, that believe for whatever reason that they can continue with business as usual and they don't have to change

This is the government's own small business ombudsman, in frustration, identifying that what has been happening up till now is not working. It just is not working. Let's face the facts, let's look at the empirical evidence of what is going on and let's form the view that something more dramatic is required to drive the change of attitude and culture that is absolutely necessary.

We know that over the years since Labor first called for a royal commission we have seen 20 inquiries launched into the banking and financial services sector. These have included inquiries set up by the government. The Australian Bankers' Association has set up its own internal processes to try to improve the behaviour of the banks. My response to that is: it is too little and it is too late. The most instructive comment that was made by the head of the Bankers' Association was when he admitted that the banks had been galvanised, to use his word, to do something after Labor's calls for a royal commission. The threat of a royal commission is what it took for the banks to finally admit that they have a problem and to get together to try to address this issue. If it is the threat of a royal commission that prompts them to do that, it is the reality of a royal commission that will be necessary if any positive change is going to take place. We do not believe that the banks themselves are capable of getting together and fixing this issue. I think that you would have to be very naive to believe that that can happen. They have appointed former Queensland Premier Anna Bligh to head the Bankers' Association. We congratulate Ms Bligh and we hope that she will be successful in her endeavours to reform the practices within the banking sector. We wish her all the best in that regard, but that does not deflect us from our position on the need for a royal commission. All of the efforts up till now do not have the powers of a royal commission to investigate and to get to the bottom of what has gone on, and they do not have the scope of a royal commission.

It is just astonishing to me that the Prime Minister, who many would say is an intelligent person, is refusing to look at the facts of the situation. He is refusing to look at the empirical evidence and refusing to take the advice of Mr Andrew Robb, a former senior minister within the government who has come out and said that there is a need to launch a royal commission. Senator Gallagher has already talked about the other government solution, which is a manifest failure: the House Economics Committee hearings. These are just friendly chats with the banks a couple of times a year. We have seen CEO after CEO appear before the committee. They appear, they refuse to answer direct questions or to release important reports or to take any genuine responsibility for the failings of their banks. We see nothing actually happening. As respected journalist Adele Ferguson said after 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.

So, with all due respect to our friends in the other place and to their attempts to get to the bottom of these banking malpractices, this is not the appropriate way to do that. It is a flawed process. It is entirely inadequate to the task of dealing with this systemic problem that we have. The MPs have a limited time. The CEOs duck and weave. And the Australian people are left completely unenlightened about what the banks are going to do to fix up their issues.

I mentioned that there was another recent event that has reinforced and fortified me in the view that only a banking royal commission can deal with this issue, and it concerns the work of our Senate economics committee in relation to the issue of unpaid super. If there is any financial institution which should understand the rules about paying superannuation to its workers, it should be a major bank. Yet recently we saw the Commonwealth Bank being caught out by the Finance Sector Union for not paying its part-time staff members their full 9½ per cent superannuation guarantee entitlements, going back as far as 2009. I commend the Finance Sector Union for raising this issue.

We took the opportunity, as part of our inquiry into the issue of unpaid super, to call the Commonwealth Bank before us to provide us with an explanation as to why they had got themselves into this situation, and, lo and behold, a very short time before the Commonwealth Bank was due to appear before our committee, the bank advised the FSU that they had changed the view that they had held previously and that they were going to pay and to back-pay the 9½ per cent or relevant superannuation amount, over the years, back to 2009, for these part-time staff members. There were about 7,000 part-time staff in the Commonwealth Bank who were working beyond their contract hours, and not at overtime rates; there was no argument about that. These were low-paid workers—probably the lowest paid workers within the Commonwealth Bank structure—who were being denied superannuation. So, as far as I am concerned, this is a sector which refuses to learn from its mistakes and will continue to do so until a royal commission is imposed upon them.

John Williams (NSW, National Party) Share this | Link to 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?

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Someone yelled out that you are both socialists, but I do not know who it was.

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

Neither of us are socialists. Anyway, we were in Senate estimates and I asked ASIC Deputy Chair Peter Kell: 'Why did it take you 16 months to act against Commonwealth Financial Planning after a whistleblower'—namely Jeff Morris, a person who I think commands enormous respect for the courage he has shown—'contacted you?' He said: 'Senator, we got a great result. We got an enforceable undertaking.' I said: 'I didn't ask you what result you got. I'll ask you again: why did it take you 16 months to act?' The reason I asked the question was Jeff Morris told me that the 'ferrets', as they were called then, were feeding information to ASIC about the wrongdoings of the financial advice industry and Commonwealth Financial Planning, but ASIC were doing nothing. Finally, Jeff Morris went around to ASIC and banged on the door and said: 'Are you going to do anything? What are you doing? They're sanitising files et cetera.' Mr Kell said, 'We got a good result.' Well, Senator Cameron came in behind me and then said to me outside, 'We should have an inquiry into ASIC', which we did. We launched an inquiry into ASIC. That inquiry showed all the financial planning rorts and the wrongdoings, hence the inquiries and the compensation to follow.

I have got a list here somewhere of some of those financial planning matters. I will take you through them. ASIC have lifted their game, and they certainly had room to do that. I have been looking at ASIC's website; have a listen to this. On 22 March—that is not long ago—'ASIC permanently bans Queensland former financial planner for dishonesty'. These are financial planners; these are the people you are supposed to trust to give you advice on where to put your money and what to do with it. On 20 March, 'Former director fined for failing to notify market of share trading'. On 17 March, 'ASIC acts against Melbourne-based financial advice provider for alleged contraventions of FoFA obligations'. There was another one on 15 March, 'ASIC accepts enforceable undertakings from Westpac and ANZ to address inadequacies within their wholesale FX businesses'. On 10 March, 'ASIC permanently bans former Morgan Stanley Wealth Management financial adviser from providing financial services'. He was banned permanently; done for life. On 10 March, 'Former company director in court on charges of misappropriating investors funds'. And on 10 February, 'ASIC bans financial adviser for five years'.

Mr Acting Deputy President, if you ever leave this place, I have got a job for you. You would make a great detective. You could go through and clean this area up, if you are ever looking from another job. I know that you do not find that humorous. I am just being a bit humorous with you, sorry.

I will tell you another story, this time about Dr Roger Munro. Senator Dastyari will be keen to hear this. I rang this Dr Munro—I do not know what he is a doctor of—about 2½ years ago and I said: 'My name's John Williams. I'm a senator for New South Wales. Can I have a chat to you?' He said: 'Yes. What would you like talk about? Politics?' I said, 'No, I just want to ask you one question.' He said, 'What's that?' I said, 'What did you do with the $60 million?' He said: 'I'm not talking to you. Cheerio.' He hung up. I thought, 'Hung up, hey?' I then made a few phone calls. ASIC banned him for life from financial services and the ASIC media release on 17 March stated:

Dr Roger Gareth Munro was arrested by Queensland Police officers today and brought before the Southport Magistrates Court, where he was formally charged with five counts of fraud under s408C of the Queensland Criminal Code, following an ASIC investigation. Each charge carries a maximum period of imprisonment of 12yrs.

The DPP are running the case. I will not say any more, I will leave it to the court, but I know some of the people who are wanting their money back.

Senator Ketter mentioned earlier the inquiry we had in the economics committee, which was chaired by a very capable bloke. It was chaired by Mark Bishop. We went through the financial planning industry et cetera and the inquiry recommended a royal commission. But what did Labor do then? What did you do when Senator Mark Bishop, who was chairing the economics committee, recommended that royal commission? I will tell you what you did: you did nothing. You did not do a thing. I stood my ground; I was consistent and I supported the recommendation that a royal commission be held into this very issue. Kate Carnell, the Small Business and Family Enterprise Ombudsman, did a report recently. Ms Carnell said she was concerned by another inquiry she conducted, the impairment of loans inquiry, where she found that one-third of the banks' behaviour may well be 'unacceptable and possibly unconscionable' conduct. We need to find out more. I think Kate Carnell is doing a great job. There are a lot of problems there.

Now the parliament is doing an inquiry into the life insurance industry and I am quite amazed at what is coming forward. ASIC put a report out today on CommInsure—they have been doing an investigation—and there is more news to come out of that. But I am very concerned about the life insurance industry. The good thing about these inquiries is that you learn a lot as you go through. There are basically three types of life insurance. There is the group insurance you get with your superannuation. Nearly all Australians have it, and I think there are millions and millions of Australians who do not even know they have life insurance with their superannuation, but every month the premiums are taken out. Many of them do not know what the policy is for. They do not read it; they get the bit of paper; they do not care. We have a real problem there, and no doubt the committee will make recommendations on that. Then there is retail insurance, where you go and see your financial planner. The planner goes through the questions—what you want, what your family needs and the size of the mortgage on your house. What would happen if the money earner fell off his or her perch tomorrow? How would the family be left? Then you take out a policy and it is underwritten because you have answered 20, 30, 40 or 50 questions. You are underwritten; you are insured.

But then you have direct insurance, where you might see an advert on TV, you ring up the number and you think you are insured. I will give you an example, Senator Ketter. There might be a married couple of 35 years old. A bloke and his wife have one child and she is pregnant again. They have a mortgage on the house and he might say, 'Look, if I get run over by a bus tomorrow, how am I going to keep my wife and my two kids in the house? Will the bank sell the house? I need insurance.' So he may ring up and take out some life insurance, let's say a $300,000 death policy. In many cases, he is not underwritten; he just has a policy. He goes to bed at night and puts his head on the pillow thinking, 'I'm covered; I've got the family covered.' He might have a heart attack and drop dead. Then the insurance company might go back through his medical history and say, 'Oh, the young fellow at two weeks old had a valve replaced in his heart—he was born with a problem. Therefore, we won't pay. That was part of his history.' They do not pay under some circumstances like that. They will refund the premiums paid, but in the meantime the wife and the kids are kicked out of the house because there is no money earner. It is unacceptable when people think they have life insurance and actually do not.

We have seen the scandals about the medical criteria. A bloke, James Kessel at Wee Waa, had a heart attack. In the Guyra hospital his heart stopped beating. Mr Acting Deputy President, that would be pretty serious, wouldn't it, when your heart actually stops beating. They got him back to life. He told me he heard the nurse say, 'I think we've lost him.' Then it was ruled by the insurance company that he did not have a heart attack, because the criteria are outdated. This is crazy and it is why people become cynical about the industry. I am very pleased to see that Minister Kelly O'Dwyer has been involved in this. She is now bringing forward the standards for financial planners to see that they are educated, they have proper exams, they are doing the right thing and the standards are maintained all the way through. I commend Minister Kelly O'Dwyer for her work and wish her well with the upcoming birth of her baby. We have done a lot of work in the area of liquidators. Those new rules came in on 1 March and there are more to come on 1 September.

A solicitor in Adelaide told me once, 'Years ago, people robbed with a knife or a pistol. Now they rob with one of these'—a pen. It is sad and it is too common. I stand by what I said. I support a royal commission and would like it to include the industry super funds. We need to have a good, clean financial sector—and I am sure we have made a lot of progress. I am sure the banks have got the message. I have done a lot of work with Steve Munchenberg from the Australian Bankers' Association. He is a very decent man, in my opinion. Banks are picking up their game and picking up the standards of their financial planners. I still have a serious problem with vertical integration. When the companies have the financial products and they have their own advisers, I think there is biased advice there—it cannot be helped. That is a serious problem I have with it. But, in time, let's hope we get it right. I am not going to make a hypocrite of myself. I wish you lot over there had backed me when I said, many, many years ago, 'We need a royal commission into white-collar crime and the finance sector.'

Senator Dastyari interjecting—

No, you all went underground. You were not with me at all. So suddenly you have come out and—

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

I was, Wacka.

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

Yes, Senator Whish-Wilson, you were with me. You have seen me cross the floor on this very issue. I have sat alongside the Greens. Senator Dastyari has called for a royal commission but never had the stomach to cross the floor. Do you know why? Because in the Labor Party if you do that you get booted. That is the democratic Labor Party. You happen to vote against what your team thinks and you are on your bike. Your career is finished. In the National Party and the Liberal Party crossing the floor is not common, but at least we are free to have a free vote on how we like on any issue and we do not get expelled from the party.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

You get expelled from the Labor Party.

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

In your party, Senator Dastyari, if a young fellow like you crossed the floor, the next thing you would be back pushing a pen in head office—or you might not even get a job back there if you got booted out of here.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

No way.

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

No way, you reckon.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

That's why I'm here—they moved me on from there.

Christopher Back (WA, Liberal Party) Share this | Link to this | Hansard source

You might get a job in a bank, Sam.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Order!

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

Or you might be an export manager for China or something—who knows!

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I'll work for you on your farm.

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

No, you would not be good enough to work on a farm, mate.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Order! Senator Williams, return to the debate.

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

We need to have good, viable, hardworking people on the land, Senator Dastyari.

I support this bill. When I leave this place in a bit over two years time, all I want is to see the sector cleaned up. I want to see ASIC doing their job better and see people getting good financial advice and having confidence in our institutions. Strong banks are vital. We are lucky in Australia: we have strong, profitable banks—and that is essential. Look at Ireland when they went over. The taxpayers had to bail them out. We did not have to do that, and so our banking system is essential to our economy and essential to virtually everyone in the nation. We need to make sure the banks do not just put profit before people and do the right thing by their customers. It is up to us to see that happens. So let's see how it pans out in the future. I have no doubt this bill will pass the Senate going on the numbers. My vote will probably make very little difference, but, as I said, I am not going to leave this place in a bit over two years time saying that at some stage I made a hypocrite of myself. I am not that sort of person.

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

There is a famous quote: 'Sunlight is the best disinfectant.' It is from Justice Louis Brandeis, the US Supreme Court judge—

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

Did you have any in the Health Services Union?

Kimberley Kitching (Victoria, Australian Labor Party) Share this | Link to 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)

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Order! It being 6 pm and pursuant to order the time for this debate has expired. The Senate will now return to the consideration of legislation.