Scott Ryan (President) Share this | Link to this | Hansard source

I inform the Senate that at 8.30 am today four proposals were received in accordance with standing order 75. The question of which proposal would be submitted to the Senate was determined by lot. As a result, I call on the matter proposed by Senator Anning, namely:

The need to ensure scrutiny of banking includes unconscionable rural lending practices.

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Fraser Anning (Queensland, Katter's Australian Party) Share this | Link to this | Hansard source

This is not my first speech. I rise to speak on the ongoing issue of rural lending practices. The financial system plays a key role in supporting sustainable economic growth and meeting the financial needs of all Australians. The strength of our system in the past has rested on the pillars of strict prudential supervision, world's best practice and the trust of consumers knowing they will be treated fairly. Fair treatment is when a consumer engages the services of a firm or an individual and the participants act with integrity and transparency. Overwhelmingly, Australians would expect this to be the case. Unfortunately, the reality is that integrity, transparency and treating a customer with dignity have come a poor second to the rich pickings of farmers' assets ripe for the taking.

The royal commission was hard won, with many of my colleagues having to fight tooth and nail for a number of years before finally getting it across the line. To date, there have been almost 7,000 submissions detailing threats of foreclosure. I've even heard of an incident where a bank manager urged suicide. And there have been many other, often tragic, results of unscrupulous actions. It's disappointing it has taken so long for these horrendous issues to come to light. In fact, it would seem that we are only just scratching the surface of this problem. While I know a lot of good will come out of the royal commission, in its current form there are issues in relation to time, funding and lack of political will.

What has been brought to light already is, seemingly, systemic abuse by the financial sector of some of our most vulnerable in rural areas. Take a minute to consider some of the tactics that have been employed. There are anticipatory breaches of contract. For instance, farmers may never have missed a payment, yet, because the bank thinks they may in the future, it'll come in and sell them up. If the family homes of urban residents were sold up just because the banks thought people may breach their contracts in the future, there would be outrage. The prospect of banks putting mum, dad and the kids on the street because of something that may never happen would cause a revolt.

This isn't the worst of it. Lee Wallace had a successful grey and red Brahman stud. He had not, at any point, defaulted on his loan. However, for reasons that were not disclosed, the bank called in the loan. Within a year, $14 million of assets and $5.6 million of debt turned into no assets and more than a million dollars in debt. In the case of Prairie grazier Debbie Viney, during a drought her bank manager told her not to sell cattle, despite that being their drought strategy. How is it that someone with no experience in running a cattle place can make key business decisions? Debbie was forced to keep the cattle, which continued to lose condition and they started dying. A year later, the bank allowed them to be sold, but as a result of the drought conditions most had starved to death and the rest had been put down. I could name many more cases, but we would be here all day.

I acknowledge the comments made this week by Ms Orr in relation to receivers and where they fit in the spectrum of the royal commission, but you have to look at its very intent. The intent of the royal commission was to address the unconscionable banking practices within the finance sector. In the current form, it is restricted in its ability to do this. The terms of reference need to be expanded to include the behaviour of receivers and their agents. The issue of receivers' behaviour has been identified as a source of grave concern and has been linked to a wave of suicides. This toxic culture has affected and continues to affect many within our rural communities—our friends, our neighbours and our families, my own family included. My brother-in-law lost his family properties, Runnymede and Red Rock, in 2011. Runnymede had been the family home for almost a century.

Unconscionable rural lending practices are having a devastating effect on rural communities and agricultural production in this country. The waves of debt-driven suicides are a clarion call to action by those who lead the country. Fairness and a fair go are ingrained in the Australian psyche but have been notable by their absence in the treatment our farmers have received. Let us ensure that this is not repeated and that those who feed us are given the justice they deserve.

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

Well, indeed, might I congratulate Senator Anning on choosing the subject matter for this MPI and endorse the fact that it is a matter of public importance. I'd like to attach myself to his remarks in his contribution. It's well known that I was involved in agitating, along with yourself, Mr Acting Deputy President Williams, might I say, and with others in the other place, for a commission of inquiry, which resulted in this current royal commission. I'm inclined to agree that the terms of reference could have been broader in some categories. Of course, my motive all the way through—and I know your motive, Mr Acting Deputy President—had a focus on the importance of this inquiry for people in the rural sector.

I know that you've dealt with, quite literally, hundreds of representations over time. I, myself, in the four years that I've been here, have at the very least been engaged with rural producers who found themselves in difficulty. That's been in the many dozens. I really do want to place on the record your efforts, Mr Acting Deputy President, because I know that there are quite literally dozens and dozens of families who survived their conflict with the banks due to your representations to the banking sector. In fact, I suspect that outside the Prime Minister and perhaps the finance minister and the Treasurer, you are the only one who's got all the CEOs of the banks on speed dial! And I know from my experience that you didn't hesitate to push the button. That, in a sense, lent confidence to people in the bush—they knew that they had a champion in this place with respect to the behaviour of the banks.

I want to focus just on two parts. I've said it in speeches in this place before, and outside of this place, that one of the most unconscionable efforts of the banks had to do with the establishment of securities. It was the term for it, as you know. When a loan is made, two of the critical considerations for a lender are to do with serviceability—clearly, that's the ability of the borrower to meet the terms and requirements of their loan. And the second is a matter of security. And there's a thing called an LVR: the loan-to-value ratio. Whilst there are always exceptions to the rule, in the rural sector that floats somewhere between 60 per cent and 75 per cent, depending on the terms of the application. What that means is that a financial institution will lend the borrower up to 60 per cent, or between 60 per cent and 75 per cent, of the total value of the purchase, with the balance being the equity of the investor—the equity of the farmer.

It's a well-known fact to anyone who studies trends in rural assets that the fortunes of the borrower rest, first of all, with the weather. Second is the market itself—the implications of the market itself. And thirdly, of course, is the value of the property. There is a direct relationship. If you overlay the graphs of these things over 30 years, it is absolutely uncanny how these trends occur. Bad weather conditions are not favourable to the farmer so there are bad market conditions as a result, with the saturation of commodities onto the market. Of course that then puts downward pressure on the value of the asset.

This LVR, the loan-to-value ratio part of it, is one of the covenants. There are many covenants in a loan contract between the lender and the borrower, but this is one of the critical covenants. If it's breached—that is to say that if at any given time the value of the property is such that the equity, or the share of equity, of the value of the property is less than that in the contract—it gives the banks carte blanche to be able to take control of the asset.

Unlike most of us in this place, and most who live in the heavily populated areas of the country, the unique thing about rural producers is that everything's on the line. It's not just their business; it's their house, where they live. Every single asset that they own is attached, in most instances, to the security of the loan on their property. Unlike businesses, who might find themselves in trouble where the bank might foreclose on a business, where they've got opportunities—and many, many hundreds of thousands of businesspeople do this—they separate the assets so that, in the event of a failure, they might at least preserve the family home and they might at least preserve the tools of their trade. They might lose the business and, in circumstances where the contracts are not met, that's not an unfair or an unreasonable thing to occur. But they're unlikely at any time—certainly not during a drought, if you're a borrower in the metropolitan areas—to have the value of their business asset, unless it's directly indexed into the supplying goods or services into the rural sector, impact on their home or assets that are isolated from the security arrangements with the bank. The banks have used this on frequent occasions, and recent evidence before the commission shows that they used this as a trigger to take over so many properties.

The second part—and Senator Anning was right to raise it—is what happens when the banks move on these properties. The banks know full well that, with a break in the season, there will come a lift in commodity prices and a restoration of the value of the property, but they're not interested in waiting for that. At the worst possible time in the farmer's or the pastoralist's life, in circumstances beyond their control—there's very little they can do to mitigate their circumstances from a long and cruel drought—when they need their banks the most, it's their experience that they receive the least amount of support.

Mr Acting Deputy President Williams, I know that you've had a number of cases presented to you around the appointment of receivers and administrators. I know there was one famous case that came to you where the receivers moved stock off the property. There was some contestability around the transporting of the stock, and it was $16,000 or $17,000 when it should have been $6,000 or $7,000. These people have no idea. They undo their tie, take their crisp white shirt and fluff the collar and then go out into the west to take on a role to manage a complex circumstance of properties that are in drought. They honestly would not know the difference between a mulga bush and a Christmas tree, and yet they're sent in to try and keep thousands of stock alive. They buy in a bit of cheap labour along the way. But what happens—and this is the insidious aspect of what happens—is: I promise you, to an appointment, that they will stay in the appointment and not resolve the matter until they have carved out every cent of equity left by that farming family. Sometimes it takes 12 or 18 months to administer the receiving of the property, and they will just go until there's absolutely nothing left. So, not only have these people lost everything; they've also lost the opportunity to make a dignified transition off their farms to some other form of life.

The banks are on notice. They know they're on notice. They need to think very, very carefully. Some of the ways that they will be able to restore public confidence are: to look at some of the features of these loans; to look at some of the features around these weather cycles; and to have a look at what periods these properties are in good shape, in the sense that people can then make prudential provisions and arrangements with their banks in order to be ready to insulate themselves from the inevitable dry period in this country. I could quote from a dozen Lawson and Paterson poems about the circumstances on the land. The banks can't pretend that they're ignorant to these cycles and the challenges of these borrowers. Mr Acting Deputy President Williams, I know that you are looking at this very closely. I am looking at this very closely. We need, as a government and as a parliament, to support this inquiry, if it requires more time and more resources, until it does this job very, very thoroughly.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Pauline Hanson (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

As you are all aware, One Nation spearheaded a very successful Senate inquiry into this very matter. It was evidence uncovered by this inquiry into the banks' rural lending practices that forced the government to finally hold this long-overdue royal commission. Only the other week, my fellow One Nation senator Peter Georgiou and I stood outside the royal commission and called for the royal commission's investigation to be expanded. So I'm proud of One Nation's consistency on this issue and our record of holding the banks to account.

Now that the banking royal commission has started, we see the horrors of what the bankers have been doing. This is not the behaviour we would expect from people trusted with the wealth of millions of Australians. It was the Australian taxpayers effectively who bailed out the banking system with the $250,000 deposit guarantee. In return, Australians have had to endure a continuous procession of unethical and illegal behaviour from a rotten bank executive culture.

I believe the Hayne commission has done a good job of investigating misconduct where the banks have already admitted fault, like financial planning, insurance and fees for no service. However, for misconduct where the banks have not admitted fault, the commission has been found wanting. I have grave concerns about two key points where the Hayne commission has failed. Firstly, there are masses of farmers who want to tell Australia their horror stories. I have personally spoken to dozens of these farming victims. These people want their say. These people want to be heard. Their stories are so horrific that all Australians need to hear them so that we, as a community, can decide on what we should do with banking executives that treat families like this. In my opinion, there has not been sufficient time given to hearing the array of stories from farm victims.

Secondly, and of most concern, was the manner in which the Hayne commission glossed over the small business scandals, especially the CBA takeover of Bankwest. It is especially disconcerting given that the CBA Bankwest misconduct is identical to the ANZ Landmark misconduct. Both scandals involved the bank destroying or attempting to destroy the customers' livelihoods. This has caused the breakup of families, mental and physical illness and, in some cases, suicide. The Hayne commission investigates the ANZ Landmark mistreatment of farmers but dismisses the CBA Bankwest mistreatment of SMEs as a conspiracy theory. Something is amiss. I hope that the commissioner slows down, reads all the evidence, speaks to all the witnesses and asks for more time from the government.

I call on the government to extend the funding, time frame and terms of reference to include receivers, liquidators, administrators and mortgage insurance for the banking royal commission so that farmers and SMEs can get justice and legislatures can make sure no Australian ever has to suffer through this mistreatment at the hands of banks. I'm also calling on the government to pass the cost of the royal commission on to the banking and financial services sectors found guilty misconduct, and the victims paid adequate compensation for their loss and pain.

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

First, I thank Senator Anning for raising this issue—a very, very topical and important issue, particularly with the royal commission going on and some of the stories that have been coming out. Following Senator Hanson, I might say that her comments about the Commonwealth Bank and Bankwest are very, very accurate. I remember when the Commonwealth Bank took over Bankwest. Bankwest had some horrific banking propositions, particularly up in gulf country of north-west Queensland. I well remember some of the very dodgy, you'd almost say, banking deals that happened when the inevitable drought came in the gulf country—as they always will, in cycles—and the attitude of Bankwest. At the same time as this was happening, the Commonwealth Bank took over, and it was very difficult to get a sympathetic hearing. I personally know some people in that gulf country of Queensland who were victims of some very, very questionable banking practices at the time involving the particular banks that Senator Hanson was talking about.

Mr Acting Deputy President Williams, before I proceed further with my contribution today, I want to pay tribute to you for your relentless and long-term campaign to bring the banks to account. I know from history that you've had some personal experience in years gone by, and I do remember the very, very substantial assistance you gave to people, including some constituents of mine. When I was at a bit of a loss to understand how to help them, I got them to speak with you, and they are forever grateful, then and today, for your contribution and the way you assisted them and brought the banks to account.

Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

When they did Wacka over, it was a bad decision!

Ian Macdonald (Queensland, Liberal Party) Share this | Link to this | Hansard source

Yes, indeed. But it wasn't just personal for Senator Williams—and I take your interjection, Senator Cameron. Senator Williams understood, perhaps better than most of us, some of the banking practices, but he was also concerned about people and wanted to help them as best he could.

Similarly, I pay tribute to my Queensland colleague Senator O'Sullivan, who took the gamble of incurring the ire of the powers that be to be very forceful and open about the banking royal commission and what the government's approach to it should be. I know that, to a degree, it was the work that both Senator O'Sullivan and Senator Williams did within the coalition that changed some previously held attitudes.

Having said that, I can indicate that, since coming to office in 2013, the coalition government has delivered the most ambitious reform agenda for the financial system in recent history. We have a commitment to a strong and stable financial sector, and that started with the Murray inquiry into the financial system, which, as one might remember, regrettably wasn't supported by Labor at the time. Chris Bowen, the then Treasurer, said: 'The financial system is strong, well regulated and well managed, and I have not seen a case for a full-blown inquiry.' Fortunately, the Murray inquiry did go ahead.

While we've proactively sought to reform the Australian financial sector, unfortunately our opponents in this chamber have sat idle, contributing nothing more than a running commentary from the sidelines. Many of the notable scandals and collapses in financial services, such as Trio Capital, Great Southern and Storm Financial, happened on Labor's watch, when the current Leader of the Opposition, Mr Shorten, was the minister responsible for financial services.

I'm pleased that the government has contributed to establishing a sensible, well-resourced and targeted royal commission to identify areas of misconduct and to ensure that the recently announced legislative reforms will provide adequate protection to consumers well into the future. It is important that the royal commission does its job for the Australian people, and it is doing that. It's uncovering instances of serious wrongdoing and shining a light on them. No doubt the royal commission will make recommendations to the government, if the royal commission believes that changes to the law are necessary.

Having said all of that, Australia, of course, has one of the strongest and most stable banking, superannuation and financial services industries in the world. But the Turnbull government will continue its critical reform agenda, including seeing what the royal commission says and then taking meaningful action, as we've shown in the past we can.

Before I finish, I just want to briefly mention the legislation promoted by this government for the Australian Financial Complaints Authority, which has introduced a one-stop shop dispute resolution scheme to provide consumers with independent and timely access to justice, and access to compensation where appropriate. I particularly want to mention the Australian Financial Complaints Authority will operate under significantly increased monetary limits and compensation caps. The bit that I particularly like is that small business primary producers who are in dispute with their lenders may be awarded up to $2 million in compensation, and that's around six times what is currently available. So that's just one of the initiatives the current government has taken, and I can assure the Senate that the government will be watching closely the recommendations of the royal commission and, as required, it will be taking legislative or other action that might be needed and recommended.

Malarndirri McCarthy (NT, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on today's matter of public importance. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has started to turn its attention to the long-suffering plight of those farmers and primary producers treated unfairly, those in debt due to circumstances well beyond their control.

The Turnbull government didn't want this inquiry to proceed, and they certainly did everything they could to protect their mates in big business. They did everything they could to help their mates working for the big banks. And let's not forget that the only reason the Prime Minister relented and called this inquiry was because the banks asked him to do so. It wasn't pressure from Labor, pressure from his own party room or pressure from the parliament—or even pressure from the people—that got him to change his mind; it was a request from the banks themselves.

Labor from the outset has been critical of the banks, and rightly so. Time and time again we hear stories of heartache and stories of loss, both financial and personal. This Senate in particular, as well as the Senate of the previous parliament, can hold its head up high for leading the charge to help shine a light on the unconscionable conduct of the banks. In particular, I draw reference to the Senate Economics References Committee report into forestry managed investment schemes. These investment practises were particularly detrimental to farmers. Some farmers, who leased their land to MISs, suffered massive financial loss from failed MISs. It was difficult for them to seek clarity on their legal position with regard to ownership rights over land and trees, and liability for damage. The administration and liquidation of MISs gave rise to a number of difficulties, again associated with ownership rights, but also with conflicts of interest. And when they reached out for help, this government turned them away.

People want justice, whether it is through this royal commission or through the litany of inquiries conducted by the Senate, and they deserve it. At the time of the publication of the Senate report into forestry managed investment schemes, ANZ, through its association with Timbercorp, set up hardship funds for investors, but it was hardly compensation. It's also worth noting that stories like these are not isolated incidents; they are systemic, which is why this royal commission is so vital.

Only yesterday, throughout the commission's hearings in Brisbane, we heard the story of the Harleys. Stephen Harley had just suffered a heart attack when ANZ ruthlessly pursued his family for the default of a loan, saying they had to pay off their entire debt by March 2014 and that, if they didn't, they'd have just one day to leave their beloved farm. And even worse, this correspondence was received despite Stephen's wife, Janine, informing the bank that her husband had been flown to Perth for heart surgery. She wrote:

I hope you can now understand the pressure we’ve been under … we ask that this is taken under consideration when a decision is made.

The Harleys are just one story of many farmers who have been relentlessly hounded by the banks, mostly due to circumstances beyond their control, such as previous financiers having their agribusiness books acquired by banks like ANZ.

The Harleys managed to sell five of their nine land lots and livestock to pay down $1.6 million of the $2.5 million debt before the March 2014 deadline. However, because the bank refused to accept the circumstances they faced due to the heart attack of Stephen, they were forced to sell the four remaining parts of their farm, but these lots were sold by the bank. However, they were sold for $570,000 less than they were valued at, and at a much lower value than that at which the Harleys had sold the first five lots. Eventually, in July 2017, the bank decided it would not pursue the remaining $309,000 that the Harleys owed. When asked why it took so long to inform them, despite knowledge of Stephen Harley's heart condition, ANZ executive Ben Steinberg replied, 'I don't know.' He conceded that if the Harleys had asked for that nine-month extension today it would more likely have been granted. This is too little too late.

The behaviour of the banks and their inability to show compassion towards farmers—or anyone else, for that matter—existed long before these stories. Back in 2016, at the height of the CommInsure scandal, James Kessel, a former cotton picker and diesel mechanic, suffered a massive heart attack. He thought his road to recovery would be aided by his personal life insurance. It wasn't. His understanding was that his cover allowed him to claim up to $1 million in compensation. However, they had different ideas. Essentially, they claimed that its definition of a heart attack had not been met by the events that occurred in Mr Kessel's case and instead relied on an old, outdated definition to determine the severity of a heart attack. That was the claim from the insurer. Seriously, banks, financial advisers and CEOs should not be deciding what the definition of a heart attack is. That should be reserved for medical professionals.

To take another example, let's have a look at the powers. This government has since 2016 been promising laws to give ASIC important powers to crack down on dodgy payday lending practices and dodgy rent-to-buy schemes. To date it has failed to introduce this legislation. The delay is hurting families who are preyed upon by unscrupulous lenders. At the latest estimates, in May, Treasury officials couldn't provide an answer about when this vital legislation would be introduced. All they could say was that it was a matter for government. Claims that these loans help people to get out of hardship ignore the fact that the cost of a payday loan is itself a significant financial burden for a person on a low income. You could say that a low-income earner who is trapped in a debt cycle has effectively taken a pay cut, courtesy of their payday lender. A $300 payday loan typically requires a $372 repayment after 28 days. Given such a high repayment, it should be no surprise that a low-income borrower will borrow again to meet a further shortfall caused by the cost of the loan itself. This is how payday loans trap Australians into an ongoing debt cycle. Far from assisting them to overcome financial hardship, payday loans perpetuate hardship, and a high proportion of payday loan borrowers—almost 25 per cent, at last count—are Centrelink recipients. As such, many borrowers are committing a significant proportion of their welfare payment towards repaying payday loans. Many payday lenders target First Nations families and their communities, perpetuating financial hardship in many cases.

I hope the royal commission into misconduct in the banking and financial services industry has prompted financial sector institutions and advocates to reflect on the effectiveness and impact of lending practices. I hope it prompts this government to finally take action on some of the irresponsible lending practices that are rife across our communities. The royal commission sits in Darwin this month, and I suspect that we will be hearing more stories of the hardship and trauma that these unconscionable practices are causing for the people of the Territory. All I can say is that whatever recommendations come out of this royal commission—be it for farmers, be it for small business owners, be it for those who have received dodgy financial advice or be it for those on low incomes, deliberately targeted by unscrupulous lenders—it had better be a matter for government, because this government does owe all these people an apology.

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

The royal commission is the biggest thing in town, and I feel very strongly that the ramifications of this royal commission are going to be felt for a generation. I'm confident that the commission is doing a great job and that we will see some recommendations that we can drive home.

I'd like to say, Mr Acting Deputy President Williams, while you're sitting in the chair, that when you leave this place, you can hold your head high for what you did to make sure this royal commission happened. We're hearing a lot of commentary and a lot of claiming about the royal commission. I would say that while a number of people in this chamber and the other place helped make it happen, and some important people outside of this chamber—investigative journalists and whistleblowers—also helped make it happen, without yourself and the Greens, it wouldn't have happened.

Senator Cameron interjecting—

I knew you might arc up, Senator Cameron. I'm very glad that you did. Let me explain why. Senator Williams and I were both on the original inquiry with Senator Mark Bishop when we decided to call for a royal commission. Unfortunately, the final committee report didn't reflect that clearly, and Senator Bishop personally would have liked to have seen a royal commission. But the Greens were the first party in 2014 to call for a royal commission. We were the first party to campaign for a royal commission, relentlessly. It took us nearly two years, but we did eventually get Labor on board going into the double-dissolution election.

There's plenty of other water under that bridge for another time, but I'd like to say that it was the Greens that created the Trojan Horse, the legislation for a parliamentary commission of inquiry. It was our idea and our legislation which passed this place. It was my private senator's bill that was sent to the other place that enabled the pressure to be brought to bear on the Prime Minister and the banks to actually call a royal commission. If it hadn't been for that legislation—and I thank One Nation and all the senators who supported it—it would never have happened. Once again, there'll be plenty of time to tell the story of the long and winding road to the royal commission at another date, but I think parliament can hold its head high that it did a really good job to try and get this scrutiny of our financial services sector.

The logic to me was always very simple. As a senator, I saw the Senate inquiry processes, the numerous inquiries we all sat on—those of us on the economics committee—and the Senate could never get to the bottom of these issues. We simply didn't use our powers or weren't prepared to use our powers. We certainly didn't have the resources. As good as our people are in the committee system, we could never get to the bottom of it. Even the CommBank inquiry or the ASIC inquiry or the inquiry into forestry management investment schemes or inquiries into financial misconduct—we could never get to the bottom of these issues. All we got were platitudes from executives.

Given the limitations of the political process in the Senate, we were never going to get justice for victims or get substantive legislative change. However, the pressure on the Liberal government to call for a royal commission did lead to some good legislative outcomes in this country in the last few years. Minister O'Dwyer, Mr Scott Morrison and a number of ministers brought legislation to this place to try and improve things, but it was never going to be enough. We actually needed a QC who knew what he or she was doing with the powers and with the resources and with the time to get to the bottom of these issues.

I am concerned that the time frame is too short and that not enough will be done. That's another bridge we can get to when we arrive at it. But I'm very proud to stand in here in this chamber and say today that I was part of something much bigger than myself, much bigger even than our political parties and this institution of the Senate. We've managed to get what I believe will be a far-reaching royal commission into financial services at a time when it was desperately needed. That's all I'll have to say today, but, no doubt, I'll have more to say about this in the future.

Peter Georgiou (WA, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

I begin by saying that the One Nation-led Senate inquiry into rural lending was the catalyst for the current banking royal commission. The One Nation-led inquiry uncovered unconscionable and dishonest conduct by banks and by receiver managers. We heard stories of farmers having their interest rates raised by up to 80 per cent, and receiver managers charging them over $500 an hour to act on their behalf. In one case, we heard testimony from a Western Australian farmer who had been charged over $500,000 just to sell his sheep and his grain crop, which were worth about the same value. The entire proceeds from the sale were taken by the bank's receivers. This is nothing short of legalised theft.

There have been over 17 government inquiries into bank misconduct recently, and concerns about misconduct and regulatory failures have been the common theme. When the One Nation-led Senate report was tabled last year, Pauline Hanson called for a banking royal commission. The Turnbull government rejected these calls, saying that a royal commission was not needed as they had acted to clean up the industry. I raised this issue in this chamber last November, asking Senator Brandis:

When will the Liberal Party and the Prime Minister wake up … and hold a royal commission on the banks?

Senator Brandis replied:

The problem with a royal commission is that it will take forever and achieve nothing.

Well, just how wrong and out of touch is this Liberal government? The Liberal Minister for Revenue and Financial Services, Kelly O'Dwyer, has repeatedly avoided answering questions on whether it was wrong to delay establishing a royal commission after weeks of shocking revelations. She should admit that we have all been appalled by the number of issues that have been aired at the royal commission.

The unfortunate thing about this royal commission is that it appears the banks and the government have colluded to write the terms of reference, as they conveniently omit references to bank-appointed receiver managers, one of the most problematic areas. It is almost totally unregulated and subject to many damning reports. Last month, the banking royal commission devoted just two weeks to small business lending and foreclosures. This is inappropriate, given the issues raised in numerous past Senate inquiries, the magnitude of the misconduct and the complexity of the evidence.

The commission heard stories of misconduct by bank-appointed receivers that raised serious concerns, yet these issues were not allowed to be considered as they fall outside the terms of reference. The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has expressed dismay at the brief period allocated to small businesses. The same thing happened in Brisbane this week when cases of rural lending were heard, with more stories of unconscionable and dishonest bank-appointed receivers and agents falling outside the commission's terms of reference.

The commission's terms of reference need to be amended. The government has lobbied us to agree to cuts in the company tax rate that would effectively give banks millions in extra revenue at the cost of the Australian taxpayer. Senator Brandis was concerned about the cost of this royal commission, and here we have the government proposing tax cuts that would give the banks far in excess of the cost of this commission. It is in the interests of the nation that banking misconduct be exposed, and that past and present executives be held accountable. The cost of doing this is insignificant in comparison to the economic benefit gained by having an honest financial system.

I call on the government, firstly, to immediately extend the terms of reference for the banking royal commission to include receiver managers and bank-appointed agents, including valuers and independent accountants. Secondly, it should extend the time frame and funding for the royal commission in order to allow it to be more diligent and inquisitive in its investigation. If the government is serious about cleaning up the industry, it should agree to this. There is no justifiable reason not to. If the royal commission is to address the concerns of the many past inquiries, it must be given the powers to investigate and allowed significant time to do so.

Lastly, I would like to thank everyone in the Senate for supporting and getting this royal commission up; you know who you are.