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

My question is to the Minister representing the Treasurer, Senator Cormann. The Westpac CEO resigned this morning. I think we in this chamber can all agree that the Westpac money-laundering scandal is truly shocking. What is most shocking is that AUSTRAC warned the banks about weaknesses in their IT systems as early as 2013, including that they were vulnerable to child exploitation by paedophiles. Minister, why wasn't the prospect that paedophiles were using the bank enough to curb Westpac's pursuit of profit, and why do you think Ian Narev's resignation from Commonwealth Bank just two years ago on nearly identical grounds wasn't enough to put the fear of God into Westpac and its CEO and senior management and to make them change their act?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

Senator Whish-Wilson, I've got to say that is a very good question, and I think that that is a question that all of us are entitled to ask. I made that observation on Radio National on Monday morning myself.

Given the events at the Commonwealth Bank a few years ago, surely every bank, every board and every managing director or CEO—the leadership of every bank—would have looked very carefully at the operations under their bonnets to make absolutely certain that they weren't equally exposed. The fact that they didn't is an absolute disgrace. Of course, that is why AUSTRAC will now be pursuing Westpac as is appropriate—through the courts in the appropriate way.

Westpac will end up paying a very, very significant fine for their failure to act. And I guess this is now also a warning to all the other banks. We expect that no other bank is going to be as negligent as the Westpac bank has clearly been, in the wake of this latest round of revelations.

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

Senator Whish-Wilson, a supplementary question?

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

Thank you, Minister. Brian Hartzer told a meeting of executives yesterday that, more than anything, the bank needed to get mortgages going and get the net promoter score going. Even though they had just been found out to be enabling paedophiles, sales remained Westpac's top priority. After the $75 million royal commission and dozens of inquiries, I ask on behalf of most Australians: what is it going to take to change the culture in Australian banks?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

In response to that question: the consequence of the revelations that Senator Whish-Wilson is referencing was pretty well immediate. All senators would be aware of the fact that the CEO of Westpac is stepping down, and I would be very surprised if there weren't further decisions along those lines over the coming weeks.

Clearly, there was a complete failure within Westpac to address the issues that needed to be addressed, and I think this is a very clear warning to all other banks to ensure that they have their affairs in order.

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

Senator Whish-Wilson, a final supplementary question?

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

I have a question and a suggestion. After a raft of scandals in the banking system, Israel decided that the banks would not clean up their act until the incentive culture was eliminated. They legislated unanimously to cap executive pay in 2016. Minister, I ask this on behalf of all Australians, and I think we all agree there has been one scandal too many for the Australian people: will you now act to stop the rot and legislate to cap executive pay in Australia?

Mathias Cormann (WA, Liberal Party, Vice-President of the Executive Council) Share this | Link to this | Hansard source

We will continue to implement the recommendations of the royal commission into the banking sector which, of course, build on a substantial record of reform by governments of both political persuasions over a number of years now. We will not stop until all of the necessary reform has been properly implemented.