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Wednesday, 31 August 2016
Page: 230

Banking and Financial Services


Senator KETTER (Queensland) (14:53): My question is to the Minister representing the Prime Minister, Senator Brandis. Can the minister confirm that today's announcement of an inquiry into small business lending is the fourth position the government has adopted in order to avoid a royal commission? What is wrong with a royal commission?


Senator BRANDIS (QueenslandAttorney-General, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:54): What is wrong with a royal commission is that it is entirely unnecessary. One has a royal commission—and this government has established royal commissions, most recently a royal commission into the Don Dale Youth Detention Centre and related issues in the Northern Territory—to identify and get to grips with and make recommendations relating to systemic abuse, just as we saw, for example, the systemic abuse within certain trade unions revealed by the Heydon royal commission. A number of complaints about the banking system do not constitute systemic abuse, but what they do show is that there is an appropriate mechanism to be devised in order to address those complaints, and that is precisely what the government has done. Your proposal, Senator Ketter—and I might say it is charitable even to call it a proposal, because, for all of the months that Mr Shorten and Senator Dastyari campaigned on this issue, not once did they so much as favour us with proposed terms of reference; not once. So it is a thought bubble and a slogan but not a proposal. What is wrong with that proposal is that not only are the complaints better addressed by a more responsive and appropriate mechanism but, as well, if you were to have a royal commission into the banking system, how many years do you think it would take before a single person obtained a single piece of redress out of that process? That is why it is not the right mechanism.

The PRESIDENT: Senator Ketter, supplementary question.



Senator KETTER (Queensland) (14:56): I refer the minister to recent statements by the Prime Minister, who says:

… banks don't just operate under a banking licence, they operate under a social licence and that is underwritten by public confidence and trust.

Given that confidence and trust in the financial services industry have been shaken by ongoing revelations of scandals which have resulted in tens of thousands of Australians being ripped off, why does the government continue to stand in the way of a royal commission?


Senator BRANDIS (QueenslandAttorney-General, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:56): Senator Ketter, I explained that to you in the answer to your primary question, but might I caution you in being so reckless as to suggest that the public does not have confidence in the financial services system. That is a very, very reckless thing to say, and it is not true. Australia has some of the strongest and best and most appropriately prudentially regulated banks and financial institutions in the world, and I would warn you, Senator Ketter, against being so reckless as to suggest that we should not have confidence in our banks, that we should not have confidence in our financial system. Nor, Senator Ketter, is it the case that because, in a system in which there are literally tens of millions of accounts conducted, there are complaints that constitutes a systemic problem or a basis for the public to lack confidence in that system. (Time expired)

The PRESIDENT: Senator Ketter, final supplementary question.



Senator KETTER (Queensland) (14:57): Minister, just this month the Prime Minister acknowledged the need for cultural change in the banking sector. If the government knows that cultural change is required, why is it prioritising protecting the banks over protecting consumers?


Senator BRANDIS (QueenslandAttorney-General, Vice-President of the Executive Council and Leader of the Government in the Senate) (14:57): It is in the interests of all Australians, including all Australian consumers, that we have a strong financial system underpinned by strong, well-capitalised banks, well regulated, in particular through strong prudential regulation—and we do. That is absolutely in the national interest. But, as I said a moment ago, in a system in which there are literally millions upon millions of accounts and account holders, of course there will be complaints from time to time, and those complaints should be investigated, and, when mistakes have been made, those mistakes should be exposed. But it is one thing to say that and it is another thing to recklessly suggest, as your question does, that Australians should lack confidence in our financial system. We should have confidence in our financial system, and where there are problems they should be addressed by the appropriate mechanism. (Time expired)