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Tuesday, 18 November 1986
Page: 2421

Senator MICHAEL BAUME(8.32) —As I recall, the Secretary to the Department of the Treasury is a Director of the Commonwealth Banking Corporation. Serious concerns have been expressed in the Sydney business community and were reported in the Australian today relating to alleged attempts by the Treasurer (Mr Keating) to politicise the administration of the Commonwealth Banking Corporation by endeavouring to force upon it his own nominee from outside the bank to become its Managing Director to succeed Mr VernChristie. The appointment of the Managing Director of the Commonwealth Bank is the Government's prerogative. The Government has the right to appoint whomever it wants to that job. The tradition has been that, as the quality of management within the bank has been so great, only people from the bank have succeeded to that job. That tradition has been important for morale within the bank, particularly in view of the inadequate salaries paid by the bank compared with those paid by the private sector.

It is evident from the very good results that have come from the Commonwealth Bank that it is well managed and has done remarkably well, despite its inadequate capital base, which Mr Christie pointed to last year. The Government's expenditure restraint limited its ability to provide the Commonwealth Bank with the sort of capital base from which it could operate adequately in the current very competitive environment. Within that constraint the Commonwealth Bank has done remarkably well. There is no suggestion that the management of the bank is inadequate. On the contrary, its performance shows that it is very satisfactorily managed. Why then is there any trouble at all? Why is there this hassle? Why is there the current Board disputation? Why is there Treasury pressure on the bank concerning this matter? Why has the Board been having lengthy meetings? Why is there so much disquiet within the business community in Sydney about concerns that the Treasurer is seeking to politicise the bank by appointing his own nominee from outside the bank as its Managing Director?

This raises the general question about governmental control of the bank. There has been much discussion about this matter. Is the Government going to see the Commonwealth Bank as its pawn, as a bank that does the Government's bidding on political issues rather than what it always has been considered in the past as being-a commercially viable organisation with integrity and its own spirit of independence, which competes properly in the market without excessive concern for the political policies of its owner? If the Bank is to continue to function in that way, obviously the attempts by the Treasurer to change that course should be strongly resisted. There is a need, which appears to be developing quite strongly, to diminish the power of a government that has a Treasurer such as the current Treasurer who would seek to dictate to this bank. There is now on two grounds a need to diminish this power. Last year the ground was an inadequate capital base. Now the ground is the apparently unsatisfactory pressure from the Treasurer. These two grounds now combine to increase the merit of the Commonwealth Bank making some kind of issue of shares to extend is ownership, perhaps to its clients, its staff, or both.

Senator Grimes —This is what you are really about. All that stuff about the Treasury is nonsense.

Senator MICHAEL BAUME —I can see no reason why this Government should say to the people of Australia: `We deny you the right to hold shares in your own bank'.

Senator Grimes —Well, why did your previous Government not do that?

Senator MICHAEL BAUME —I can see no justification, on moral or any other grounds, for that kind of nonsense.

Senator Grimes —Why did you not do it?

Senator MICHAEL BAUME —The Minister falls back on the classic response that goes to every matter: Why did you not do something about it?

Senator Grimes —You were in government for 30 years, for God's sake.

Senator MICHAEL BAUME —Exactly. It has now become evident from the current massively increased competition in the banking environment that there is now no justification for the present oppressive situation of the Commonwealth Bank which we can see emerging from the Treasurer's interventionist role, and the lack of a capital base which Vern Christie complained about last year. Maybe the Minister has been asleep and has not noticed, but there has been a dramatic and radical change in banking in Australia.

Senator Ryan —Who brought it about? We did.

Senator MICHAEL BAUME —I am overjoyed that the Minister has interjected in that incredible way. She has no doubt forgotten that when her Government came to power the first thing it did was to cancel the call for applications for a massive increase in the number of banks in Australia. It was one of the Government's first activities. Applications were called early in January 1983, as she well knows, following an inquiry which we held and to which the Australian Labor Party violently and consistently objected. The Labor Party violently and consistently objected, through its spokesman, to the whole concept of increasing the number of banks and allowing foreign banks into Australia. One of the first actions of honourable senators opposite was to cancel the applications and the requests for applications for up to 10 foreign banks, in a duplicitous move.

Having refused to provide the consensus which honourable senators opposite say is essential for radical change, and having been such an irresponsible and opportunist opposition that they would not accept what was proper and right when we tried to do it, they cancelled those applications. Their opportunism and dishonesty in that matter was incredible. How can those opposite now pretend in the Senate that they have purity coming out of every pore? I suggest that they examine their pores much more closely. We gave those opposite the consensus on this matter that they refused to give us. Their leader uses this word `consensus'. He says that there must be consensus to do significant and dramatic things which involve radical change.

We have been responsible where Government members have been opportunists. They have behaved in a disgraceful way, creating political barriers to the proper change which they proceeded, in an incredible way, to bring in and claim credit for, having cancelled our first endeavours to do so. The behaviour of those opposite is as opportunist and disgraceful as it has been on all the promises they have made, none of which they have kept. Let us hear no more of this absolute rubbish that we keep hearing from their side. Either they do not know the reality or they have the sorts of convenient memories which allow them to feel honest when they make that kind of statement.

The Commonwealth Bank in the changed environment that exists here is at risk if we have a Treasurer who will impose on that bank his external appointee because he wants that bank to follow more closely the devices and desires of the so-called Messiah. Let us recognise that this bank has as its major objective the need to look after the best interests of its clientele, the people who do business with it. If the Treasurer thinks that he can move into that bank and impose a different set of objectives, with the first objective being to meet the Government's political requirements rather than its customers financial ones, we must resist him to the full and make certain that the sort of scandalous behaviour that is going on at the moment is exposed to public view.

This fight has been going on for some time. Vern Christie was supposed to retire at the end of this year. That has been forced to be deferred, as is known throughout the business community in Sydney, because unreasonable pressure is being applied by the Treasurer to appoint his own person rather than someone who has come up through the bank. I cannot speak highly enough of the people within that bank. Unfortunately, there has been a high loss of senior executives because the pay at the higher levels is appalling compared with pay provided by other banks. The Commonwealth Bank provides a very large number of highly skilled financial operators around the business community, particularly in Sydney. There has been no criticism whenever we have been talking about the need for an issue of shares to some section of the private sector, its shareholders or customers that the bank is badly managed, because it is not. It is a well managed bank. That is one of the reasons why it is absolutely vital to resist any attempts by the Treasurer to subvert that management.