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Monday, 4 September 2023
Page: 94

Senator McKIM (TasmaniaAustralian Greens Whip) (19:04): Westpac, $115,000; ANZ, $50,000; the Commonwealth Bank, $80,400; the National Australia Bank, $60,500; Macquarie Bank, $96,000—those sums are how much each of the major banks donated to the Labor Party in the lead-up to the last election. There was about 400,000 bucks in donations from the major banks to the Labor Party in the lead-up to the last election. That's why these financial accountability regime bills, which are meant to stop bankers from behaving in a dodgy way, don't include fines for dodgy bankers. The Labor Party broke the agreement that they made with the Australian Greens within 24 hours of making that agreement with the Australian Greens, because the moment the dodgy bankers found out about the deal they called in the debts owed. That's what's going on here, colleagues. That's why the major banks donate. That's how democracy works in Australia.

It was as naked a display of absolute power as you could ever want to see. It was a complicit revelation about the powers of institutionalised bribery that is political donations in this country. A $400,000 investment to avoid million-dollar fines for dodgy bankers is a great ROI. The fantastic thing for the dodgy bankers is that they didn't even have to use their money to donate; they used shareholders' money to donate to allow them to force a compliant Labor Party to not impose million-dollar fines on dodgy bankers. That's how democracy works in this country.

As I said, it's a good ROI. That's before any of us even get to the $144 billion in wholesale funding that the major banks received from the RBA at the height of the pandemic—at the cash rate, I might add. On that funding they are now reaping record profits in large part because the RBA has put up interest rates time after time after time, after promising Australians that interest rates would not go up until 2024. That's also before you get to the ongoing discount on wholesale funding that the major banks receive on the open market as a result of the implicit government guarantee that comes from being too big to fail. The major bank levy recovers at most a third of the benefit for the public.

In justifying Labor's backflip on the agreement they made with the Australian Greens to include million-dollar fines for dodgy bankers in this legislation the minister said that he hadn't appreciated the unintended consequences that fines might have, particularly on small banks. We said to the minister: 'Okay. Carve out small banks. We'll be very happy with that.' That the minister hasn't included fines in the new version of these bills with a carve-out for small banks proves that what he said at the time was an absolute ruse. Invoking the impact on small banks was just a way of Labor trying to cover its tracks and cover up the real reason that Labor backflipped—because the dodgy bankers didn't want to leave themselves open to million-dollar fines so they called in the debts they were owed by the Labor Party.

Let's be very clear about the agreement the Greens made with Minister Jones. The agreement we made with him would have given effect to exactly what was originally proposed by Treasury in January 2020, before the pandemic hit. While the memories of the banking royal commission were fresh Treasury released a proposal paper on the establishment of a financial accountability regime. That paper—released by the Morrison government, I might add—proposed that individuals be subject to civil penalties for breaches of their accountability obligations and, consistent with the newly introduced maximum penalties for individuals under other acts, those penalties would be 5,000 penalty units, which is currently about $1.1 million, or three times the benefit derived.

Then, under the cover of the pandemic, the Morrison government ditched million-dollar fines for dodgy bankers—completely walked away from its own proposal to ensure that executives who breach their accountability obligations face fines. But the Morrison government still didn't get their watered down bill through the parliament. In fact, they never even listed it for debate in either house.

I admit that this bit of my speech is speculation, but I think it's a reasonable thing to speculate about. I think the reason the Morrison government didn't list the bill for debate is that there was a fairly good chance that an amendment to include civil penalties for bank executives who breach their accountability obligations would have got up, because in the House at the time Mr Christensen was highly likely to support such an amendment and would very likely have brought along some further members of the National Party. Similarly in the Senate, the crossbench and some National senators stood ready to support an amendment to introduce fines for bank executives who failed to meet their accountability obligations. And who was leading the charge? Who was leading the charge in calling for an amendment to include fines for dodgy bankers? Well, the now Minister for Financial Services, Mr Jones, was leading the charge. On 9 November 2021 he was quoted in the AFR in respect of the financial accountability regime as saying:

There's no good reason why [the government] backflipped on the original position. If this is going to have any teeth, there has got to be penalties.

That's the now minister, Stephen Jones, saying that if this is going to have any teeth there have got to be penalties. And here we are: a bill that he has sponsored into this parliament on his own argument has no teeth, because it does not include million-dollar fines for bank executives who fail to meet their accountability obligations. This, colleagues, is the modern Labor Party in a nutshell.

Now, I don't have high expectations of the Liberal Party. I fully expect them to come in here and do the bidding of the big corporations. But—and maybe I'm naive—I actually do expect the Labor Party to be better than this. It is an absolute travesty that Labor, in government, has walked away from the position it held in opposition, which was to support million-dollar fines for dodgy bankers. It has now walked away from that because the bank executives have signed over massive political donations to the Labor Party, which didn't even come out of their pocket; it came out of their shareholders' pockets. That is the modern-day Australian Labor Party in a nutshell—pulling all the moves in opposition and then folding like a pack of cheap cards to their corporate masters when they're in government.

Four years ago we had a once-in-a-century royal commission that uncovered a rampant litany of misconduct and corruption. But I'll tell you who didn't cop it through the banking royal commission, and that is the senior bank executives who ripped off their customers. They went largely unpunished. It was a recommendation of that royal commission that this financial accountability regime be established. But bankers who continue to fail to meet their accountability obligations, allowing their customers to continue to be ripped off, will continue to go largely unpunished, because bankers who rip off their customers have bought the Labor Party lock, stock and smoking barrel. The party that was once led by Ben Chifley is now as much a party of financialised capitalism as their so-called opposition in the LNP.

That is exactly why this bill is all carrot and no stick. Yes, 40 per cent of bankers' bonuses will be withheld for up to four years, and if regulators find executives to be breaching their accountability obligations then those bonuses can indeed be confiscated. But missing out on 40 per cent of a bonus is not the same as getting hit with a million-dollar fine. The whole point of a financial accountability regime is to require executives to take reasonable steps to run a bank, a super fund or an insurer in a way that prevents their customers being ripped off. In other words, it's not enough for executives not to deliberately rip off their customers; they actually need to make sure they run an institution in such a way that all the employees know they shouldn't rip off their customers. That is not rocket science, colleagues; that is basic corporate accountability.

The civil penalties included under division 6 of the act as it stands apply to institutions that fail to take reasonable steps to protect their customers and to individuals who deliberately rip off their customers, but they do not apply to individuals who fail to take reasonable steps to protect their customers. It is an accountability regime that is weak, and it is deliberately so. It is an accountability regime in name only, a piece of legislation that is masquerading as an accountability regime but actually has in it a loophole big enough to drive an armoured vehicle stuffed full of cash through. That's what we are debating here this evening and that is why the Greens will, in the committee stage, move amendments to this legislation that would provide for an accountability regime that is robust, that actually does its job of protecting bank customers and that includes the capacity for million-dollar fines for dodgy bankers who fail to meet their accountability obligations. It's an amendment that would, as the minister said, give this regime some teeth. If this bill is going to stop bankers from acting in a dodgy way—and the evidence heard by the banking royal commission was absolutely open and shut about the dodgy way in which so many bankers in this country operate—it needs to include fines for dodgy bankers; otherwise it's not going to do the job.

Of course, we all know it's not going to do the job and we all know why it's not going to do the job. It is because the banks, in an extraordinary display of their naked power and their control over the Labor Party, within 24 hours of the agreement being made public came down on Minister Jones like a tonne of bricks, and he welched on an agreement that he'd made with me and the Australian Greens. He welched on that agreement because the banks rang up the Prime Minister's office and the office of Treasurer Jim Chalmers and gave the Labor Party its riding instructions. Its riding instructions—and we can all see this as plain as day, colleagues—were: do not include the capacity to issue fines to dodgy bankers, bankers who fail to meet their accountability obligations.

The Labor Party sold out bank customers in a flash. They didn't even have to think twice about it. They ignored the reams of evidence before the banking royal commission. They ignored the cancerous culture that exists in the big Australian banks, which was revealed in all of its squalidness by the royal commission. They ignored all of that. They ignored the interests of consumers of banking products and took the side of bank CEOs with their multimillion dollar salaries. They wouldn't even expose them to the prospect of a million-dollar fine if they failed their accountability mechanisms. That is the modern-day Labor Party for you.

There is nothing, as it stands at the moment, about accountability and financial regime penalties. In 2017 I chaired the Senate select inquiry into lending to primary production customers. We unearthed so many ghastly, inhuman practices from the major banks and some of the smaller banks. It was so bad that it led to a royal commission. I think it was the Hayne royal commission. Not one executive was penalised. Not one executive was held accountable. Not one executive went to jail. Not one executive, to my knowledge, paid a hefty fine—not one. Yet we saw a litany of abuse of people, borrowers, customers—a litany over many, many years, and not one was brought to justice. Not one was held accountable.

This bill, the Financial Accountability Regime Bill, has no personal civil penalties for bankers—none at all. That's what we object to, so I will be supporting Senator McKim's motion tomorrow. I point out exactly what Senator McKim said. Mr Jones in the lower house is a friend of the banks. The Labor Party is the party that brought in, under the Fisher Labor government of 1910-11, the Commonwealth Bank, and the most important thing it did was get Australia's banking foundations set up. It supported infrastructure. We were the only country to come out of the First World War without any debt. We also established trade and our industry thanks to the Commonwealth Bank. But the biggest thing the Commonwealth Bank did as a public bank, as a people's bank, was ensure accountability through competition with the big private banks. It is sad to say that Labor Party governments and Liberal Party governments—and the predecessors to Liberal Party governments—slowly, surely and deliberately dismantled the Commonwealth Bank until Paul Keating flogged it off as another retail bank.

There is no accountability in the banking sector at the moment. Executives can do whatever they damn well please. As it is, I can't support this bill without a financial accountability regime that is real and honest in it.