Be careful what you wish for. The establishment of a commission of inquiry or a royal commission into Australia’s banks looks to be a matter of when not if.
Owing to the stubborn perversity of some of the Queensland Nationals, it now seems likely the parliament – via the combined support of Labor, the Greens, some independents and at least two National MPs – will vote to establish a special commission before Christmas.
Given the general confusion about what this commission is supposed to achieve and – even more importantly – who wants to claim more credit, it’s possible this effort will collapse again under its own weight of contradictory expectations and terms of reference.
But enough National backbenchers seem so keen to use a bank bashing vote to demonstrate just how tough and different they are from their Coalition colleagues that the momentum is becoming self-propelling.
For bank executives and bank boards, it merely means the inevitable will happen sooner rather than later under what is becoming the near certainty of a Labor government after the next election.
For the Turnbull government, it means another humiliating example of being dragged into playing the unwilling extra in a political spectacle beyond its control.
For shareholders, including every Australian with superannuation, it means another major management distraction and massive legal costs for the banks.
For international investors and capital markets, it’s another puzzling example of Australia’s determination to hobble its own economy, its diminishing corporate strengths and a relatively well-regulated banking sector.
For customers, it means not much beyond another avenue for publicising any grievances dating back many years. Pick your complaint – and the hundreds, perhaps thousands of individual complainants, who will want to line up to talk about being unfairly treated.
We already know some of these complaints well thanks to the 17 separate inquiries into the banks since the global financial crisis. Just as we know many of the changes in banking systems, remuneration methods and management practices that have occurred or are due to occur as a result.
That doesn’t excuse or ameliorate past behaviour and the constant criticism about the need to fundamentally change banking “culture”.
The long list of transgressions ranges from charging from financial advice never given to inadequate or inappropriate services offered to compensation or insurance claims wrongly rejected. And then there’s the latest case brought by AUSTRAC against the CBA for alleged breaches of the anti-money laundering act.
But the commission process would take many more years – and at least many tens of millions of dollars beyond the $51 million claimed by Labor as the cost of its royal commission.
This would also come up with recommendations unlikely to differ much from various measures already put in place by the Turnbull government, by regulators already given additional powers and money and by banks already reacting to the intense pressure on them.
Yet none of this has altered the political appeal of a royal commission as a way to magically “fix” things. Presumably that includes fixing the banks’ big profits too – over $30 billion last financial year.
The banks certainly left it way too late to start an ad campaign explaining how 80 per cent of those profits get given back to millions of “ordinary, everyday Australians” via dividends to shareholders, including superannuation funds.
Publicity about the level of pay in the senior ranks of the financial services industry has also undoubtedly exacerbated the level of community resentment, leaving bank executives looking flat- footed when responding to complaints.
Malcolm Turnbull, campaigning in Bennelong on Tuesday, insisted the government had made it clear would not establish a royal commission for good reason.
“The reason for that is simply because we want to get on with the job now,” he said.
“Let me tell you, if we had set up a royal commission into banks two years ago, none of the reforms that we have undertaken would have been able to be achieved. You know why? Because people would have said: “Oh, don’t do that. Wait for the royal commission’s report. Wait for the report….
“We are constantly working to ensure that the cultural change in the banks occurs and we are getting strong support for that. But our focus is on results. It is on action.”
Naturally, Bill Shorten, also campaigning in Bennelong, wasn’t buying this argument, maintaining the Australian people didn’t understand why Malcolm Turnbull was “fighting so hard to protect the banks”.
“I also say to Mr Turnbull, this fight is over but you just haven’t worked it out,”he declared. “One way or the other, sooner or later, there’s going to be a banking royal commission and the way I see this happening sooner is that either the Government splits and some government members vote for Labor’s royal commission. Or at the next election, if Labor is successful, we’ll just legislate for a royal commission.”
By now Malcolm Turnbull must also be wondering why he didn’t work it out earlier himself given the politics have proven so toxic. Another poll Tuesday showed about two thirds of people supported a royal commission.
Ironically, it was Turnbull’s critical address to shocked bank executives at the Westpac 199th birthday lunch in April last year that gave Shorten the political courage to immediately demand one. It was another tactical advantage – and a call Labor has pursued relentlessly since even as the government introduced ever more interventionist powers for itself and the regulators.
The impact of all this on the banks is certainly real enough but the emotive political impact is, as usual, muted by the necessary complexity and technical nature of the changes.
In today’s shrill politics, that apparently doesn’t add up to a hill of beancounters.