Sometimes, it’s beneficial for a politician to offer a mea culpa and, if executed correctly, can become a successful part of their political repertoire and public persona. Former Queensland Premier, Peter Beattie, made an art form of the political apology, and seemed to grow in stature every time he apologised for a government catastrophe – which happened on a regular basis during his time as Premier during 1998–2007.
He was at it again last week, this time as the Chairman of Commonwealth Games, when he apologised for the less-than-perfect closing night ceremony. It wasn’t such a big deal, just another one of those ‘first-world problems’ that Australians love to focus upon – he apologised nevertheless and “copped it on the chin”.
But Beattie is an exception. Most politicians will try and spin their way out of trouble, preferring to dig themselves deeper into an unextractable hole, rather than cede any territory to their political opponents, or suffer a bruised ego.
It was an interesting political exercise this week amid some of the most unimaginable stories told at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, including a number of financial schemes gone wrong and one case where the Commonwealth Bank charged client fees for 10 years after the died. That’s really what you’d call ‘money for jam’.
We witnessed some mea culpas from Liberal–National Party members of parliament, including former Nationals leader and current backbencher, Barnaby Joyce: “I argued against a Royal Commission into banking. I was wrong,” and Minister for Revenue, Kelly O’Dwyer, who claimed initially there wasn’t a need for a Royal Commission into banking, but the Government then evaluated its position and introduced one.
The straw-clutching continued, with O’Dwyer claiming the Coalition was “cleaning up the system that Bill Shorten ignored” and that he did “virtually nothing” when he was part of the Labor Government during 2007–2013. The Treasurer, Scott Morrison, took this one step further, by attacking Shorten and accusing him of “point-scoring”, ignoring the fact that he was engaging in the practice of point-scoring himself.
Of course, this latest round from the Coalition a futile exercise in political spin doctoring, and it’s convincing no-one: the public is one step ahead and realises that this is a Government that is more intent on protected vested interests, rather that protecting the national interest.
The Prime Minister, Malcolm Turnbull, had resisted all calls for a Royal Commission for well over 18 months, before finally acceding to one in November 2017, and only after the banks actually called for an inquiry themselves. He had previously denied the need for a commission, saying it was “actually bad for the banking system and counter-productive to consumers” and “it would not offer any immediate solutions” for the scandal-plagued sector.
There have been calls for a Royal Commission into Australian banks ever since 2014, when the Australian Senate recommended a judicial inquiry, after it found the Commonwealth Bank was involved in fraud involving thousands of customers and millions of dollars.
It also has to be remembered that the Coalition wound back Labor’s Future of Financial Advice (FOFA) reforms soon after it came into office in September 2013. Is there a correlation between relaxing these reforms and the unethical and potentially illegal behaviour from the banks?
Yes, of course there is.
Following on from the time of the Senate inquiry in 2014, there have been a number of financial scandals involving the National Australia Bank (inappropriate financial planning advice between 2009 and 2015), Commonwealth Bank (fraud and money laundering to drug and terrorism syndicates), Westpac (rigging bank swap rates and fraudulently lending millions of dollars to elderly pensioners), ANZ (a bank bill swap rate scandal), and the Macquarie Bank (a foreign exchange trading scandal).
Although the Government did announce some measures to rein in banks through tightening up the oversight from the Australian Securities and Investments Commission, these measures were seen as inadequate and there had been mounting calls for a judicial inquiry, firstly by the Australian Greens in 2015, followed by the Labor Party, who promised the commission as part of their 2016 election campaign.
It is notable that O’Dwyer was an executive with the National Bank in 2007, and Turnbull was managing director of the investment bank, Goldman Sachs between 1997 and 2001. Many in the Liberal Party have strong links with the banking and insurance sectors and it was obvious they were doing their best to protect this sector from scrutiny and showing more concern about protecting the flow of political donations to Liberal Party coffers from the banking sector – $495,000 in the last financial year.
Turnbull consistently ignored the calls for a commission since 2016 and instead of supporting and inquiry, launched attacks on Labor for making the suggestion. In April 2016, Morrison said Shorten’s call for a Royal Commission were “reckless” and would cause an “unwarranted hit to international and domestic confidence” in Australian banks.
In June 2016, Finance Minister Mathias Cormann also offered resistance: “since then [the 2014 Senate inquiry] we have had a financial system inquiry, there have been various inquiries through the Senate. We don’t need more enquiries”.
The Chief Executive of the Australian Bankers’ Association, former Queensland Premier, Anna Bligh – another Labor MP who traded principles for silver coin – also chimed in, claiming the inquiry would “lead to higher interest rates” and was not required.
On 22 November 2017, Turnbull resisted again: “A royal commission would simply be an inquiry, take a long time, cost a lot of money and make some recommendations, which would no doubt be to do precisely what we are already doing”.
On 30 November 2017, the day after he again ruled out a banking inquiry, he finally announced the Royal Commission and said: “while we regret the necessity of the decision, we have taken it is in the national economic interest”. But the decision was only made after the chairpersons and chief executives of ANZ, Commonwealth, NAB and Westpac called for it. It says much about the Prime Minister’s lack of political skill and judgement that it took the much-maligned bankers to instigate action.
The former German Chancellor from the 19th century, Otto von Bismarck, observed that the making of laws is like the making of sausages – it is best not to see them being made. And so it is with the banking sector. In a nutshell, people get screwed, the charlatans of the money markets and the captains of industry make massive gains, and prop up the economy through a game of smoke and mirrors.
It’s almost like a Faustian pact governments need to make with financial sectors. The making of money, through complex money trades and products such as contracts-for-differences, currency trading and exchanges, exploiting and stealing money from the public – even if they might be dead – are the items governments have decided should be shielded from the public view.
If it’s convenient, and if it can help cushion the domestic economy, governments turn a blind eye to virtually anything related to money making, as witnessed during the global financial crisis of 2008, when the market leaders that almost collapsed the world economy, were virtually pardoned, funded and encouraged to find even more ways to scourge money from their customers.
Foreign investment in the Australian housing market was encouraged from all-comers – money launderers, black economies, corrupt dictatorships – mainly to prop up the Australian economy, even if it created a housing bubble that continues to lock out many people from the housing markets. Fortunately, the Canadian Government clamped down on foreign purchases of domestic housing stock, but the Australian Government is yet to follow.
All of these actions by the banking sector are the things Malcolm Turnbull and his Government never wanted the public to see. And if the Coalition Government wasn’t under so much pressure, the Royal Commission would have been resisted for years to come.
The Royal Commission is uncovering all the banking issues that the public should never have to see, just like Bismarck’s laws and sausages, but it has many more criminal intents that will be revealed.
The banks and big money are made up of Turnbull’s people and his circle of friends, and this is the reason why he resisted a banking Royal Commission for so long. And, yet again, his poor political skills have been revealed for all to see.