Strengthen Corporate and Financial Sector Penalties
House of Representative Bill, 28 November 2018
Second Reading and Consideration in Detail
Watch Matt's Second Reading speech here
Mr KEOGH (Burt) (18:13): Before I get to my substantive remarks on this, I need to call the attention of the House to what ostensibly amount, in some regard, to crocodile tears from the member for Dawson as to the conduct of this inquiry. There is no doubt that he has been a longstanding member of this House who has called for a royal commission. But it is also in no doubt that he is a member of this government that called that royal commission and of this government—indeed, it was the now Prime Minister, who was then the Treasurer—who restricted that royal commission to being for only 12 months, effectively thereby ensuring that the royal commission would not be able to call oral evidence from many victims of banking misconduct, limiting it to fewer than 30, despite the over 9,000 submissions that were made to that royal commission. Even with that, we have seen so many terrible issues come to light and be highlighted through this royal commission, but I think it is remiss of the member for Dawson to not acknowledge the shortcomings of and time constraints that have been placed on this royal commission, which have meant some of these issues that he and many on this side of the parliament, including myself, have highlighted are a function of the limited time that was made available to the royal commission to do its work—a decision that was made by this government, by the now Prime Minister when he was Treasurer—but, when we look at the issues that have come out of this royal commission in the time that it has gone on, we can see that they are astounding. With that, I conclude my remarks.
Watch Matt's Consideration in Detail here
Mr KEOGH (Burt) (18:36): As I was remarking during the second reading debate on this bill, so many of the issues that are addressed in this piece of legislation, which we are now seeking to improve through these amendments, are things that have come out of the banking royal commission. The banking royal commission has turned the attention of the country to these issues in a way that's never happened before.
The minister tried to impugn members on this side of the House by asserting that our hearts aren't in these amendments. He was in some way trying to suggest that these are politically motivated amendments. But what this is about—why we support this legislation but have moved amendments to it, and why I support these amendments—is that this is just part of a raft of things that need to be done to fix corporate and financial services regulation in this country and to address the misconduct that has come out time and time again through the royal commission and was known about before it.
It was only yesterday that we heard from the acting chief executive officer of AMP that apparently their financial advisers didn't have the education not to charge people for services that weren't provided. Not just is the royal commission exposing malpractice, misconduct and malice; it's actually showing up moronic behaviour. Who actually needs to be educated in that? Why do you need to be told that you shouldn't charge fees for something you're not doing? We've even had instances where someone has tried to mount a defence of the banks' practice of charging for advice provided to people who are already dead. That is despite the fact that, only weeks earlier, bank CEOs tried to tell us they didn't need a royal commission to tell them they shouldn't have been charging fees to dead people. Regardless, they were doing it, and then they tried to defend it. So it is important that this parliament and the government send a very strong message to the banking and financial services sector that enough is enough.
The real shame of this is that recommendations to increase the penalties, like we are seeing here, came out of a Senate report back in 2014. The minister tries to besmirch members of the previous Labor government, when the recommendations to do this came during the coalition's term in government. Following that report, the government, after taking months and months to finally respond to those recommendations, said they would consider them. Years later they conducted another review, which said yes, we should increase these penalties. A year later again, and the government finally gets around to introducing some legislation. And now, finally, we're starting to debate that legislation.
But, as we have seen from conduct that has come up before committee inquiries and the royal commission, the reality is that, if the government had pulled its finger out and got around to doing these things back when they were originally recommended, some of the conduct that we have seen come before the royal commission would have already had these penalties apply to them at the time and maybe, just maybe—in fact, it is highly likely—the people who were running those banks and financial institutions would have thought more strongly about what they were doing.
One of the fundamental issues that has come out here is that of culture. There are issues with the government's BARE regime, which members of the government have mentioned, and no doubt I will have an opportunity to address those in further remarks. But culture comes down to changing the behaviour of the senior individuals in those banks, and part of that is understanding what penalties may be imposed upon them individually but also on their bank. What we know is that the penalties that have been available to date have been woefully inadequate.
The minister speaks about the fact that the new penalties that they propose are many multipliers more than the penalties that were there before, but then they go and impose artificial caps in some of these amendments. What is the point of a one-million-penalty-unit cap when you think about that as a proportion of the money that the banks have been making out of their misconduct—not their total revenue, but the money they have made out of this misconduct? We need to ensure that the penalty does not effectively merely amount to a licence. Can I just point out: it is also just terribly drafted. In the penalty provision they have drafted, they have imposed 'the greater of a 50,000 penalty unit cap, or a multiplier of revenue, but no more than 1 million penalty units'. If that is the case, you don't need the 50,000 unit cap in the first place. This is terribly drafted legislation. Why would you do that? That goes to the point that the government has not thought this through properly and that is why we are here moving amendments to make sure— (Time expired)