Banking royal commission: hypocrisy of politicians laid bare

Savage cuts were made to ASIC’s budget under former prime minister Tony Abbott. Picture: AP

The reason I wrote in favour of a banking royal commission in this newspaper more than a year ago was because the number of instances of poor conduct were mounting and it was time to have a tell-all investigation into what has transpired and what might be done to improve the banking and finance sectors going forward.

It’s important, however, that the isolated instances of wrongdoing don’t turn into a wider witch hunt which overstates the problem, thereby eroding confidence in a four pillars system which has served this country well.

That said, as examples of misconduct continue to surface at the Royal Commission “I told you so” comments from Labor MPs are understandable, given their calls for said Royal Commission were roundly mocked by many who are now embracing it.

Listening to government ministers now puff out their collective chests, however, and attack the banking community is beyond the pale. Not just because they fought a Royal Commission tooth and nail for years, which they certainly did. It’s particularly galling because most of the shortcomings identified have more to do with inadequate oversight than cultural failings within the banking sector.

That is, failures of inadequate government oversight.

Few examples of alleged misconduct have surfaced in the Royal Commission that authorities didn’t already know about. But ASIC and other agencies haven’t always followed up instances of potential misconduct reported to them by banks following internal investigations. Why?

It’s simple: usually because of funding and resources limitations ASIC suffers from. Which is why the first Abbott budget gutting hundreds of millions of dollars from ASIC’s budget makes it laughable when the former PM now bangs the drums attacking the banks for their conduct. Talk about jumping on a populist bandwagon.

Had Abbott not firmly fastened one hand behind the back of the regulators, just maybe the cultural failures we are all witnessing now wouldn’t have happened. It’s also reasonable to ask why Bill Shorten didn’t do more when he was financial services minister. Many of the problems identified today were at their infancy back then.

But let’s not stop there. The examples of misconduct, shocking as they are, are isolated in the context of the sheer size of these banking institutions. Between them the four big banks have a market cap the best part of $400b — more than most of the rest of the top 200 Australian companies.

Their sheer scale is extraordinary.

Such large organisations will always have malpractice within. That doesn’t excuse it, but it does help explain it. And who let the banks get so big? Governments of course — the same politicians now lamenting examples of malpractice within these super structures.

Then we have the hypocrisy. I’d bet that the political class has more scandals per head than any other employed group, from travel rorts to misuse of entitlements to breaking promises taken to elections. Businesses are attacked for doing the wrong thing to their customers by politicians who pathologically lie and mislead voters.

Pot. Kettle. Black.

If we are searching for the beginning of time when it comes to cultural decline in our modern community it starts with the political class. Yet they lecture the rest of us about standards?

The banks deserve the day of reckoning they are now facing. The findings will hopefully result in recommendations which get adopted and help to clean up malpractice. Hopefully, for a change, the politicians will back the authorities charged with preserving order by not cutting their funding and resources, so they can do their jobs effectively.

But let’s be clear: the politicians who moralise about the banks are themselves no white knights when it comes to doing the right thing. Far from it.

Peter van Onselen is a professor of politics at the University of Western Australia