By Joe Montero
As the fallout from the Royal Commission continues to envelope the Turnbull government, no amount of promising has brought about relief from the trouble it now finds itself in.
Making an error of judgement is one thing. This is something else. It has been a deliberate strategy of a big business friendly government that is especially snuggle up to the banks. It ‘s track record has been to champion their cause, with regard to little else. And it will continue for as long as Australia fails to come to terms with this and lets it continue.
Nothing makes this clearer than the cosy association between the heads of this government, the Liberal Party and the bank chiefs.
Figures for 2016 show that the finance industry, and by far the largest part of this is the banks, at more than $2.7 million, was one of the biggest donaters to the Liberals. This is just behind property and construction interests, in which the banks have a high stake.
Official donations records under estimate what is being given, because donations can come in under existing law, through torturous routes that hide the point of origin. Being major shareholders in most of the big companies operating in Australia, the banks have plenty of vehicles through which to channel the dollars.
The association between the government, Liberal Party and the banks is not only about money. Bank chiefs move about in the same social circles and join the same top shelf clubs and have the ear of political leaders. The share this with the rest of the corporate world, and there is a constant revolving door through which politicians, staffers and top level public servants pass through, to become directors and senior executives of corporations. This cannot occur without the formation of an extensive network of contacts.
An investigation by Crikey in 2004, listed 220 ex Howard government staffers who had gone through this revolving door.
The current prime minster came from the banking world. Before becoming a politician, he was chief of American giant Goldman Sachs’ subsidiary in Australia, and a member of the parent company’s board. Turnbull’s entry into politics brought a new dimension in the connection between the government, Liberal Party and the banks. In a short time, had their own man on the scene as prime minister.
It is inconceivable that such a close association would not be accompanied by a helping hand. Anyone who might dispute that this is not necessarily so, should consider what has been done to help the banks and ask whether they have been legitimate.
During the time of the Howard government, the banks were given pretty much a free hand to move into financial advice and insurance. Locked into this was the absence of requirements to be transparent, properly inform clients about what was being done with their money and to show that they were acting in the client’s interest.
The banks took full advantage of the opportunity and instituted a bonus system, to encourage their employees to aggressively market the products. A swathe of new subsidiaries came into existence.
Financial advisors with names like Storm Financial, Timbercorp, Opes Prime, Bridgecorp, Westpoint, Trio and Commonwealth Financial Planning Limited came up like mushrooms. They were really fronts for the banks, and before long, were connected to the payment of secret commissions and other unethical behaviour. .
By the time the Howard government had gone, and the Rudd/Gillard governments came in, there was no hiding that something was seriously wrong. Stories had begun to come out. Complaints were mounting.
The Gillard government passed a law (Future of Financial Advice Act) in 2012 to reign this in. Unfortunately, it only went part of the way and in any case, the Securities and Investments Commission decided to delay the implementation of the law until 1 July 2014. By then the Coalition became the government again.
Led by Tony Abbott, the new government’s first act was to give the banks even more leeway than they already had. Disclosures were allowed of become less transparent. Withdrawals from client accounts could continue, unless they formally withdrew their approval during a window of opportunity, provided once every two years. Commissions could still be taken out, as long at there was a reference to them at least once a year.
The Coalition pushed for an amendment to the law, requiring the banks and their fronts to only provide disclosure information to new clients. This was knocked back in the Senate by Jackie Lambie’s casting vote.
How was this setback met? ASIC gave the banks another year free ride.
It didn’t stop here. In the same year, the government handed over $3.75 billion to the banks. Handouts had been in place to help the banks with financial stress, since the crisis of 2008. But they had been reducing since. The new government decided to raise the amount again, to help the banks get a higher ranking from international ratings agencies. This helped them to borrow more money from the international banks.
By 2014 a series of new scandals involving the banks were starting to break out and gathered pace over the next three years. The government did not just sit on its hands. It actively worked against any investigation into what was going on.
Then came last 2016’s Mossack Fonseca leaked documents. They revealed evidence of the intimate involvement of the Australian banks in international money laundering operations. The government still refused to budge. A special police task force was set up, supposedly to take on those responsible. A few minor figures were rounded up at first. Since then nothing. Is this another cover up?
The pattern is consistent, and this is more than sufficient proof of a deliberate and ongoing protection of the banks. Protection on this scale is bound to encourage even more wrongdoing.
It is the combination of the scandals and government inaction that has turned public anger to the banks. The call for action rose and eventually pulled some members of the national Party to opt on the side of the inquiry.
In the end, the inquiry was unavoidable. There was an effort to delay it. Then there was the objective to side track it. Now that the unintended exposures are becoming public, there is a faint towards doing something to hold back excesses. But don’t expect very much. One or two individuals might be sacrificed. Nothing will be done to effectively change the situation. The banks have too much power over the government and Liberal Party.
An effort will be made to channel the Commission into an investigation into the superannuation funds, and the government, will be hoping that this will turn public attention away from the banks.
Anger against them may now be too strong for this to happen and Malcolm Turnbull, his government, the Liberal Party and the banks have a serious problem on their hands.