The need for a royal commission into banking and financial services is different. It arises not from a failure to enforce the law or corrupt officials but a reluctance to address important questions about the kind of society we wish to live in. It rests on a concern, based on an abundance of evidence, that these institutions engage in practices which, while not demonstrably illegal, are unfair and dishonest, in ways which cause irreparable harm. They also undermine public confidence in the institutions themselves.
This calls for a comprehensive inquiry so the public can have a better understanding of how these banking and financial services work and who benefits and who loses. We will then be in a position to judge whether laws are needed to bring them into line with ordinary, everyday standards of fairness and honesty.
We had another reminder of why this is needed in a Lateline report for 21st April. The program recounts the story of Michael and Kaye Downer, a retired couple who were pressured by Westpac to borrow far more money than they could afford, and suffered financial disaster when he was retrenched. There was also evidence that bank staff had forged signatures and falsified incomes, no doubt ‘incentivised’ to earn bonus points and salary increases.
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Despite compelling evidence of the extent of this abuse of financial power there is a growing sense that the Prime Minister is incapable of taking a leadership role in a debate about the ethical regulation of business and the need to change the culture of the market to avoid going down the American path, which begins with what critics call the ‘revolving door’ and ends with the wholesale capture of regulatory agencies by big business.
Too many lawyers and company directors seem to think legal maxims like caveat emptor are moral principles, which makes no sense when one considers the huge difference in bargaining power and business sophistication which separates Westpac from the Downer family.
No one doubts Turnbull’s ability to win a difficult case for a worthy cause, as he did against the British establishment in the ‘Spy Catcher’ trial - a case the Sydney bar said was unwinnable. But it is a big ask to expect serious structural reform of banking and financial services from someone who has benefitted so much from a career spent with media barons and private banks.
However that may be, and regardless of promises to create a ‘first world, high wage, social welfare economy’, he has from the beginning been captive to conservative party forces. It now seems clear there was never a prospect he would have the numbers to bring in progressive liberals - men and women who believe the party can and should stand for fairness and human dignity as well as ideals of freedom and personal responsibility.
This is, of course, a matter of opinion, but his implausible claim that ICAC can do the job, when there is overwhelming evidence that what is needed is an open public debate about the entrepreneurial freedom to exploit the likes of Michael and Kaye Downer, suggests he may be unwilling, as well as unable, to bring about any major social reform.
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