Andrew Leigh

HOUSE OF REPRESENTATIVES, 26 MAY 2021 

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No contribution from the member for Goldstein is complete without a mention of the 'Wilson first, Australians second' campaign he's been running. Unable to persuade his own parliamentary colleagues, he continues to come in here with fluff and bluster, saying that Australians can't get a government that will actually deal with housing affordability and what they need is to be poorer in retirement. The member for Goldstein wants Australians to rip money out of their retirement savings, to lose the compounding returns and to increase the pressure on the age pension, which of course will be paid by future generations of taxpayers, all because he is part of a government that has overseen the homeownership rate fall to 60-year lows.

The measure before the House is largely uncontroversial. It flows out of a recommendation of the Hayne royal commission. The royal commission report referred to 'shortcomings' of the regulators.

Let me quote from a larger slab of the report, taking into account some of the concerns that led to the regulators:

… the answer seems to be greed—the pursuit of short term profit at the expense of basic standards of honesty.

…

From the executive suite to the front line, staff were measured and rewarded by reference to profit and sales.

It goes on to say:

When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done. The conduct regulator, ASIC, rarely went to court to seek public denunciation of and punishment for misconduct. The prudential regulator, APRA, never went to court. Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable 'concerns' about the entity's conduct. Infringement notices imposed penalties that were immaterial for the large banks. Enforceable undertakings might require a 'community benefit payment', but the amount was far less than the penalty that ASIC could properly have asked a court to impose.

As a result of that, ASIC is now under a range of oversight mechanisms. These include two parliamentary committees—the House Economics Committee, of which I am the deputy chair; and the Senate Corporations and Financial Services Committee, where Senator Deb O'Neill does vital work in keeping ASIC and APRA to account—ministerial oversight, audits by the Australian National Audit Office, established public governance frameworks and so on.

This bill, the Financial Regulator Assessment Authority Bill 2021, adds a further layer of assessment, which is in the form of a new statutory body consisting of three part-time members and the Secretary to the Treasury. It will provide a biennial assessment to the minister on the effectiveness and capability of ASIC and APRA, which will be subsequently tabled in parliament. It's not a watchdog with any great level of teeth. As the member for Goldstein has so articulately put, we have the House Economics Committee, who are, in his words, 'the police that polices the police that police'. I'm not sure that one will go on a bumper sticker. I don't think it gives much credit to the real police themselves. But it is certainly true that the House Economics Committee was the committee to which Commissioner James Shipton announced that he was stepping down temporarily, which ultimately became his resignation, regarding issues surrounding expenses. The House Economics Committee has also overseen the major banks.

Curiously, in our oversight of the major banks, it's been the Liberals that have said that they don't want the major banks to face more scrutiny. The member for Mackellar thinks that scrutiny by this parliament of major banks' CEOs is a 'complete and utter waste of time'. That's what the member for Mackellar, Mr Falinski, says. That's despite the fact that the Hayne royal commission report revealed within the financial sector a culture of greed, activities including terrorist financing and money laundering for drug gangs and a range of misconduct which hurt thousands of Australian families. So that is why the Hayne royal commission was so essential. It's why the Liberals were so wrong to campaign against it for 18 months. But, having campaigned against it for 18 months and voted against it more than 20 times, they're now attempting to water down the House Economics Committee's hearings with major banks' CEOs. They're like goldfish: they've forgotten already the lessons of the Hayne royal commission.

The Treasurer was quick to try and get a photo op with an unsmiling Commissioner Hayne. But, years later, his colleagues are attempting to wind back scrutiny of the major banks. Labor believe that's absolutely the wrong approach. We think there should be appropriate scrutiny of the major banks. We believed that the hearings with major banks shouldn't have been deferred during COVID at a time when the major banks were receiving unprecedented government assistance. It was pretty extraordinary that the government took it upon themselves to defer parliamentary committee scrutiny of major banks' CEOs. But that's the way they think.

The way they think is that they will come down like a tonne of bricks on a welfare recipient who might have been overpaid a hundred dollars, but if it's parliamentary scrutiny for a major bank's CEO, they'll describe that as a complete and utter waste of time.

The second reading amendment refers to the government's failure to focus on misconduct in the financial sector. One form of this misconduct is proposals that are being put forward by this government. In late April, Treasury put forward proposals for proxy advisers to have to give their analysis to the firms that they're analysing five days in advance for so-called fact checking. This is despite the fact that the Australian Securities and Investments Commission in 2017 and in 2018 inquired into proxy advice and found no cause for concern and is despite the fact that their providing such advice beforehand is effectively taking the intellectual property of proxy advisers and handing it over to the people that they're attempting to monitor.

It is not as though we have seen undue influence at AGMs. If you're a board-endorsed director of an ASX 300 company, the average vote for your re-election is 96 per cent. There have been in recent years only six candidates for office who failed. Thirty-eight candidates have withdrawn their nominations. To a large extent, shareholders are voting to support the decision of boards. Proxy advisers provide the analysis which can inform investors. As Dean Paatsch of Ownership Matters has put it: 'Proxy advisers identify the problems, but shareholders sort out the solutions.' There hasn't been any identified problem with proxy advisers. No clients of the advisers have complained. Investors haven't claimed to have been misled or deceived. There haven't been systematic errors committed by proxy advisers. There haven't been meeting resolutions that failed because proxy advisers gave misleading advice. There's none of that. The real problem that this government has with proxy advisers is that they allow shareholders to have a better insight into how companies are run. It's no wonder that the Business Council of Australia and the Australian Institute of Company Directors have backed in the government's proposals for a crackdown on proxy advisers.

It's got to be said that perhaps this is some form of payback. The government, after all, has been scrutinised for the fact that it has given so much of the $100 billion JobKeeper scheme to firms with rising earnings. Some one-fifth of listed firms that received JobKeeper had their earnings go up last year rather than down. A program designed to stop firms from hitting the wall and workers from going into unemployment was instead used to fund executive bonuses for millionaire CEOs and dividends for billionaire shareholders. At least 11 Australian billionaires own shares in companies that received JobKeeper and paid out dividends. This is a way in which JobKeeper has become 'BillionaireKeeper'. The work that underpinned this overpayment to firms that didn't need it was done in part by proxy advisers. I acknowledge the work of Ownership Matters. Its important reports outlined first of all the extent to which JobKeeper was going to fund executive bonuses, a practice which was condemned by the head of the Business Council of Australia, condemned by the Australian Taxation Office, condemned by former Liberal Premier of Victoria Jeff Kennett and yet not condemned by the Prime Minister. When we asked the Prime Minister about this he said Labor was playing ‘the politics of envy’, as though a firm that takes corporate welfare and uses it to pay bonuses to millionaire CEOs is in some way entitled to do that. The very same Prime Minister who designed robodebt to illegally hound welfare recipients over a couple of hundred dollars turns a blind eye when firms get millions of dollars and use it to pay executive bonuses.

If it's true right across the program that a fifth of the money went to firms with rising earnings, we're talking about some $15 billion to $20 billion. How much is that, for Australians listening? That's $1,000 each for every Australian adult. We're talking about $1,000 of your taxes spent through the JobKeeper program to firms that didn't need it—firms like Premier Investments, firms like Harvey Norman, firms that have seen their earnings rise substantially during the pandemic. Within the car industry, we've seen dealers such as A.P. Eagers. We've seen hedge funds such as K2. We've seen the investment bank Moelis. We've seen a range of firms that didn't need corporate welfare putting their hands out and asking for it.

Meanwhile, plenty of businesses that were eligible chose not to claim the cash. I was speaking to an industry association yesterday. They said they did the numbers and worked out they were eligible but they felt that they weren't under any risk of closing, and so they didn't take JobKeeper. They felt that was the morally right thing to do. But another industry body, in a similar industry, got millions of dollars from the taxpayer. I've spoken to small-business owners who were doing it incredibly tough—travel agents in my electorate—who can't understand, for the life of them, why so much money was given to a firm like Premier Investments, paid out to a billionaire like Solomon Lew, at a time when they were having to lay off staff as a result of the pandemic. They say it's just not fair that the government ran JobKeeper in a way that would benefit millionaire CEOs and billionaire shareholders.

Some firms have done the right thing. Toyota, Domino's and Iluka are among the firms that have paid the money back. But too many firms have hung onto the cash. They've used that old shareholder theory of value, which should have hit its use-by date when the first Wall Street movie came out. They think that firms are just there for their shareholders and their executives. They don't realise that a modern firm should be there for its customers, for its workers and for the broader community. Firms that have recognised that have paid back JobKeeper money they don't need. Firms that haven't recognised that have taken cash they didn't need.

The Morrison government has done nothing to provide the public with a sense of transparency. I've asked the Treasurer how much of the money went to firms whose earnings rose. He won't answer. I've asked him how many of the firms that forecast that their earnings were going to fall actually saw their earnings rise. He won't answer that question. I've asked him how much of the money went to firms that paid out executive bonuses. He won't answer that question. I've asked the Treasurer how much of the JobKeeper cash went to firms that paid out huge dividends. He won't answer that question. That stands in stark contrast with New Zealand, where there is full transparency over their program. You can plug the name of a firm into the New Zealand website and find out who received their program. That's the thing about the Morrison government: they are as soft on the strong as they are hard on the vulnerable.

ENDS

Authorised by Paul Erickson, ALP, Canberra.