With the release of the Banking Royal Commission report, it seems the banks have come out unscathed due to political protection, writes John Passant.
COMMISSIONER KENNETH HAYNE has laboured mightily for 11 months and brought forth a pup. The 78 recommendations in the almost 1,000-page Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry are about putting lipstick on the pig that is the banking, superannuation and finance sector.
The market knows it. At the close of the stockmarket on Tuesday, the day after the Hayne Report was released, the share prices of the Big Four banks jumped by between 3.9 and 7.4%. The market knows that, apart from a few minor changes, it will be business as usual for the banks.
Mortgage brokers are taking a big hit in the market, because the recommendation to stop trailing commissions, which Labor has promised it will adopt, will dry up their rivers of gold. The Morrison Government won’t fully implement that recommendation.
No chief executive officer has been hauled before the criminal courts. All Hayne has done is refer 24 companies, including Suncorp, AMP, the Commonwealth Bank, NAB and ANZ, to the Australian Prudential Regulation Authority and the Australian Securities and Investment Commission for investigation into possible breaches of the civil or criminal law.
There is about as much chance of criminal prosecutions of the CEOs of banks as there is of Australia winning the Soccer World Cup. The 1% look after their own.
ASIC and APRA have such a good track record on prosecutions, don’t they? And yes, I believe them when they say that is all in the past. (Sarcasm alert.) Let’s not forget who, as Treasurer, cut $26 million from ASIC and slashed investigator numbers by 30 in the 2018 Budget, driven by a desire to emasculate the body and protect his banking mates. Yes, good old Scott Morrison.
The whole approach of the Abbott-Turnbull-Morrison Government has been to protect the banks as best it can. As Peter Martin said in April last year, they ran interference for the banks. Their response to the Hayne recommendations is, as Katharine Murphy in The Guardian points out, purely political. They have to appear to be doing something without really threatening their mates in the banks at all.
Bill Shorten says the response to the Hayne royal commission could be a “big issue’’ at the upcoming federal pollhttps://t.co/gidxO2bfjZ— The Australian (@australian) February 5, 2019
Why? The finance and insurance sector accounts for 9.4% of gross value added to the economy each year. The banks are a key part of the structures of economic and political power.
Commissioner Hayne’s report starts off sort of okay. Hayne blames greed and putting profit first for the litany of criminal and shonky activities by the banks and other financial institutions.
In almost every case, the conduct in issue was driven not only by the relevant entity’s pursuit of profit but also by individuals’ pursuit of gain, whether in the form of remuneration for the individual or profit for the individual’s business. Providing a service to customers was relegated to second place. Sales became all important. Those who dealt with customers became sellers. And the confusion of roles extended well beyond front line service staff. Advisers became sellers and sellers became advisers.
One problem with this statement is that it attempts to blame front line workers for the systemic drive for profit of their leaders and the culture these leaders inculcated in their staff. As Kym Sheehan points out in The Conversation, the real problem is how we (over) value executives and (under) value workers.
There is also a deeper question. Isn’t every business trying to make a profit? That is what drives them. If the drive for profit is the cause of all this misery, what is the solution? Eradicate the profit motive? Hayne, the Government and the Opposition cannot go there.
Contrary to what the then Treasurer and now Prime Minister Scott Morrison said when he announced the Royal Commission, after voting against it 26 times, the Hayne Report did put capitalism on trial and, without saying so, found it wanting.
Former Liberal Prime Minister John Howard went one further and labelled a Banking Royal Commission “rank socialism”. Of course, as the Hayne Royal Commission Report and the reaction of the Government and Opposition show, the whole process is about saving Australian capitalism — or at least removing one major impediment to its more efficient functioning. It is also about removing from view the festering sore on the body of capitalism that the banking system is for many workers and small businesses. We experience every day the rotten way banks treat us.
The banks abused their customers because they were in the business of making a profit. A royal commission into almost any other business sector would unearth exactly the same results, because the cheating, lying, and criminal conduct, including mistreatment and abuse of staff reflect the logic of capitalism — to make a profit.
Real estate? Tick. Mining? Tick. Retail? Tick. The supermarkets? Tick. The mainstream Murdoch and Channel 9 media? Tick. Property developers? Tick. Agriculture? Tick. Security? Tick. Vocational education training? Tick. The disability services sector? Tick. Aged care? Tick. The transport industry? Tick. Fossil fuels? Tick. Big pharma? Tick. The list is endless.
‘’So there’s carelessness, there’s poor systems, and there’s competency issues.”— Warrick (@warrick_w) February 5, 2019
Well, he’s really learned his lesson ...
Banking royal commission: NAB (ASX: NAB) chief Andrew Thorburn opens up on stinging Hayne criticism https://t.co/QfW7yRpaY2
Neither the Government, nor Hayne, nor the Opposition can admit the fundamental truth — that capitalism is a structure of exploitation of workers’ labour. Hiding this reality necessarily involves systemic subterfuge, cheating and skulduggery to make a profit. Anything goes and almost anything is acceptable if the goal is profit.
It is also the case that finance capital is so important to the ongoing sustainability of capitalism that to actually attempt to bring it under control puts at risk, so we are told, the very system itself. The history of capitalism over the last century or more has been one of the growth of finance capital and the very close relationship between it and productive capital — in other words, capital productive of goods and services.
This is why Hayne, the Government and the Opposition are not proposing a radical reform or shakeup of the finance industry. Until recently, Australian banks were the most profitable in the world. They are still among the most profitable. Hayne does not change that at all. His recommendations keep the banks’ super profits flowing.
What can we do? In 1935, Ben Chifley, a member of a Royal Commission into the monetary system and banking, qualified its report.
He said (and my thanks to Chris White for bringing this to my attention):
There is no possibility of any well-ordered progress being made in the community under a system in which there are privately-owned trading banks which have been established for the purposes of making profit…
In my opinion, the best service to the community can be given only by a banking system from which the profit motive is absent and thus, in practice, only by a system entirely under national control.
That is the issue, still absolutely relevant today. Should we have for-profit banks? My answer, like Chifley’s, is no. Based on the evidence before him, that should have been the conclusion of Commissioner Hayne, too.
You can follow Canberra correspondent John Passant on Twitter @JohnPassant. Signed copies of John's first book of poetry, Songs for the Band Unformed, are available for purchase from the IA store HERE.
Big four banks’ shares climb despite Hayne royal commission report https://t.co/7kALzDFQzK— 🐬🎾Sassy Leo🎾🐬 #IStandWithUnionThugs (@Loud_Lass) February 5, 2019
Banking royal commission: Hayne leaves out board accountability https://t.co/1RMpsIKBIN— David Fantoma (@fantoma_david) February 5, 2019
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