Friday, 1 December 2017

Pressure mounted in Australia for a royal commission into banks and Turnbull caved

It would appear that some federal government MPs and senators are becoming nervous about their party’s chances at the next general election and are looking for ways to appease the electorate.

So the politically insecure Australian Prime Minister and former merchant banker Malcolm Turnbull announced a Royal Commission into the alleged misconduct ofAustralia’s banks and other financial services entities in order to appease theses nervous nellies on his backbench.

Having been dragged kicking and screaming to this point Turnbull has made quite sure that the carefully worded Terms of Reference hides a scorpion with considerable sting in its tail:

1. c) the use by a financial services entity of superannuation members’ retirement savings for any purpose that does not meet community standards and expectations or is otherwise not in the best interest of members;

This opens the door for a sustained assault over the twelve months this commission is sitting aimed directly at the sixteen industry-based superannuation funds.

These low-fee super funds are supported by Australian unions and, it is no co-incidence that eight of the top 10 list for the 10 years to 30 June 2017 are industry funds.

Industry superannuation funds which the Turnbull Government wants to see transferred to the control of the big four banks.

No wonder the banks are now in favour of this royal commission.

It is being observed in mainstream media that; It is noteworthy that the letter to Morrison from the big four bankchairmen and CEOs seems to have been used as the template for the royalcommission announcement.

Brief Background

ABC News, 28 November 2017:

The calls for a full inquiry have been relentless for years, emanating from a broad section of the community — from farmers, small business and households, jaded and disillusioned with the industry's rampant profiteering, fee gouging and blatant disregard for the law.

How many times can a Commonwealth Bank chairman sincerely apologise for a yet another breach of trust? What, pray tell, will be the cause of next year's?

But the overwhelming reason for an inquiry rests on just one principle — accountability.

What has been forgotten in the endless round of scandals in recent years is that the Australian banking sector is a taxpayer subsidised industry.

It's an industry that pays ridiculously bloated salaries to its leaders; that showers itself with massive bonus payments when profits are soaring but instantly demands taxpayer protection and support when the tide turns. More on that later.

A summary of bank transgressions during the past decade compiled by former Deutsche Bank analyst Mike Mangan at

The Guardian, 28 November 2017:

A majority of Australians would support a royal commission into the banks, with this week’s Guardian Essential poll showing 64% in favour, including 62% of Coalition supporters.
With Barnaby Joyce holding out the prospect that the Nationals might formally support an inquiry into the banks when the party room meets next week, and with dissident parliamentary numbers for the proposal building, the new poll finds public support for a banking royal commission has stayed constant for two years.

Support is highest among Labor voters at 72%, and people intending to vote for someone other than the major parties (71%), but there is also clear majority support among Coalition voters and Greens voters – 62%.

ABC News, 28 November 2017:

It seems inevitable that a bill calling for a wide-ranging inquiry into banks, insurers and superannuation providers would pass the Federal Parliament, after another Nationals MP pledges support for it.

Llew O'Brien is one of the fresher faces in the 45th Parliament, but he has parachuted himself into the political spotlight by confirming he would back the proposal from Nationals Senator Barry O'Sullivan.

Mr O'Brien gave his support on the condition the inquiry investigate discrimination by financial institutions against people with mental health problems.

The Australian, 24 November 2017:

Liberal National Party senator Barry O’Sullivan will move a ­motion in the Senate next week to establish a powerful probe into the financial services sector, staring down government opposition and criticism from former prime minister John Howard.

Senator O’Sullivan yesterday hit back at Mr Howard’s labelling of his proposed bank probe as “rampant socialism” after circulating a draft bill to establish a commission of inquiry into the banking sector.

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