Do We Need A Royal Commission Into The Banks?

The Fairfax Ipsos poll of April 17 found 65% of the public supported a banking Royal Commission.  Yet the Government (minus initially a few backbenchers) vigorously opposes it, slamming it as “populist”, “reckless”, a “distraction”, and a waste of money.  Furthermore the Government claims it would take too long and be likely to erode public confidence in the finance system.

These Government spokesmen – Turnbull, Morrison, Cormann and others – obviously cannot see that the community is sick of the recurring finance sector scandals and has no confidence in any current measures for making these powerful institutions behave ethically – and indeed within the law.

Another oft-cited reason for the Government’s rejection of a royal commission is that we already have “a tough cop on the beat” in the form of the Australian Securities and Investments Commission (ASIC).  ASIC, they reiterate, has both the power to investigate and to prosecute.  They point out that while a Royal Commission can investigate, it has no power to prosecute.

While the “tough cop’s” powers may exist, it has not had any success in stemming the flow of finance sector scandals.  Indeed many of the revelations of bad behaviour have not been as a result of ASIC investigations but the work of whistleblowers and financial journalists. And it would seem that the fines resulting from ASIC investigations have seemed more like “slaps on the wrist” for bad behaviour rather than effective deterrents.

In addition the “tough cop”, along with other government entities, has had its response capacity limited by the very Government which claims ASIC has all that is needed to keep the banks and other finance institutions in line.  In the 2014 budget ASIC lost $120 million over 5 years.  This has obviously affected its investigative capacity.

The increasing clamour for a Royal Commission has worried the Government because of the proximity of the election. Consequently Treasurer Morrison announced recently a series of measures which he claims will solve the bank problem.  These measures include at least $120 million in extra funding, tougher penalties for wrong-doing, greater powers for ASIC and an extra commissioner to focus on prosecuting crimes in the finance sector.  These changes will be financed by the banks who will be hit with a levy of $121 million. The costs to the banks are not, according to the Government, to be passed on to bank customers.

Morrison and the Government are obviously hoping this response will undermine the appeal of Labor’s Royal Commission commitment. Presumably the Government backbenchers  who were supporting the need for a Royal Commission are now satisfied but it’s doubtful that many in the broader community – and particularly those who have been ripped off by the banks – will be.

Those who want the kind of extensive open inquiry that a Royal Commission can provide, have no confidence in ASIC as a body to expose and deal with financial industry malpractice.  This view was highlighted by a Senate committee in 2014 which found ASIC to be “a timid, hesitant regulator, too ready and willing to accept uncritically the word of the bank”.  There is considerable doubt about whether these latest measures will change that. 

Furthermore, is ASIC to investigate its own responses to the plethora of financial scandals? This is a matter which certainly needs to be investigated to ensure that such inadequate responses do not happen again.  Conflict of interest issues mean ASIC cannot be given this important task.  There is, of course, a question about whether the Government wants a light shone on ASIC’s performance just as there is a question about what appears to be its cosy relationship with the banking/finance industry.

This close relationship has been seen as a major reason for the reluctance of the Abbott/Turnbull Government to take effective action to protect consumers.  A prime example of this was its desire to wind back the Future of Financial Advice reforms legislated by the previous Labor Government.   These reforms had been introduced to protect customers from unscrupulous behaviour by advisers and their employers.  The Government failed to wind them back only because of Senate opposition.  Another more recent example of this close relationship is the funding the National Australia Bank is providing as a co-sponsor for a political fundraising breakfast for Kelly O’Dwyer, member for Higgins and the Assistant Treasurer.

The sense of entitlement that banks have about being able to operate with as little government interference as possible – even when behaving badly – was clearly obvious early this month after Labor announced that, if elected, it would hold a banking Royal Commission.  The head of the banking industry lobby, the Australian Bankers Association, refused to rule out the possibility of a mining-style tax ad campaign against Labor.  Presumably the widespread community support for a Royal Commission revealed in a recent poll might make this lobby group realize that such a campaign could backfire.

What is very obvious is that there is a need to shine a very strong light on the banking/ finance industry in order to force the changes that are required to make it fairer and more responsive to customer needs.  Moreover there is an ongoing need to ensure proper compensation for consumers who have been hurt by unscrupulous behaviour over recent years.  And the “bad apples” in the sector need to be identified and removed.  This would lead to a marked improvement in public confidence in the banking/finance system.  The Government measures are clearly too little, too late and were merely rolled out because of fear of an electoral backlash rather than because of any conviction that action was needed.

The Royal Commission into Institutional Responses to Child Sexual Abuse has shown how powerful is the shining of a strong, very public light on institutions which have done the wrong thing.  We need a Royal Commission into the banking/finance industry to force a sweeping clean-up in this sector.

Hildegard

Northern Rivers

GuestSpeak is a feature of North Coast Voices allowing Northern Rivers residents to make satirical or serious comment on issues that concern them. Posts of 250-300 words or less can be submitted to ncvguestspeak AT gmail.com.au for consideration. Longer posts will be considered on topical subjects.

So you think Australia is an egalitarian society? Think again.

Based on the World Population Clock as of 16 April 2016, a total of 74 million people (The 1 Per Cent) are said to own approximately 48 per cent of the entire world’s wealth.

In 2015 the Credit Suisse Group calculated total global wealth at US$250 trillion. 

An est. US$7.6 trillion of this was held offshore in low taxing jurisdictions (tax havens) and the majority of offshore wealth is managed by just 50 big banks, with the 10 busiest banks managing 40 percent of these offshore assets, according to Oxfam Briefing Paper 210. 

How much this represents in lost tax revenue to the countries in which profits were generated is unknown.

However, there is some indication that despite many of the extremely rich having residences in more than one country and often living in constant movement between these homes, they are not above seeking political influence in those countries in which they may not be citizens.

In countries in which they conduct business they are also politically active. In Britain the Sunday Times Rich List for 2015 revealed that: In total, 197 people who have featured in Rich Lists between 2011 and 2015 contributed £82.4m, just under half of the £174.7m donated in private and corporate cash. 25 gave more than £1m. Seven donors gave more than £2m.

What this all means is that by 2015 The 1 Per Cent had amassed US$120 trillion for their own exclusive advantage and use and, of these an est. 7.4 million individuals have the biggest share of that very large slice of the global riches pie.

In that 7.4 million strong group there is old money and new money - heads of royal houses, heirs of fortunes established in previous generations, hedge fund billionaires, investment bankers, oil barons, mining tycoons, industrialists, shipping magnates, the odd digital genius or two, oligarchs, financiers and other disreputable individuals.

Oxfam pointed out in that in 2015, 53 men and 9 women out of these 7.4 million rich individuals had a total combined wealth of $1.76 trillion.

According to the Institute for Policy Studies, by 2015 in America the 20 wealthiest people owned more wealth than the bottom half of the American population combined - that is more wealth than a total of 152 million people in 57 million households.

For the same year, Forbes listed Australia’s 50 richest residents (our very own 0.00020 per cent) as having a combined personal wealth of $85.41 billion - which would roughly equate to 5% of this country’s gross domestic product for 2015.

Also in 2015 news.com.au reported that the chief executive officers of Australia’s biggest corporations earned more than 100 times the annual salary/wage of the average worker - in some cases earning as much as $367,000 a week.

Going into 2015 Westpac Banking Corporation's CEO was already receiving an annual remuneration package worth an est. $13 million.

The gap between the very rich and the rest of Australia continues to grow.

In November 2015 Australian Bureau of Statistics reported that between 2003-04 and 2014-15 the 20% of individuals in the highest income quintile received 42 per cent or nearly half of the total growth in wages and salaries.

In September 2015 The Guardian reported that: The latest figures for Australian household incomes and wealth released last week showed that income inequality has risen in the past two years. The average annual income of the richest 20% rose by 7%, while median households saw their income rise by just 1.3% in the same period.

When one looks for evidence of political influence - it was not unknown for very large political donations from billionaires and millionaires to occur in years past, such as those from Lord Ashcroft and Reg Grundy. While in 2014-15 at least five of the first ten Australian billionaires included on the Forbes Rich List made more modest political donations - between $10,000- $100,000 and predominately to the Liberal-Nationals.

The rich tend to cluster together in life as well as politics. In 2015 Business Insider reported suburban clusters with the highest taxable incomes, of which the following are examples:

* Claremont-Claremont North-Karrakatta-Mount Claremont-Swanbourne, Western Australia, with 10,885 residents having a total combined average taxable income of est. $1.16 billion pa.

* Balmain-Birchgrove-Balmain East, New South Wales, where 10,515 have residents have a total combined average taxable income of est. $1.14 billion pa.
* Middle Cove-Castlecrag-Willoughby-North Willoughby-Willoughby East, NSW, with 10, 295 residents having a total combined average taxable income of est. $1.09 billion pa.

* Darling Point- Edgecliff-Point Piper, NSW, where 5,980 residents have a total combined average taxable income of est. $1.06 billion pa.

* Castle Cove, Roseville, Roseville Chase, NSW, with 8,985 residents having a total combined average taxable income of est. $976.68 million pa.

* Kooyong-Malvern-Malvern North, Victoria. where 7,755 residents have a total combined average taxable income of est. $817.36 million pa.

With all this conspicuous wealth in the top tier of a supposedly egalitarian society, one would expect that any journey towards the bottom of the pile would be more a gentle downward slope rather than a high drop from a cliff. 

However, in January 2015 there were 795,000 ordinary people at the bottom of that proverbial cliff, without a job and living on about $140 per week, and on any given night an est. 1 in every 200 men, women and children were without a permanent roof over their heads.

So when multi-millionaire Prime Minister Malcolm Bligh Turnbull and Treasurer Scott John Morrison begin to explain on 3 May this year how the approximately 90 per cent of Australian households (who don’t have net worths calculated in double digit millions or billions) should start to live on less or expect diminished public health and education provisions in order ’to assist' the national balance sheet, I strongly suggest that every low-income household in this group consider giving both these gentlemen the raised middle finger.

For the last three years it has been those on the bottom tiers of the wealth pyramid who have borne the brunt of punitive federal budget measures and it is time to say “No more!”.

via GIPHY

How to explain the trainwreck that is the last three years of the federal government?

Josh Bornstein writing in The Guardian on 13 April 2016 manfully tries to explain that which confounds us all:

How to explain the trainwreck that is the last three years of the federal government? The debacle poses a challenge that will dog journalists, policy wonks and historians for decades to come. The explanations for its dysfunction and sustained under-achievement are complex, but there are at least two distinct theories worth considering.

In Malcolm Turnbull’s second ministerial reshuffle in February, Alex Hawke was promoted to the office of assistant minister to the treasurer. In 2005, the then young Liberal office holder prophesied that conservative politics in Australia would move increasingly towards an American model. Hawke explained that: “The two greatest forces for good in human history are capitalism and Christianity, and when they’re blended it’s a very powerful duo.”

Can the relentless incoherence and incompetence of the current government be attributed to a particular blend of capitalism and religion that has found favour in the US? Perhaps…..

And yet, there is also a far more prosaic explanation for the mess.

The federal government is hostage to the campaign run by Abbott in opposition – a campaign had three essential features: it was ruthlessly prosecuted, very successful and, finally, completely and utterly irrational.

The opposition inculcated a state of perpetual crisis that was the envy of professional catastrophists the world over. The crises said to beleaguer the nation under a Labor government formed an impressively long list: the cost of living crisis, the retail crisis, the productivity crisis, the debt crisis, the deficit disaster, emergency low interest rates, sovereign risk crisis, the budget emergency.

None of the crises were real. Rather, they were a fiction borne of a political strategy designed to destabilise and remove the Labor government which, for all its faults presided over a stunning macroeconomic performance and successfully ducked a recession in the wake of the global financial crisis.

It is one thing to proclaim a series of crises. It’s another to promulgate the solution. The then opposition’s program was remarkably simple and painless: “No cuts to education, no cuts to health, no change to pensions, no change to the GST and no cuts to the ABC or SBS.” Critically, there would also be tax cuts.

Exactly how the federal government would cut taxes, reduce government debt and transition to a budget surplus, boost infrastructure and not cut major expenditure like health, education and the pension was never made clear. Nor could it be made clear. The laws of mathematics do not accommodate such idiocy.

Economic illiteracy can be masked by theatrical bluff and bluster for only so long. The government’s 2014 budget cut a swathe through its pre-election promises including gouging an $80bn hole in funding for health and education. Taxes weren’t cut; in fact, there was an attempt to raise a new tax – for visiting a GP.

The Senate kept the government to its pre-election promises and it has been stuck in a paralysing funk ever since.

In its short life the LNP government has levied more tax as a proportion of GDP than its predecessor. Government spending as a proportion of GDP has also increased, the budget deficit has more than doubled from its “crisis” levels in 2013, and gross government debt has ballooned by over $100bn…..

By January 2016, even conservative partisans at the Australian could no longer maintain the fiscal fantasy. Judith Sloan wrote: “I’m calling it here: the Turnbull government is a big spending, big taxing government with no real intention to pare back the growth of government spending, let alone cut it.” In other words, Turnbull continued where Abbott left off.

The wild irrationality that has infected the government has manifested itself in a series of government appointments. A climate science denier, Maurice Newman, was one of the government’s first, appointed to head its Business Advisory Council.

The appointment of Tim Wilson to the role of “freedom commissioner” was an Orwellian coup for the extreme right lobbyists at the IPA, effectively outsourcing Wilson’s labour costs to the taxpayer.

The man who specialised in the dehumanisation of asylum seekers and perpetuated the incarceration of children, Philip Ruddock, secured an appointment as special envoy for human rights. More Orwell…..

It sought to silence, intimidate and then remove the president of the Human Rights Commission, Professor Gillian Triggs. It has enacted laws to prevent doctors speaking about the harm being inflicted on refugees.

There are the measures taken to silence NGOs including community legal centres who are banned from advocating for law reform. The work of environmental organisations including the Environmental Defenders’ Office has been sabotaged notwithstanding the government’s failed attempt to prevent environmental groups accessing the legal system. So much for the rule of law…..

Who or what is responsible for the government’s many other strange cultural and religious obsessions? Eric Abetz’s insistence on a link between breast cancer and abortion, notwithstanding the science that discredited this theory five decades ago. The attempt to ban the burqa in the confines of Parliament House. The campaign to water down racial vilification laws in support of the right to be a bigot. The havoc wreaked on investment in renewable energy as the government campaigned against “ugly” wind turbines. The many attacks on the ABC, culminating in a government black-ban on appearing on its current affairs flagship, Q&A. The attack on Safe Schools.

Endless fuel to stoke the fires of satire – perhaps – but there is another more disturbing dimension to these obsessions. The federal government almost always “punches down”. The coalition caucus is a toxic brew of fierce antagonism directed at minority groups, the disadvantaged and victims of discrimination.

Those targeted to be disadvantaged by its policies are invariably minorities, the less well-off and those with little or no political voice: those with the smallest superannuation balances, Muslims, cleaners of Canberra offices, food processing workers employed at SPC, the unemployed (the attempt to impose a six-month qualification period to qualify for unemployment benefits), children in disadvantaged schools (the sabotage of Gonski education reforms), the strenuous attempts to chisel lowly paid workers with intellectual disability out of backpay owed to them, the calculated and deliberately cruel infliction of injury on refugees fleeing war zones including Syria.

And let us not forget the attempt to wind back consumer protections against predatory crooks in our ethically challenged banks, championed by Turnbull’s key ally, Senator Arthur Sinodinos…..

Then Australian Attorney-General George Brandis in March 2015: "Media organisations are not the target of this law. The targets of this law are criminals and paedophiles and terrorists"*

The Australian federal police have admitted they sought access to a Guardian reporter’s metadata without a warrant in an attempt to hunt down his sources.

It is the first time the AFP has confirmed seeking access to a journalist’s metadata in a particular case.

The admission came to light when the AFP told the privacy commissioner it had sought “subscriber checks” and email records relating to the Guardian Australia journalist Paul Farrell, and the correspondence was sent to Farrell by the office of the Australian information commissioner……

The AFP’s submission said: “You will see that exemptions have been claimed under s47E(d) and s37(2)(b) on some folios. These exemptions primarily relate to e-mail and other subscriber checks relating to Mr Farrell, and examination of meta data associated with some electronic files.”  [The Guardian, 14 April 2016]

At 11.35am AEST on 17 April 2014 The Guardian published journalist Paul Farrell’s article Australian ship went far deeper into Indonesian waters than disclosed with this map:

And this observation:

The redacted version of the classified report, obtained by the Australian Associated Press under freedom of information laws, said: “Entry to Indonesian waters was inadvertent, arising from miscalculation of the maritime boundaries, in that the calculation did not take into account archipelagic baselines.”

Crucially, the report adds: “Territorial seas declared by foreign nations are generally not depicted on Australian hydrographic charts.”

But the digital map from the vessel casts doubt on these findings, and clearly shows the Australian ship crossing the red line that marks the point of Indonesia’s baselines and entering its waters past the headlands near Pelabuhan Ratu bay. Indonesia’s territorial seas are 12 nautical miles further out from where the baselines are marked in red. It is not known whether the digital mapping device was operational at the time the Ocean Protector entered Indonesian waters.

If he wasn’t a blip on the Australian Federal Police radar before the publication date of that article, Paul Farrell was from then on.

However, it is unclear if the initial request to investigate this journalist came from the then Minister for Immigration and Border Protection, Scott Morrison, his department or some other individual or agency.

Although what appears to be Folio 3 of an est. 200 pages in Case No.5610147 seems to suggest that Customs (now called Border Force) may have been the complainant of record by May 2014 and the media finger points to the head of Australian Customs and Border Protection Services, Michael Pezzullo.

On 12 Febraury2016 Farrell stated of this investigation:

The files are made up of operational centre meeting minutes, file notes, interview records and a plan for an investigation the AFP undertook into one of my stories. Most concerning is what appears to be a list of suspects the AFP drew up, along with possible offences they believe they may have committed.

The documents show that during the course of an investigation into my sources for a story I had written, an AFP officer logged more than 800 electronic updates on the investigation file.

Farrell is not the only journalist whose metadata has been accessed in search of sources, but the Australian Federal Police insists that it has not accessed any journalist’s metadata for the last six months – the last time being in 13 October 2015.

Footnote

* See http://www.smh.com.au/federal-politics/political-news/probes-of-journalists-communications-records-rare-police-say-20150317-1m1g9d.html

Australian Federal Election 2016: genes are destiny excuse

Journalist Jennifer Oriel in The Australian on 11 April 2016, putting the case for a two-tiered national education system where public schools and their 'dumb' students living in comparative poverty are offered less opportunity because genetics are allegedly destiny:

More punitive taxes and big spender social programs in education and health are central pillars of ALP plans for fiscal repair. The former is aimed at reducing the deficit Labor increased by squandering the proceeds of the mining boom. It wasted billions on cash splashes and social programs that have failed to achieve stated policy goals in improving educational and social outcomes. Now the party needs a scapegoat. The politics of envy provides an endless supply…..

Whether the object of envy is intelligence, talent, beauty, status or wealth, there is always a group that feels entitled to what nature or nurture did not provide. If they cannot take the envied trait or property by force, the envious seek to deride those who bear it.

As a unifying political device, the emotion of envy has few equals. In Australia, it finds social form in the tall poppy syndrome. Visitors to Australia long have remarked upon the darker side envy amplifies in our national character.….

Modern Labor began its campaign against Prime Minister Malcolm Turnbull by sowing envy about his wealth and international investments. But the collective envy required to justify a circular regimen of Keynesian redistribution demands a collective target and policy goals that are always just out of reach, either because they are unattainable or conveniently unquantifiable. Equality of outcome is the substantive socialist solution.

While liberals support equal opportunity and formal equality, socialists engineer equality of outcome through policy prescriptions increasingly at odds with science. Labor’s education policy is a case in point. In a letter to school principals last week, Bill Shorten committed to redressing inequality by promising money the government doesn’t have to fund Gonski education reforms. Despite the sound aim of improving the educational outcomes of all children, at a cost of $37.3 billion, delivering the Gonksi policy through government inflicts a heavy toll on the taxpayer with doubtful return on investment. Numerous private companies provide high efficacy literacy and numeracy programs while decades of government-run interventions have had little impact in levelling educational outcomes. And recent research indicates the Gonski reform package, like numerous social programs before it, is unlikely to succeed.

Despite Labor’s education revolution and promises of substantive equality, vast differences in educational outcomes continue. The most recent research suggests a reason for inequality of educational attainment that should provoke a rethink of social and economic policy. Speaking on SBS’s Insight program, Brian Byrne of the University of New England revealed findings of soon to be published research with colleagues at the Centre of Excellence for Cognition and its Disorders. It indicates that genes are the most important determinant of maths and reading skills among schoolchildren. Their study of twins’ NAPLAN performance apparently found that maths, reading and spelling skills are up to 75 per cent genetic and writing skills are about 50 per cent genetic. The influence of schools and teachers, the focus of Labor’s policies, accounts for only about 5 per cent of performance.

Social psychologist Richard Nisbett was more hopeful in his assessment of the nature versus nurture debate in education. In Intelligence and How to Get It, he analyses research on various interventions to improve the educational outcomes of children from poor backgrounds. Some appeared promising, but many had only a modest impact whose effect diminished.

Recent research suggesting academic performance is substantially heritable challenges existing literature in which academics and politicians extol the benefits of government interventions to redress educational inequality. But it could be used constructively to drive policy reforms that provide greater choice in school and university education to cater to inborn differences…… [my red bolding]

There we have it in a nutshell - genes are destiny, a second-tier education system is advisable and anyone who suggests otherwise is suffering from pathological envy.

However, the journalist wasn't being as honest as possible concerning the views of Emeritus Professor Brian Byrne.

Here are two quotes from the answers he gave the Insight program moderator when questioned about that international twin study, which included twins from the Sydney area:

JENNY BROCKIE: This is what's genetic, what's inherited? 

PROFESSOR BRYAN BYRNE: What's genetic, for the NAPLAN varies between about 50 and 75 percent of the differences amongst children's performance can be traced back to genetic differences which leaves a fair bit for the environment…..

JENNY BROCKIE: And genes aren't destiny Bryan we need to make that very clear? 

PROFESSOR BRYAN BYRNE: That's right. 

Nor does the journalist specifically mention that Professor Dr. Richard Nisbett has formed a view that genetics matters less than differences in family environment and culture when it comes to intelligence and educational outcomes.

Wangan and Jagalingou to Adani Mining: Take your shut up money and go home

https://youtu.be/cdts26tQElM

"Adani Mining won’t listen – they are rude and obstinate – so we will take the fight up a notch. We are planning more action in the courts and will take this fight all the way.

We will continue to fight. We are protecting Wangan and Jagalingou country from irreversible destruction, from complete devastation. We will maintain our stand against the Adani Carmichael mine. Because when we say no, we mean no."

wanganjagalingou.com.au/donate