The government’s political package to solve the problem posed by Labor’s call for a banking royal commission will leave the systemic problems of lack of financial sector oversight unaddressed.

This morning Treasurer Scott Morrison and Assistant Treasurer Kelly O’Dwyer announced a hastily contrived set of changes to beef up the corporate regulator, the Australian Securities and Investments Commission. The $120 million funding cut from ASIC’s budget will be restored via a levy on the banks, but only half of it ($57 million) will flow into additional operational funding, with the other half to go into capital spending for “enhanced data analytics”, meaning only around half of the several hundred staff cut from ASIC in recent years will be restored.

The package also involves a new ASIC commissioner to focus on investigating financial sector misconduct, the re-appointment of current ASIC chair Greg Medcraft for 18 months (his term was due to expire in May), and the removal of ASIC from the public service requirements relating to industry consultants. ASIC will also collect all its costs from industry, ostensibly making it less dependent on government funding decisions.

There will also be two more reviews — one on “ASIC’s enforcement regime, including penalties, to ensure that it can effectively deter misconduct” and another on dispute resolution and complaints handling schemes.

The package was prompted by Labor’s call for a royal commission into the banking sector in the wake of repeated scandals by the big banks and the current prosecution by ASIC of ANZ and Westpac for interest rate-rigging. ASIC, the Australian Prudential Regulatory Authority and the Reserve Bank have all, in recent months, criticised the culture of the banking industry. At least two polls have found strong community support for a royal commission.

Today’s package meets the first political hurdle facing the government — restoring the funding it has cut from ASIC over the last two years, albeit with not all of it flowing into operations — but will do virtually nothing to address the major problems with financial sector oversight identified by a major inquiry into ASIC in 2014 by Labor, independent, Greens and National Party senators.

That committee — which examined the operations of ASIC before its budget cuts — found that the regulator was timid, inept and too willing to take the banks at their word. The committee also devoted a chapter to the flaws in Australia’s approach to corporate whistleblowers — after ASIC itself had admitted it had mishandled whistleblowers who brought to it key information about bank misbehaviour. The committee’s belief that “a strong case exists for a comprehensive review of Australia’s corporate whistleblower framework, and ASIC’s role therein” has been entirely ignored by the Coalition since then.

As Crikey reported in the months after the committee report, Australia fares poorly when it comes to private sector whistleblower protection, despite a good framework for protecting public sector whistleblowers. The committee recommended a long list of reforms to widen Australia’s existing, very limited protections for corporate whistleblowers, better protecting anonymous disclosures, making it easier for whistleblowers to access legislative protection, and most of all addressing the bane of all whistleblowers, the career-damaging and career-ending repercussions of being identified as a whistleblower, both through greater punishments for companies that take reprisals against whistleblowers and, potentially, a US-style whistleblower reward scheme.

Whistleblowers being sacked by the companies that expose for wrongdoing is routine — for example, CommInsure’s chief medical officer, Dr Benjamin Koh, was sacked just days after revealing a systemic refusal to pay legitimate insurance claims by the Commonwealth Bank’s insurance arm. Today’s package has nothing on whistleblowers, leaving Australia with a substandard whistleblower protection system that internationally ranks even below that of China.

Another area of concern is that ASIC will be freed up from restrictions relating to public service secondment of employees from industry, pitched by Morrison and O’Dwyer as better enabling ASIC to go after banks. In fact, such secondments raise very serious concerns about industry capture of the regulator and were the subject of recommendations by the committee in light of the evidence of James Wheeldon, a former ASIC employee.

Whether the package will be enough to assuage community demands for greater regulation of the banks remains to be seen, but today’s package looks very much like that of a government that bent over backwards to deliver a win for the big banks on gutting the Future of Financial Advice reforms, takes generous donations from the major banks and has avoided any Murray Inquiry recommendations that upset the big four.