So the government has carefully dropped Graeme Samuel’s review of the Australian Prudential Regulation Authority (APRA) to selected media ahead of its release, getting plenty of coverage while preventing the rest of us from actually reading the report, which is to be released today.
The coverage naturally emphasises APRA’s extensive failures, especially in superannuation regulation, where it has virtually ignored the interests of members, and its overly collaborative approach to “regulating” the big banks. All fair enough. APRA and the government have agreed to all two dozen of the review’s recommendations.
The APRA review — as the AFR’s James Thomson wisely noted — forms a companion piece to a culture review commissioned by APRA itself into the Commonwealth Bank last year, also by Samuel, which pulled the scab off decades of poor governance and contempt for customers. Both organisations have a culture of conformity that discourages anyone from challenging a manifestly inadequate status quo; both have cultures that ignore non-financial risks.
But having had a bank, and a regulator, we need a third culture review when it comes to financial services regulation: the Liberal Party.
Not the Nationals — on financial services regulation, the Nats and parts of the LNP have been in the corner of customers and small business, and often led the debate in advance of Labor. There should be a statue of former Nats senator John Williams somewhere for his sterling service in unmasking the crimes of the banks and the astonishing ineptitude of APRA’s partner-in-incompetence, ASIC. This has been a Liberals-only problem.
For all that the government may want us to focus on the failings of APRA today, there’s an elephant in the room: the Liberal Party’s long-term determination to act as agents of the major financial institutions. Having received several million dollars in donations from the financial services industry over the last decade, the Liberals did everything they could to protect it — opposing FOFA, trying to repeal FOFA, severely cutting ASIC’s budget, resisting a royal commission.
Indeed, over the last decade it has been difficult to separate the Liberal Party from the banking industry: the Coalition minister for financial services regulation has, again and again and again, been a former banker. Another former banker, Jane Hume, currently occupies the role, and despite a brief stint working an industry super fund, has resumed the Liberals’ demonisation of industry super, calling it “unholy” and part of a Labor/trade union conspiracy. A new Liberal senator, Andrew Bragg, formerly of the bank-run Financial Services Council, was point man in another, if hilariously inept, campaign to smear industry super.
In fact what can be more cultural than the Liberals’ irrational obsession with destroying industry super? Rather than celebrating industry super as one of the great victories of neoliberalism — the co-opting of the entire trade union movement, and every worker in the country, into the free market system and its funding model — the Liberals spend a great deal of their time trying to devise ways to wreck the sector, even if it means harming the entire superannuation system.
These are people who can’t even bring themselves to admit that industry super funds out-perform big bank funds after the Productivity Commission stated it in black and white.
And this cultural obsession of the Liberals has helped cost ordinary Australians a great deal. Over the last decade, according to a study by Industry Super Australia based on independent data, the out-performance of the industry super sector compared to retail funds has cost retail fund members, on average, $2000 a year — money that, over a working life, means a cost of hundreds of thousands in lost retirement income.
So, let’s have Graeme Samuel finish the trifecta and conduct perhaps the most important review of all, into why a major political party has been collaborating with some of the worst actors in the financial services industry for most of the last decade.
What steps can Australia take to fix the fundamental problems in the financial regulation system? Send your thoughts along with your full name to [email protected]