ILL FARES THE LAND
There is always more to the story.
The royal commission created its own narrative, which was carried by the nation’s media and regurgitated in everyday discussion in a familiar, self-reinforcing process that ends up creating a single agreed version of reality. The same narrative has worked its way into the pages of this book.
However, the first draft of history often shows just a fraction of the whole story. Often, there are stories that remain untold.
In April 2016, when Kelly O’Dwyer was assistant treasurer, she visited the United States. In Washington, DC, she struck up a number of conversations at the G20 finance ministers and central bank governors meeting and at the International Monetary Fund and World Bank spring meetings.
Her talks with some of the world’s most powerful financial regulators and government figures came a month after Commonwealth Bank had been hit by the CommInsure life insurance scandal. Just before she hopped on the plane to the US, Labor had started openly considering its support for a royal commission into the banking sector, a position it would soon officially adopt.
As O’Dwyer met leading international figures over the next fortnight, she was stunned at the questions she received. Many of the global central bank representatives who chatted to her only wanted to discuss one thing: was there a systemic misconduct problem in the Australian financial sector that warranted a royal commission?
As the assistant treasurer—who was responsible for the financial services and superannuation sector—flew back to Australia, she became convinced of the need to restore confidence in the country’s banking sector. If it was going to face calls for a royal commission, the government needed to have a plan.
O’Dwyer started meeting with Peter Costello, a former treasurer and her predecessor in the federal seat of Higgins. She was not entirely opposed to a royal commission, but as she discussed with Costello what was needed to diagnose and fix the issues in the finance sector, she decided it would not be a bad idea to proceed with caution.
The government needed to be clear on what problems were afflicting the banking, insurance and superannuation sectors. It would also need to ensure there was no further contagion of scandals in the sector, in order to keep the system stable for customers, for overseas investors and for the banks’ own operations.
Under Prime Minister Malcolm Turnbull, the government started considering the creation of a compensation scheme for victims of financial misconduct. It wasn’t a royal commission, but it was hoped it would soothe the deteriorating public sentiment.
As O’Dwyer worked on pulling a scheme together with the help of commercial law professor Ian Ramsay and consumer advocate Alan Kirkland, she became weary of the types of people who were seeking redress through her office. While she received numerous reports of horrible treatment of consumers by super funds and life insurers, she was also inundated by spivs and businesspeople who wanted compensation for their own poor business decisions.
There were property developers who wanted the bank to pay for their losses after their projects fell over. She had no sympathy for small businesspeople whose poor handling of company finances resulted in the bank foreclosing on their loans. One was a parliamentary colleague: One Nation senator Rod Culleton. Senator Culleton, whose term ultimately ended after only six months, was a cereal and sheep farmer until he lost his farm in 2013, after which he took to fighting ANZ in the courts and in the media.
O’Dwyer spent countless hours arguing with Culleton, who once presented her with a drawn-up document purporting to show evidence that the existence of Commonwealth Bank was not in accordance with Magna Carta.
Culleton was pushing for a royal commission, but his party’s leader, Pauline Hanson, struck a deal with the government to back down from that proposal in return for a parliamentary committee inquiry into foreclosed farming loans. Hanson chaired the committee, which was established in early 2017, in a momentary slip-up by Turnbull, who didn’t at the time realise he had given the minor party the power to chair the inquiry during the discussions with Hanson and her senators over their support for various pieces of government legislation during the horsetrading.
Soon after, O’Dwyer went on maternity leave and gave birth to her second child. By the time she returned to work a few weeks later, she was thoroughly convinced of the need to hold a royal commission into the banks.
It was July 2017, and O’Dwyer had been holding discussions with banks and superannuation funds. She knew where many of the bodies were buried. Having also asked the Productivity Commission to conduct a wholesale review of the superannuation sector, she was more than aware of the need to launch a much more powerful examination of the nation’s retirement savings managers, who were frustrating the PC’s review. Senior members of the industry fund sector laughing at her suggestion that a royal commission needed to happen only firmed her resolve.
When, not even a month later, the anti-money-laundering regulator AUSTRAC launched a Federal Court action against CBA alleging more than 50,000 breaches of the law, she urged the government to launch a commission. O’Dwyer had even drawn up draft terms of reference for a royal commission into the banking, insurance and superannuation industries. Her office had drafted notes on how such an inquiry could be conducted and how the government could sell it. The royal commission was ready to be announced.
Despite the AUSTRAC claims implicating CBA in frustrating the authorities’ attempts to clamp down on terrorism financing, giving the government a clear reason to launch a royal commission, O’Dwyer was blocked by internal resistance. Turnbull and his treasurer, Scott Morrison, couldn’t find common ground. Sources say Turnbull was wracked by indecision, at times open to the government launching a commission and at others swinging back against the idea. When Morrison was open to the idea, he lacked the support of his prime minister. The two never seemed to want a royal commission at the same point.
Instead, the government opted to give APRA the job of doing a wholesale review of CBA’s culture when Morrison was not satisfied with the bank’s explanations for its failings.
The failure to launch a commission only strengthened Nationals senator Barry O’Sullivan’s plans to introduce a private member’s bill for a commission of inquiry into the banks. O’Dwyer believed this could be an option the government should pursue, and went about giving oversight to O’Sullivan as he drafted the terms of reference, as I detailed at the start of this book.
However, she was disheartened by O’Sullivan’s lack of nous and had to insist that such an inquiry include a proper examination of the super sector. She attempted to get O’Sullivan to fashion a sensible and targeted royal commission, urging him to take a step back and work with the government to arrange a workable outcome. It was of no use. O’Sullivan wasn’t open to being shepherded through the process.
During this time, NAB chairman Ken Henry and NAB senior executive Mike Baird were stalking the ministerial wing at Parliament House. Baird, a former NSW premier who had joined NAB after retiring from politics, was close with Turnbull, and Henry had longstanding government contacts due to his time as Treasury secretary.
The duo came down to Canberra to meet with Turnbull and Morrison frequently in the months leading up to the royal commission, presenting the government with a plan where the banks could formally ask the government to establish a properly constituted inquiry. The idea was divisive among Turnbull, Morrison and O’Dwyer. Why would the government want to look like it was doing the banks’ work?
However, in the end this was the plan Turnbull and Morrison ended up choosing. The night before the major banks released their calls for a sensible royal commission in a statement to the ASX, Henry emailed a copy of the draft statement to Morrison. The rest is now history—or a fraction of it.
A little over a year later, a few weeks after the publication of Kenneth Hayne’s final report, O’Dwyer stood up in parliament to give her valedictory speech. She was leaving politics after ten years as an MP. ‘I am glad we called the royal commission into the banking and financial services sector,’ she said. ‘It was the right thing to do. We were so keen to address the issues we had already identified that we underestimated just how strong a disinfectant the sunlight from a royal commission would be.’
Most of the time, governments will take the most expedient course of action. Ideology plays an important part in determining the path taken, but expediency often dominates the choice of routes available.
The story above shows that the public face of a government can mask a great number of alternative directions being considered by competing ministers. That competition will now largely play out between the Coalition and the Labor Party. While Hayne has provided a road map for reform, it is up to each side of politics to decide how to implement it. The early indicators are that reforming the financial sector will sometimes be a dirty business.
Just a few weeks after pledging to implement all the recommendations, both sides of politics ditched the plan to clamp down on the bonuses being paid to mortgage brokers. With $3 billion a year at stake, the mortgage broker sector had instantly wedged the government and Labor with a massive campaign against the measures.
Of course, some of the concerns about the reshaping of the mortgage broker sector were legitimate. More than half of all loans in Australia are bought through a mortgage broker, and the sector has grown to be a vital part of the country’s financial infrastructure. The banning of upfront and trailing commissions would likely put many brokers out of business—either that, or the salaries they enjoyed would become significantly smaller. If the sector was hobbled, it could reduce the access many smaller lenders had in reaching borrowers. Smaller banks don’t have the branch network the big four banks enjoy.
The failure to adopt ideal reforms in favour of second-best regulations is a recurring problem in the financial sector. Because the big four banks have grown to be so large, any changes to laws governing the financial system can inadvertently hand them even more power.
Indeed, despite losing about $80 billion in share-market value over the course of the royal commission, the failure of Hayne to recommend any major structural changes to the big banks resulted in a $19 billion stock-price rally the day after his report was released. Bank stocks each rose about 5 per cent in one day. That compared to shares in the two largest Australian brokers, Mortgage Choice and Australian Finance Group, which crashed more than 25 per cent on the day Hayne’s report was released.
Global ratings agency Moody’s said the fact the royal commission had not recommended breaking up the banking oligopoly supported the sector’s ‘strong and stable profitability’.
As soon as the recommendations were made public, the mortgage broking industry began contacting MPs and senators, complaining the sky would fall in if the rivers of gold flowing into their pockets were stopped. Electoral offices were inundated with claims that the big four banks would be anointed with renewed power, crushing the benefits of competition in the market.
Hayne had known that forces would mobilise against his recommendations. ‘In their submissions, some entities used the undoubted need for care in recommending change as a basis for saying that there should be no change,’ he wrote in his final report. ‘The “Caution” sign was read as if it said “Do Not Enter”. “Disruption” and similar terms can be used, and in some submissions to the commission were used, as little more than pejorative synonyms for “change”.’
Other nations, such as Denmark in particular, grappled with the same transition for mortgage brokers years ago. A fee-for-service approach was adopted, and borrowers in Denmark are still able to buy a mortgage.
As the sector in Australia quickly formulated a response to the attack on its remuneration model, consumer advocate groups quit en masse from a forum aimed at improving governance and remuneration practices in the sector, accusing brokers of being ‘disingenuous’. This means that the Combined Industry Forum, established in the wake of a review of the sector by ASIC and following the recommendations of the Sedgwick review of banker bonuses, now lacks any members interested specifically in consumer outcomes. Choice, the Consumer Action Law Centre, Financial Counselling Australia and the Financial Rights Legal Centre left the forum, arguing that the sector ‘cannot be trusted’ to stand up for customers.
‘We have been locked in discussions with them for years, with no progress on introducing a best-interests duty for brokers or removing conflicts from the sector,’ Choice chief executive Alan Kirkland said. ‘With many members of the forum now backing the mortgage broking lobby’s political campaign against the royal commission reforms, it is clear that they are only interested in blocking meaningful change.’
Taking power away from the financial industry is tough.
While the banking and wealth management sector has incredible amounts of financial power, much of that influence is channelled through another powerful sector: the lobbying industry. In Australia, there are sixty-eight industry associations representing banks, superannuation funds, insurers, financial planners, accountants, and so on. For a country with a small population, that is an enormous number of lobby groups representing a globally small economic industry. Is it any wonder that the financial sector maintains a 10 per cent share of all Australian economic output? Only Switzerland, a global centre for banking, has a financial sector with more domestic power than Australia—which, for all its self-promotion, lacks the regional stature of the Hong Kong and Singaporean financial centres in Asia.
Public policy think tank the Grattan Institute has found that after retiring from parliament, more than one in four federal ministers since 1990 have gone on to work for a lobbyist firm, peak body or other special interest. The revolving door between government and industry has whittled away the ability for MPs to take decisive action on vested interests, distorting the democratic process.
After analysing the industries most represented by the roughly 500 commercial lobbyists working in parliament, the Grattan found that almost 80 per cent of businesses who had hired lobbyists were operating in highly regulated industries. This meant that the design of the law had an unusually large impact on how those industries generated and maintained profits and revenue. Making the issue worse, the public service has over recent decades grown weak in terms of shaping laws. Many Treasury staff members now see their main role as shaving off the rough edges of policies that may harm the economy, instead of advocating for sound laws and regulations that operate on a principled basis.
With many industry organisations also becoming more partisan and wedded to current business models, the field of public debate has been vacated by sensible voices. It is increasingly left to statutory bodies to run silent campaigns against bad government policy. This puts government departments in a tricky position where they must develop strong policy positions while avoiding accusations of bias or politicisation.
Another problem arises when senior members of those departments, or of the regulators, look to the industry they are supposed to regulate as a golden parachute scheme. The boards of Australian financial institutions are littered with former heads of Treasury, the RBA and other government departments.
Of course, NAB was once lucky enough to count a former Treasury secretary as its chairman, and halfway through the royal commission another former Treasury secretary, John Fraser, joined AMP. Westpac was previously chaired by former Treasury boss Ted Evans.
When Glenn Stevens stepped down as head of the Reserve Bank, he hopped across the road at Macquarie Place to Macquarie Bank, on whose board also sits former Productivity Commission chairman Gary Banks. ANZ employed former RBA boss Ian Macfarlane as a board director. Former ASIC senior executives and APRA members sit on numerous financial company boards.
These men and women are some of the most patriotic Australians, with independent minds and independent behaviour, and it would be silly to think they have simply sold out to the companies they once regulated. But perception matters to many Australians. If the person on the street can’t believe regulators will use their time in office to enforce the law or drive better standards that might threaten company bottom lines, then there is an issue. Maintaining trust in the financial system must be a primary motivator for senior regulators.
It was refreshing, two days after the release of Hayne’s report, when RBA governor Philip Lowe questioned the profitability of the banks. Speaking in Sydney, he said that while banking sectors in many other developed English-speaking nations had registered a fall in profitability in the wake of the GFC, the profitability of Australian banks remained high by international standards.
‘At the moment the Australian banks are earning roughly 13 per cent return on equity,’ Lowe said. ‘When I talk to overseas bankers and ask them what return on equity they’re targeting, a number around 10 is common. The Australian banks still have higher returns on equity than many international banks. I don’t know how long that’s sustainable, whether extra competition in the system will drive that or whether they have low credit losses at the moment so high returns on equity. It is a good question to ask or contemplate: why it is that the Australian banks can earn, on average, higher rates on return on equity than similar banks overseas? I’m not sure of the answer to that.’
While Lowe rightly questioned the profitability of the major lenders, his offsider on the other side of the ditch went one further.
In a strange twist of fate, New Zealand lacks its own banks. Its major banking players are all subsidiaries of the major Australian banks. In the same week Lowe made his comments, Reserve Bank of New Zealand governor Adrian Orr attacked the four major banks for making supersized profits at a time he was attempting to force them to hold more capital to insulate them from economic shocks.
‘We have to remember that the return on equity should be related to the risks they are taking,’ Governor Orr said. ‘At the moment, the return on equity for banking is incredibly strong and we would even hazard to say over and above the risks they are holding themselves as private banks, because there is an aspect in most OECD countries of the ability to free ride—where returns can be privatised and losses can be socialised.’
An optimistic interpretation of Hayne’s central recommendations would be to say that, once conflicts of interest are banished from the system, true competition between financial companies will result in diminishing margins of profitability. A proposal that the ACCC conduct five-yearly studies of vertical and horizontal integration in the financial system—where companies cross-sell products owned by arms of their own conglomerations—could, over time, reduce the market domination of the oligopoly.
While Hayne’s recommendations received harsh criticism for opting against wholesale structural separation of banks and wealth management businesses, and against a tearing-up of the main regulatory frameworks that guide the system, he was also considerate of the economic costs of doing so. When the government drew up the terms of reference for the royal commission, it specifically asked him to be mindful of the economic impacts of any recommendation that he made.
In many cases, it is more prudent to allow companies to slowly restructure over time rather than force immediate revolution. If slow changes of legislation are exhausting to guide through parliament, wholesale change would be dead on arrival.
If there can be no doubt that the primary cause of the misconduct in the financial system is the companies themselves, then the primary responsibility for restructuring their behaviour also rests with the banks. If bank culture and governance change, it will result in better outcomes for consumers.
When independent consultants were first brought in to investigate the failures in the banks’ wealth management operations, what they found were recurring references to ‘toxic revenue’. In banker parlance, this refers to product streams that produce such high rates of profitability that it is thought there must be an issue with the product.
Take the case of consumer credit insurance, where expensive policies were sold to unsuspecting customers and rarely claimed upon. Profits on the products were so lucrative that investigating the reasons why they were delivering such revenue for the company would only reveal that it was due to the toxic nature of the products. Bankers believed any product line delivering toxic revenue was best left unexamined.
During the royal commission, Westpac reviewed each and every financial product the bank offered. As it carried out the review, loans sold by financial advisers to self-managed super funds were shut down. Commonwealth Bank soon followed Westpac, and now no major bank will offer the so-called limited recourse borrowing arrangements.
If bankers hold themselves accountable, consumers will be better off.
In 1770, in his poem ‘The Deserted Village’, Oliver Goldsmith recorded his thoughts after surveying some of the unintended consequences of the Industrial Revolution and the pursuit of wealth at any cost. One line continues to resonate with me: ‘Ill fares the land, to hastening ills a prey, where wealth accumulates, and men decay.’
Wherever enormous financial power amasses, so too does political and social power. Power has a tendency to corrupt. The narrative of the royal commission has forced the banking sector to accept that change is necessary. However, into any power vacuum will soon step another force. The risk of the royal commission is that while the banking sector has been thoroughly shamed by the process, the not-for-profit industry superannuation sector has come out without so much as a scratch. If the banks have been dethroned, there is a danger that another sector has been anointed to take the crown. This means the future of the superannuation sector needs to be more closely examined.
By 2035, there will be $10 trillion in the nation’s retirement savings pool, and the lion’s share will be managed by industry funds. It will be one of the most powerful sectors in the world.
As the royal commission revealed untold rates of criminality in the bank-run retail fund sector, the industry funds were shown to be beacons of sound, consumer-friendly financial management. Savers have already begun voting with their feet: Australia’s largest industry fund, AustralianSuper, had received nearly $4 billion in savings directly from the retail sector by the time Hayne handed down his final report, and Hostplus said its rate of joining members jumped 350 per cent during 2018.
But the shift, and the growth of the sector, present new and different dilemmas.
With only a year to trawl through all misconduct in the financial system, Hayne had little time to conduct a thorough review of the mechanics of the industry fund sector. Multiple notices to produce information were sent to industry funds, but it was beholden to the funds themselves to nominate what they believed was misconduct. In the industry fund sector, outright misconduct wasn’t necessarily the problem to be examined.
Rather, the sector’s structure is evolving into one that closely mirrors the interconnected, vertically and horizontally integrated nature of the bank-run wealth management industry. Cross-subsidisation is rife throughout the sector, and the money guaranteed to the funds through enterprise bargaining deals represents a key sustaining life force that allows complacency to develop.
While there are a host of diligent, thoughtful companies, there is also an underbelly of mismanagement and deleterious consumer outcomes. A series of small industry funds governed by union and employer groups have presided over funds with sky-high rates of ‘zombie’ inactive accounts, made up of savings that are lost or forgotten and that have failed to be reunited with their members, and this has allowed small funds to exist where they otherwise would not be able to.
These include the CFMEU-backed $3 billion First Super, where 44 per cent of members are inactive, and the $3 billion Club Super, which is backed by United Voice and the Australian Workers Union and has 42 per cent of its members considered inactive. The $1 billion Meat Industry Employees Superannuation Fund has 36 per cent of its membership inactive, as does the $3 billion United Voice–backed Intrust Super Fund.
Several funds in the system, including First Super, are reluctant to leave the industry or merge, even under pressure from APRA. The $3 billion fund, which is co-chaired by Michael O’Connor, the brother of Labor workplace relations spokesman Brendan O’Connor, manages the retirement savings of more than 60,000 workers in the timber, pulping and furniture industries. Despite its top-quartile investment performance, its relatively small membership base is ageing and drawn from shrinking industries. While every other union-and-employee-backed industry fund has signed up to the Insurance in Superannuation Voluntary Code of Practice along with major retail funds run by the big four banks and wealth managers, First Super has not. It is the only one not to have done so.
There seems no good reason for many funds to be controlled by the same union. If the funds are concerned about accusations that they are taking members’ money and handing it over to unions, then it would make sense to consolidate funds controlled by the same union. But this does not happen.
The superannuation system is beset by consumer apathy and disengagement. While some funds work tirelessly to put members’ interests first, others are, at best, complacent. Public policy can be the first line of defence for consumers in these funds.
The PC’s central recommendation—that prospective employees should be provided with a list of the ten top-performing super funds for them to choose from—is vital to force funds to operate in members’ best interests. On its face, it seems like an entirely uncontroversial idea: simple, useful information provided to consumers that would have the effect of kicking super funds into gear. The PC reckons it will deliver a $165,000 boost to the average retirement balance. Underperforming funds will also be policed under the so-called ‘elevated outcomes test’ to ensure laggards are punished, which will further help savers. Consumers wouldn’t even be forced into one of the top ten funds.
However, the proposal sparked sustained condemnation from the industry fund sector that was then filtered through the Labor Party.
There are more than 100 sub-scale funds in the system, where funds are too small to keep fees low. Many of these are small industry funds. Should the best-in-show list put pressure on these small funds to merge, many of their union appointees would lose their postings, limiting their ability to direct where capital is invested and influence how big companies behave.
I’m a proud member of the Media, Entertainment & Arts Alliance, the union for journalists, actors, photographers and others who work in media, the arts and sport. The $5.6 billion Media Super, which takes board directors from the MEAA, has top-quartile performance, but it lost 6 per cent of its membership in 2018, and $80 million of its savings in rollovers. The media is under pressure, and as people leave the industry, most take their savings with them.
When the government proposed consolidating lost and idle accounts through the Australian Tax Office, Media Super, along with other small industry funds, was worried. With many inactive accounts, it would have to convince members to consolidate into Media Super rather than risk losing the assets that were subsidising those left in the fund. Gerard Noonan has been the fund’s chairman for almost thirty years. One has to wonder how he plans to avert its looming liquidity shortfall.
The problem is that many directors don’t want to give up the influence they can wield. Having, in early 2019, almost a trillion dollars to invest gives these funds a power to shape the economy in ways they favour. This is not de facto a bad thing, but it isn’t ideal, either.
As industry funds are under intense pressure to deliver high rates of returns on the investments they make, the more pressure companies they invest in will be under to deliver high rates of profit. Replacing one set of institutional investors that seek to drive supersized profits in the firms they own with another set of institutional investors seeking to drive outperformance raises the risk that everyday consumers and workers will lose out.
On top of this, the cosiness among industry funds raises very real concerns about the concentration in ownership of companies and assets. Most Australians would not know it, but the jointly owned IFM Investors, an asset manager owned by the industry fund sector, controls nearly all the major airports in Australia. It is slowly gobbling up more infrastructure assets across the country, on which it expects to generate a significant investment return.
For the Labor Party, the situation in the industry fund sector represents its biggest challenge. It is likely that when the next financial crisis arrives, there will be some damage caused by the interconnectedness and interdependence of the industry fund sector. Then, Labor’s pledge to increase the current rate of wages flowing into the super sector, rising from 9.5 per cent to 12 per cent, will only serve to make the industry more powerful and will be done at a significant cost to the average worker, and to the federal budget.
The funds management sector has been begging for the superannuation rate to increase for years, complaining that retirees could be left in the lurch if more of their wages aren’t handed over. The Grattan Institute study found that the average retiree can already expect to receive an income of at least 91 per cent of their pre-retirement salary under current savings rates—well above the 70 per cent benchmark recommended by developed economies. Putting more wages away in super will mainly boost the retirement incomes of already-wealthy Australians, at a significant cost to the budget.
Low-income Australians who don’t own their homes—a growing cohort who are failed by the way the current super system is set up—would be best served by a 40 per cent increase in rent assistance rather than sidelining even more of their salary into super, where meagre contributions are swallowed up by fees.
While more money going into super funds would be a huge windfall for wealth managers, the government would lose significantly more revenue due to the generous tax breaks built into the super system. Treasury modelling in 2013 found the government would continue to lose more revenue through concessional tax breaks than it saved in keeping self-funded retirees off the pension. Increasing the super guarantee rate to 12 per cent will result in the total super tax breaks adding more than 10 per cent to the nation’s debt by 2050. This means the government will have less money to spend on programs such as aged care, education and hospitals—all to satiate a questionable claim from the superannuation industry.
As the royal commission drew to a close, the close relationship between the Labor Party and the Greens was on show when the two parties refused to vote for the ‘Protecting Your Super’ bill, first announced by O’Dwyer a year earlier. Labor and the Greens demanded the government agree to amendments that would carve out entire funds from the measures.
More than forty groups had swarmed parliament to lobby against the bills, which were expected to slice $3 billion in revenue out of the scandal-plagued life insurance industry. These included odd bedfellows such as Australia’s largest insurer, the Hong Kong–based AIA Group, the ACTU and Industry Super Australia. In some cases, insurance sold in super—where 70 per cent of Australians obtain life insurance—has been found to potentially short-change workers by as much as $600,000 by the time they reach retirement, according to a report by actuarial firm Rice Warner.
If it remains impossible to legislate modest, sensible changes to policy affecting the industry fund sector, then it will be everyday Australians who end up paying for it. And with every Australian forced to engage with the super sector, which is already perhaps more financially powerful than the banking industry ever was, it could be a recipe for disaster.
The day Hayne was due to hand down his report, I called Nationals senator John ‘Wacka’ Williams again.
This time, he was on his property and livid because the new John Deere Gator he had just bought for his farm had dodgy wheels. His last Gator had run for more than a decade without any problems, and he’d put it to good use on his land. The wheels on his brand-new machine were already starting to fall apart.
‘I thought you’d have enough stories over the last year, Michael,’ Wacka said. It was true. While the royal commission had been great for the legal fraternity, it had also been great for journalists. Each day that the counsels assisting brought a new witness onto the stand, it was explosive. For the companies, it was a rolling catastrophe as they stumbled from one disaster to the next, but for the reporters, it was a rich vein of complex, stimulating stories, with the best headlines you could ask for.
The man who had first stood up in the Senate nearly a decade earlier and called for a royal commission into white-collar crime believed the royal commission had done a superb job. As he drove around regional communities, he had already sensed a change in the air. The banks were now dealing with drought-affected customers with some level of compassion. Sentiments had changed. It was important that this cultural change was made permanent.
Wacka reminded me that it was now just a week until he was due to give his valedictory speech in parliament. Like O’Dwyer, he had chosen to leave at the federal election after a decade in politics. To celebrate his time on Capital Circle, he had organised a party. ‘It’s Wacka’s shout,’ he said.
And so, on 13 February, Senator Williams stood up to the speaker’s podium to give his final speech.
The gallery was packed. Watching from the seats open to the public was Commonwealth Bank’s Matt Comyn, who had struck up a relationship with the senator after rising to the role of chief executive. Comyn had even visited the farm. A few seats to his left was whistle-blower Jeff Morris, who had exposed the financial planning scandal at CBA. A few benches over from Morris sat ASIC deputy chair Daniel Crennan, the man now tasked with taking companies to court. Adele Ferguson, responsible for much of the groundbreaking reporting into financial sector misconduct, was sitting close by.
‘People might think I am the banks’ enemy,’ Wacka said. ‘No, I am not. Often I say the bank has got it wrong but many, many times I say the customer has got it wrong as well. I have worked closely with the banks.’
The crowning achievement of his time in parliament was the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. ‘It is a bit sad to see the politics being played but if both sides of the chamber had listened to that recommendation in those days in 2014 we would have achieved a lot more a lot sooner,’ he said. ‘However, as they say, better late than never.’
While Wacka was never right on every issue, he carried himself in a manner that showed he fundamentally respected the work of those on the opposite side of the fence to him. ‘The one sad thing about the Senate is that it works a lot better than the public thinks. When the public looks at the TV they see hand grenades being thrown around the chamber, a bitter atmosphere,’ he said. ‘It is not like that at all. We work close together on committee work and have achieved so much.’
Standing in the Senate courtyard after he had received a standing ovation for his time in parliament, Wacka was surrounded by bankers he had pushed onto the witness stand, regulators he had shamed into action through his dogged pursuit of accountability, and members of each parliamentary party who admired his honest, matter-of-fact approach to solving issues.
It was easy to feel that sometimes things do work out for the best. Perhaps, yes, things have changed.