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Speech: Banking Executive Accountability

Lee Rhiannon 8 Feb 2018

On Wednesday 7 February 2018 Lee Rhiannon made the following speech during the second reading of Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2018.

The system we live under and work under is rigged, and the banks are a big part of the problem. The economy works for the rich and this bill does nothing to change that. Big bank CEOs are the flag-bearers of this rigged system. These CEOs fail to protect their customers, they fail to properly manage financial risks and they fail to report changes and where they've gone against the law. Time and time again, these CEOs are letting the public down. They fleece the public with excessive fees and other charges, all to boost their profits. That's what's going on here. While there are complexities in the system, on one level it's very simple: it's about boosting profits.

The annual pay packets of the CEOs of the banks illustrate that so effectively. I will put on record what they are to illustrate how out of control the system is and the depth of failure of the bill currently before us, the Treasury Laws Amendment (Banking Executive Accountability and Related Measures) Bill 2018. CBA CEO Ian Narev received a $12.3 million salary package in 2016, off a base salary of $2.65 million—an absolute shame. NAB's Andrew Thorburn received a $6.7 million salary package, off a base salary of $2.4 million. ANZ's Shayne Elliott received $5.07 million, off a base salary of $2.1 million. Westpac's Brian Hartzer received $6.7 million, off a base salary of $2.8 million. Macquarie's Nicholas Moore received $18.7 million, off a base salary of $818,000. The system is deeply broken. I said it's rigged—it's just rotten to the core. Why is the essence of this whole system about profits? It is because that is how the CEOs make their money. It's not about how they treat customers or if they're helping to make housing more affordable, ensuring young people can get a start in life or assisting people to get loans for their small businesses. That's not how they're judged. It's all about the massive profits they're making, and that's what flows through to these obscene wages—and that's what should be dealt with here today.

And these profits are obscene. In 2015, Australian banks made the highest profits anywhere in the world as a share of GDP.

The privilege the banks have in this country because of the way the government runs the system should be what we're dealing with here, because the way the banks are run—the extreme salaries that these CEOs take home—is driving the inequality in this country. It's getting much larger, and I will come back to it. This issue of wages and salaries is right in the news at the moment because wages for the majority of people in this country have stalled. In the meantime we have an opportunity with this legislation here to do something about the super-rich, and nothing is being delivered.

As I said, the key issue the government should deal with is excessive bank CEO salaries. CEOs should be judged to be doing a good job and should be paid more if shareholders are gaining more returns because of banks' high profits. That's the basis of the very sick system we're living in at the moment and we need to change how banking executives are paid. The bill barely covers that key aspect—why? It doesn't cover that key aspect because the Liberals and the Nationals are mates. This is actually a class system here: the Nationals and the Liberals are looking after their class. They're looking after the very rich. They're out to protect them. That's why they're just nibbling around the edges.

This legislation has come before us because the government does at least note that there is outrage amongst the public about what is going on and about how out of touch so many banks are with their needs. The salaries are excessive, but they won't actually deal with them. Why don't they deal with them? Because they're mates—they'll probably have to get a job with them one day. It is a really sick system when you have a government that is there to advance privilege and not use the power and the responsibility it has to make our society more equal and more fair. So, as I said, it's not surprising that the bill before us barely touches on the issue of salary.

If this legislation goes through in its current form, CEOs can continue to pay themselves these huge amounts of money because their salaries are linked to the profit basis of their banks. It also illustrates the closeness of the major parties to the banks. Why the major parties are soft on the banks is the issue of political donations. I will come to the fact that recently—and, again, because they were getting such a bad name for themselves—some of the banks did come out with a position: 'We're not going to take donations anymore.' You need to look at the 'anymore' closely.

But, firstly, let's look at the culture that has been around for many years. In 2013-14 and 2014-15, the four big banks gave $1.3 million in political donations to the Liberals, the Nationals and Labor over those two financial years, with the bulk of it going to the Liberals and the Nationals. That again is a very unhealthy culture. It's said, 'We just want to be able to talk to people,' or 'We want to help the democratic process.' That's what some of the big CEOs have said. But, again, it is part of the corrupting culture that is really turning people off how politics works in this country.

Now, I do acknowledge that the National Australia Bank, in 2016, announced it would stop giving money to political parties. That decision is a remarkable turnaround and it's a good turnaround—I certainly acknowledge that. It is an important turnaround and a reminder why the Turnbull government should get its act together and bring in some electoral funding law that limits, bans or puts strict caps on all corporate donations.

I will put on the record what the National Australia Bank had been doing just before it changed its position. It had given more than $500,000 to the major parties over three years, and it also sponsored a major fundraiser for Liberal frontbencher Kelly O'Dwyer in her re-election campaign for the seat of Higgins. It's interesting that the bank was right there, in a very generous way, up to the point it made its decision. But its decision isn't watertight. The NAB's manifesto actually still allows for there to be exceptions to what appears to be a strict policy. Political donations can still be made, but they need to be cleared by the board of directors.

But, at any rate, I still congratulate NAB. They've taken that position, and other banks are also moving in that direction. But I go back to the position that for a long time there's been this culture of closeness, of attending the big, fancy, expensive fundraisers and giving generously, particularly to the Liberals and Nationals. That creates an unhealthy culture. It's a culture that's been identified in a High Court case about political donations that I've spoken about many times in the House, and I will continue to do so, because it identified that with political donations it's not just about quid pro quo—giving money and expecting something in return. It's about the damaging influence this money has on how the legislators, the politicians in this place, operate. They start to, maybe subconsciously—who knows; I'm not one of them—adjust their culture to deliver for the big donors. So, if there's legislation, maybe we should think about how that works for that sector that we spend a lot of time with.

The corrupting influence of political donations is well on the record, and I believe it's part of what's going on here—that there is a closeness between the major parties and in this case the big banks, the big donors, so that they don't really do the job properly. A proper job would be taking on the CEOs and limiting their salary. It infuriates people. These salaries are now publicly known. People are insulted when they hear about how much money these CEOs effectively award to themselves—millions and millions of dollars—and it is a driver of inequality. Inequality is bad for the economy, it's bad for our society and it's so serious for individuals who are just trying to scrape things together.

There really is no reason that bank CEOs should have an income that's more than 10 times the average national wage. And I want to congratulate my colleague Senator Peter Whish-Wilson. He's done extensive work in this area. He spoke very clearly about this bill before us, and his amendments are to be supported. We should support these amendments, which are in fact very mild. They're not going to stop these CEOs being millionaires, but they're responsible amendments that would show that this place, our Senate, has got some backbone, is looking out for all Australians and isn't just playing Mickey Mouse games with legislation so the government can go out to the media with their headline, 'Senator Cormann is very effective,' making out that they're doing something when they're not. The Liberal-Nationals are not. They're protecting their own people, their own mates. And that's why I very warmly congratulate Senator Peter Whish-Wilson on these amendments and draw the Senate's attention to how important they are and that they should be supported. I really regard them as absolutely essential amendments.

Again, I want to emphasise, when we move into committee to consider this debate, let's keep at the front of our minds one of the big debates this week, and that is about the wages of the majority of Australians. So many people see their wages going backwards because the cost of living is going up so fast and their wages are not keeping up with it. Again, if you're sincere about doing something about that—and surely that should be the bread and butter of all of us in this place, ensuring that people aren't worse off—you would actually bring the excessive CEO salaries into line. It's time that bank CEOs are paid a fair wage, not an indecent and obscene wage—well, they don't even call it a wage; they call it 'salary remuneration' or whatever words they come up with. But it's indecent. It's obscene. It's really, really ugly, and something needs to change.

This bill needs teeth, and that's what the Greens amendments provide. They put some oomph, some guts, into this bill which is so urgently needed. We know that the majority of Australians want this—absolutely. The reason I'm saying that so emphatically is because of some very impressive research. I congratulate the Australia Institute. They have done some excellent research in really showing how out of control the banking system is in this country, particularly with regard to the four banks.

One of their very extensive research projects polled over 1,400 Australians in 2016, at the time when there was a push for a royal commission. It found that 76 per cent of these people agreed that the big four banks should put customers ahead of shareholders. That is the essence of what I'm talking about and what Senator Peter Whish-Wilson's amendments go to. They go to what Australians want to see. All they're after is a fair system. How many times do you hear the politicians on the conservative side talk about fairness? It's just words to them. Well, this is an opportunity to do the right thing. I very much congratulate Senator Peter Whish-Wilson, and I look forward to the debate in the committee stage.

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