Culture, governance and remuneration have been identified by industry gurus as prime factors contributing to the deplorable state of banking and the financial industry in Australia. Nobody is disputing this. This piece postulates that precisely the same factors have reduced the government of this country to its lamentable state. The banks and the Coalition are ‘birds of a feather’.
Let’s begin with culture.
Clearly, the culture of the banks and other financial institutions is to make strategic gains and to extract exorbitant profits no matter who is disadvantaged, no matter who is given bad advice, no matter who is burdened with illegitimate fees whether they are dead or alive, no matter whether criminal fraud is committed in the process, no matter whether the regulators are lied to repeatedly. I’m sure you don’t want another recital of the misdemeanors uncovered by the Royal Commission, so let’s look at how the Coalition channels the banks.
The culture of the Coalition too is to make strategic gains and to profit richly from the political process. Political survival is the prime purpose of politicians and political parties alike. All parties
share this imperative. In the process, self-centeredness too often overrides the common good, the welfare of the nation. Any show of concern for the individual surfaces only when politicians discern an advantage for themselves. The personal tax cuts in the recent pre-election budget exemplify this.
Populism reigns supreme. Give the people what they want in exchange for their votes, no matter who suffers, whether it is welfare recipients (aka cheats), the disabled, the disadvantaged, or the poorest in our community. If the big corporations who are pushing so hard for tax cuts do miss out, it will only be because the Coalition fears the inevitable backlash from voters. ‘Fairness’ and ‘equity’ are missing from the Coalition’s lexicon.
Clearly, the governance of so many financial institutions has been appalling. Arrogant, insensitive, self-centered, richly rewarded executives have managed to add incompetence to their already-disgraceful attributes. They seemed to be unaware of what was going on among their staff, or unconcerned when they did know. So long as the profits rolled in, all was well. They were prepared to act dishonestly, even illegally, in pursuit of profit. They lied unashamedly to the regulators; they even lost count, as the Royal Commission exposed.
Managers were given the OK to exploit customers for their own benefit. Their bonuses depended on the extent to which they were able to manipulate customers, to place them in inappropriate schemes, to deny legitimate claims, to defraud them. And those in charge didn’t give a toss. Even their computer systems were geared to charge illegal fees, extracted surreptitiously, silently, and continuously. Deception and lying were built into their processes. On top of all that there was an aggressive attitude towards competitors. Competition is appropriate and often beneficial, but cutthroat behaviour is corrosive.
The governance of the Coalition parallels that of the banks. Its key politicians show their arrogance and insensitivity almost every time they open their mouths. Well paid, they show scant concern for those at the lower end of the social food chain.
How many times have you heard Coalition members speak disparagingly of those on social welfare and Newstart, casting them as ‘dole-bludgers’. How much resistance have you seen to increasing the Newstart Allowance? There was no sign of an increase in this year’s Federal Budget. Currently, the maximum possible for a single with dependents is just under $300 per week; the minimum national wage is just under $700 per week!
Did you hear Liberal MP Julia Banks (what an appropriate moniker!) assert that she could live on the $40 a day allowance?
This woman owns five properties, three of which are investment homes! Even the Business Council
and leading economists assert that her claim is nonsense. How arrogant and out-of-touch is she? But have you heard any of her colleagues contradicting her, much less reprimanding her? Like bank executives, they are happy for the misinformation she is spreading to remain unchallenged so long as it advances their ‘welfare cheat’ mantra.
Like the banks, the Coalition is intensively competitive, ready to tear down its opponents at every opportunity. Adversarial politics is a curse. We see it every day. Indeed we are astonished when collaboration occurs, as it did recently when the Coalition and Labor agreed to cooperate to salvage the Murray-Darling Basin Plan.
Governance is rooted in ideology. Banks embrace neoliberal principles: free markets, light regulation, individual freedom and independence, self-sufficiency, competition, user-pays, and privatization.
We know that the Coalition shares this ideology. The banks and the Coalition are birds of a feather.
We see this ideology writ large as the Coalition accepts welfare responsibilities reluctantly, deplores ‘welfare cheats’ whom it sees as irresponsible ‘leaners’, seeks to reduce welfare payments, and imposes onerous requirements on recipients. Acceptance of its responsibility for health and disability care, support for the aged, appropriate education for all, and environmental protection, is often only lukewarm.
Let’s now address ‘remuneration’.
I need not catalogue the exorbitant salaries and bonuses that executives in financial institutions enjoy – millions of dollars! And even when these same executives are ignominiously removed for bad behaviour, they still pocket massive bonuses. Their systems are geared to reward those who make the most profit for the bank or its subsidiaries, no matter how illegitimately, no matter if illegally. Mangers are actually ‘incentivized’ to cheat customers. Think about that! Until this modus operandi
is changed the exploitation will continue.
Now take a look at politicians. They are very well paid and enjoy generous allowances and privileges, which they exploit unashamedly. Because their spouses often own properties in Canberra, they pay their rental allowance to them. They use negative gearing to acquire multiple properties. They claim travel allowances for their families that might be legal, but don’t pass ‘the pub test’. They go on overseas missions that fit the description of a ‘jaunt’, more than a serious study tour. Like overly rewarded bank executives, they take all they can get, which they like to describe as their ‘entitlements’. How many give back to their community in the same measure? How many ‘pollie bludgers’ are there who channel those that they like to label as ‘dole bludgers’?
The Coalition, the banks, indeed all financial institutions, are birds of a feather.
Every time the Coalition insisted that a Royal Commission was unnecessary it was running a ‘protection racket for the banks’. Yet it was indecently rapid in setting up a Royal Commission into Trade Union Governance and Corruption
, so intense was its hatred of unions. Indeed, the verdict of widespread corruption that it sought from the Commission was written into its title! The vengeful Tony Abbott instituted the Royal Commission hoping to nail Julia Gillard, Bill Shorten, and the unions. The courts have thrown out all charges arising out of these witch-hunts. Abbott failed ingloriously. He hoped too there would be adverse findings against industry super funds, and when that did not eventuate, the Coalition hoped the same would arise in the Royal Commision into Banking. It did not! But the Coalition has still got its knife into union super funds.
Why is there such affinity between the banks, the financial institutions, and the Coalition – why are they birds of feather?
Bernard Keane, politics editor of Crikey
provides an answer. He has carefully documented the connection between the banks and the Coalition in a revealing article titled: The Liberal Party’s deep, rich connections with the banks and financial planning
, which carries the subheading: The links between the Liberal Party, the big banks and the financial planning sector seem to go beyond the ordinary relationships between business and politicians.
I’m sure you won’t mind me quoting him at length:
The Liberal Party’s long history of looking after the banks and financial planners springs from deep links between the party and both financial planners and banks.
So there it is – a plausible explanation of why the banks, financial institutions, and the financial planning industry are in lockstep with the Coalition.
Malcolm Turnbull is a former banker, although that’s just one of several careers he’s had. Kelly O’Dwyer, who has carriage of the financial services portfolio, is a former National Australia Bank executive; she has retained links to NAB via the bank’s sponsorship of Liberal fundraising events. Her ministerial predecessor Josh Frydenberg was working for Deutsche Bank when he won pre-selection for Kooyong. His portfolio predecessor was Arthur Sinodinos, who is another former NAB executive; Sinodinos commenced the Abbott government’s attempt to repeal the Future of Financial Advice reforms.
Victorian senator Jane Hume is another NAB alumna, who also had stints at Rothschild and Deutsche Bank — although she also worked at industry super fund AustralianSuper. Gold Coast MP Bert van Manen and former Liberal senator Cory Bernardi had both been financial planners before entering parliament.
The financial planning profession itself is closely aligned with the Liberals. Traditionally, that has reflected that the core clientele of financial planners, wealthy older people, are the Liberal party base. But they also share a mutual hatred: industry superannuation funds. Labor’s championing of the hated FOFA reforms also deepened the sector’s already strong affinity for the Liberals – the two major financial planning associations were delighted when Tony Abbott was elected in 2013.
We ought not to be surprised that they are indeed ‘birds of a feather’. And as the old saying goes: ‘Birds of a feather flock together’.