By Dr George Venturini
In the name of that ‘mateship’ Australia has followed the United States in the wars it fought in Asia since the second world war. Korea, Vietnam, Iraq, Afghanistan, Iraq again, Syria, recently Mindanao, and ‘by proxy’ Yemen – uniquely among the United States ‘allies’ – Australia has been present for each and every one. Whether it benefits from that behaviour is another matter altogether. “The pitiful level of debate about foreign and defence policy in the country allows us to avoid searching self-analysis. Government and Opposition advance in lock-step and the camp followers in Canberra’s think-tanks tag along behind. Almost universally the practitioners engage in what might be called strategic solipsism,” wrote Professor Henry Reynolds. And he concluded: “We react with outrage at intimations that China may send naval units to dock in Vanuatu while we intervene in Mindanao with army, navy and air force. Can there be any wonder that others are astonished at our unregarded hypocrisy?” (H. Reynolds, ‘The Best of 2018: Australia’s perpetual ‘war footing’,’ Pearls and irritations, 26 July 2018).
Halfway through Turnbull’s prime ministership, Professor Allan Patience commented on Australia’s American leadership distraction:
“As widely agreed, Malcolm Turnbull is a great disappointment as Prime Minister. He came to the job after two jarring years of Tony Abbott’s authoritarian and ideological leadership. The result was that many voters longed for an entirely different approach to Abbott’s dismissiveness of the science of climate change, his ‘Anglophilia,’ his cavalier use of Royal Commissions to nail political opponents, his inhumane policies on asylum seekers, his opposition to marriage equality, and his thuggish political style. Abbott wanted to take the country back to the dullness of the ‘fifties, much as John Howard had tried to do. Most voters have progressed way beyond this kind of nostalgia. They want to see progressiveness, inspiration, hope and a vision for the future in their politicians. Turnbull fooled everyone into thinking he was the man to provide it. But he has failed dismally to deliver. His timorous approach to public policy reform suggests that in Turnbull we have a hollow man as leader.”
Lamenting that “Bill Shorten is a similarly limited political creature”, Patience went on to say that “What we badly need is to see intellectually astute and highly principled people like Gillian Triggs, Waleed Aly, or Julian Burnside governing in our parliaments. It is unlikely they would fit into any of the existing political parties. Maybe it’s time to think of an entirely new political party with an agenda that is inclusive and concerned about the wellbeing of all citizens – one the befits an independent country able to offer real leadership in its region and the world. Until that happens we are likely to remain in pathological thrall to the Americanization of Australia.” (A. Patience, ‘Australia’s American Leadership Distraction,’ Pearls and irritations, 12 October 2017).
Of course, American administrations rarely think of many countries like Australia as ‘allies’. Rather, they see them as colonies, subject states, tributaries, client states and acolytes to be used and abused as the needs and dictates of U.S. foreign policy require. Most client states realise that and make the best of it. Some of their agents are caught in the relationship: one of them was joint commander of the Multinational Force in Iraq which destroyed Fallujah – city of some 300,000, known as the “city of mosques” for the more than 200 mosques – in 2004. (Fallujah, The Hidden Massacre is a documentary film by Sigfrido Ranucci and Maurizio Torrealta which first aired on Italy’s R.A.I. state television network on 8 November 2005) In 2005 the Pentagon conceded the use of white phosphorous as an incendiary weapon against the residents of that city; it contributed to the estimated death toll of over 6,000 civilians. The ‘allies’ conferred on the joint commander the Australian Distinguished Service Cross, on one side, while the other side awarded the American Legion of Merit.
A few months after his profession of loyalty to the Great and Powerful Friend, and on an occasion he never imagined in one of his many lives, Turnbull – one time an avowed republican – just before meeting Queen Elizabeth II said that “most Australian republicans are Elizabethans as well.”
“That’ll be right!” might have uttered some ‘well balanced’, ‘no worries’ Australian. Helots might not have reacted anyway; they would be contented in their moronic machismo and console themselves and note hopelessly: “the way things are.”
“Politics is full of unpredictable events,” Turnbull said during a press conference before his visit to Buckingham Palace.
His view, at least on 12 July 2017, was that another referendum would not be supported by the majority of Australians during the Queen’s reign.
The Australian Republican Movement – that he was – is currently pressing for an ‘advisory ballot’ in 2020 to determine whether voters want an Australian head of state and how that person should be chosen. That would then be followed by a referendum in 2022.
The Opposition had urged the Prime Minister to raise the issue with Her Majesty, but Turnbull, speaking before the visit, refused to reveal what he would have said to the Queen because “discussions … are always confidential.”
He did, however, pay tribute to the 91-year-old monarch’s “selfless public service”, described the forthcoming meeting as “an honour”, and declared that he would “obviously look forward to her advice and wisdom.” …”She has after all known and advised many, many prime ministers.”
Turnbull also refused to say whether he would raise the release of the ‘Palace Letters’ – some of the correspondence between Sir John Kerr and the Queen ahead of the Whitlam Government’s Ambush in 1975. The contention remained, then – and was recently re-confirmed – that the letters are personal papers, rather than official, and subtracted to the view of ‘indiscreet eyes’.
They are still to remain inaccessible until 2027 and after that time ‘The Monarch’ could still veto the release. (‘ ‘Republican’ and ‘Elizabethan’ Malcolm Turnbull meets the Queen at Buckingham Palace,’ abc.net.au, 12 July 2017).
When the mystery of ATM will be fully examined, Turnbull will not so much be remembered for his three-word slogan: “Job and growth.” He probably would not want that – too ‘common’ for a person of his world-standing.
In June 2009, when Turnbull took the leadership of the Liberal Party for the first time, former Prime Minister Paul Keating thought that he had some useful insights into the man. He decided to share them with the then Prime Minister Kevin Rudd.
Keating told Rudd on the phone that he had studied Turnbull over the years.
Rudd was to understand three key things about Turnbull. First, he should know that Turnbull was brilliant. Keating paused a little. Second, that Turnbull was utterly fearless. Keating went for a longer pause.
At this point, an irritated Rudd, demanded to know, “Is there any good news here?” Keating replied with his third point: Turnbull has no judgment. Keating must have felt feeling vindicated in August 2018 when a Macbeth-manqué was cast into the soap opera of infidelity led by characters such as Peter Dutton and Scott Morrison.
But, before the end, Turnbull had one more, grande opportunity to affirm himself as a master of destiny.
It was about the banks.
Returning to the subject, already considered as at 2013 – hence at the beginning of the ATM Coalition government – one will note that in 2019 Australia’s major banks are four of the seven biggest corporations on the Australian Securities Exchange Ltd. by market value, and worth around $360 billion combined.
The biggest of them, the Commonwealth Bank, has at various points in time been Australia’s most valuable company and currently is second only to B.H.P., the Anglo-Australian multinational mining, metals and petroleum public company.
Many Australians directly own shares in the banks, while most have stakes through their superannuation funds.
The big four also completely dominate Australia’s financial landscape, with combined assets – mainly loans owed to them – totalling more than $3.6 trillion, more than twice the value of Australia’s annual economic output, which stands at $1.73 trillion.
In terms of size and assets, the four banks run as follows: Commonwealth Bank of Australia, $975 billion; Australia and New Zealand Banking Group, $943 billion; Westpac Banking Corporation $880 billion; and National Australia Bank $807 billion.
A 2016 report by The Australia Institute think tank found that these assets generated large profits for the major banks – the highest in the world.
The list is as follows: Australia 2.9 per cent; China 2.8 per cent; Sweden 2.6 per cent; Canada 2.3 per cent; the Netherlands 1.9 per cent; Spain 1.8 per cent; France 1.7 per cent; Japan 1.4 per cent; United Kingdom 1.2 per cent and United States 0.9 per cent. (Sources: The banker, an English-language monthly international financial affairs publication owned by The Financial Times Ltd. and edited in London, United Kingdom; International Monetary Fund; and The Australia Institute).
Australian banks’ profit was equal to 2.9 per cent of Gross Domestic Product in 2016.
Australian banks are highly concentrated. More than 80 per cent of mortgage borrowers have a loan with one of the four big banks.
The four big banks have concentrated on mortgage lending. Mortgages require banks to hold less in reserve to protect against losses, hence traditionally much safer than other loans. That makes them much more profitable than most other forms of lending.
During the past two-decade property boom banks have received more exposure to real estate than their counterparts in other countries.
Together the four banks hold almost $1.4 trillion in mortgage debt, which is equivalent to about 80 per cent of Australia’s annual economic output.
The big four banks dwarf the rest of Australia’s retail, or consumer-focused, banking sector – even the local branches of major international banks which are dominant in other countries.
A long history has permitted a large growth in size.
The Commonwealth Bank of Australia was established as a publicly owned bank in 1911, and privatised between 1991 and 1996. It grew to be the largest of the four banks by acquiring eight institutions between 1913 and 2017.
The Bank of Australasia, established in 1835, became the Australia and New Zealand Banking Group Limited through a series of acquisitions and mergers – eight altogether between 1837 and 2009.
The parent of Westpac, established in Sydney in 1817 as the Bank of New South Wales, was the first bank in Australia. Ten banks were absorbed during the following 160 years. Re-arranged and renamed in 1982, Westpac acquired other institutions in Australia and overseas, in 2008 merging with St. George Bank.
The National Australia Bank resulted in 1982 from the merger of the National Bank of Australasia and the Commercial Banking Company of Sydney, both well over a century old at that point. This is the story of their growth. (A. Linden, W. Staples, ‘Hayne’s failure to tackle bank structure’, theconversation.com, 5 February 2019).
As already seen, after the so-called Global Financial Crisis, scandal mounted over scandal in the banking sector. And, almost regularly, investigation has followed investigation since the embrace and implementation of neo-liberal theory.
In the early 1990s there were royal commissions into the $1.7 billion Tri-continental/State Bank Victoria collapse, the $3.1 billion State Bank of South Australia collapse and the W.A. Inc collapse which explored the interrelated activities at Rothwells bank, the $1.8 billion collapse of Bond Corporation and the A$1.2 billion siphoned from Bell Resources.
A decade later in 2003 there had been the Owen report on the $5.3 billion collapse of Australia’s largest insurer HIH.
But ‘the market’ might have been ready for another inquiry, investigation, or royal commission into the activity of the banks.
Of course, there had been many of such reviews in the past 25 years: the Campbell Inquiry of 1991, the Wallis Inquiry of 1996, the Cooper superannuation review of 2010, and the Murray Review of 2012. Each either missed or downplayed the links between poor governance, industry structure, systemic misconduct and prudential risk.
By early 2016 the Greens and Labor Opposition began to call for a new inquiry into banks’ operation. Labor’s request was not specific on the terms to be given to a royal commission; it simply called for a broad inquiry into ‘misconduct in the banking and financial services industry.’
The Greens, actually, wanted to go one step further:
1) to establish a people’s bank which offers basic products at a competitive rate, putting people before profit;
2) to break up the banks, by separating retail banking, investment banking and wealth management arms. A separation of banks’ activity is often described along the lines of the American Glass–Steagall – the 1933 Banking Act. The Act provided for the separation of commercial and investment banking. It was amended by the Banking Act of 1935 which clarified the 1933 legislation and resolved inconsistencies in it. The legislation prevented commercial Federal Reserve member banks from: a) dealing in non-governmental securities for customers, b) investing in non-investment grade securities for themselves, c) underwriting or distributing non-governmental securities, d) affiliating – or sharing personnel – with companies involved in such activities. Conversely, Glass–Steagall prevented securities firms and investment banks from taking deposits.
3) to cap the obscene pay packages that banking executives receive;
4) to replace a weak and compromised A.S.I.C. with the A.C.C.C. to fight for the rights of banking customers.
The Greens said it clearly: when big banks rake in $31.5 billion in profit – as they did in 2017 – while screwing over their customers, privatisation has failed.
Some twenty six times the Opposition was unsuccessful; the government consistently declared that there was no need for a royal commission.
Now Prime Minister, when Treasurer of the Turnbull Government, Mr. Morrison was scathing of any suggestion of investigation. That may be understandable; he is after all just a vulgarian marketeer.
But the Prime Minister? Here is a successful ‘highly transactional businessman’ by self-definition – having been in turn a journalist, lawyer, merchant banker, and venture capitalist. He has been an aggressive defender of Kerry Packer against allegations made by the Costigan Commission, afterward an independent practitioner, until he turned to investment banking with such success that by 1997 he would become a managing director of Goldman Sachs Australia, eventually becoming a partner in Goldman Sachs and Co.
If there was ‘nothing to see here’ for intriguer Morrison, it is hardly credible that such lack of vision affected a person of the calibre of Malcolm Bligh Turnbull.
The Government’s resistance to a royal commission was risky but understandable – up to point.
In 2013, when the Coalition came to power, it was determined to weaken measures Labor had introduced. Eventually, it was thwarted by the Senate crossbench, with the Senate disallowing its changes.
But why the Government was so keen completely to shield an industry where wrongdoing had been so obvious is not entirely clear. Maybe it was for a combination of several factors: a mix of ‘free market’ ideology, a callously indifferent ‘let-the-buyer-beware’ philosophy, and – much more likely – some close ministerial ties with the banking sector.
The Government insisted that it had already put in train a good deal to clean up the industry, including a one-stop-shop for complaints, higher standards for financial advisers, beefing up the Australian Securities and Investments Commission, and a tougher penalty regime.
The government had missed the point.
As Ian Verrender remarked, A.S.I.C. went missing in action with the banks.
“It’s not that the Australian Securities and Investments Commission, A.S.I.C. is in need of added muscle. It needs to grow a spine.
A.S.I.C. is the law enforcement agency that shies away from enforcement, particularly in the top end of town.
Ask yourself this – when was the last time a major corporation or executive was hauled before the courts? If you’re having trouble coming up with an answer, you’re in good company.
In the past decade, our banks have been responsible for multiple breaches of the Corporations Act.”
And as the Hayne Commission had begun making extraordinary discoveries, Verrender wrote:
“[The banks] have admitted to rigging interest rate and foreign exchange markets. They’ve repeatedly stolen from their customers. They’ve happily charged premiums and then refused payments to legitimate insurance claimants.
Since the financial crisis, they have forked out more than $1 billion in fines and compensation for their misdeeds. But not one senior banking executive has faced a court room for any of this.”
The truth of the matter is that A.S.I.C. is a gun-shy regulator.
Verrender explained: “Since its inception decades ago, ASIC has had the power to launch criminal and civil proceedings against big business. But for the past 15 years, it has deliberately chosen not to.
Instead, it’s opted for what’s known as “enforceable undertakings” – effectively a slap on the wrist and a hollow threat that it may take real action if it ever happens again.
Why? One explanation is that it became gun shy after suffering a series of humiliating court defeats prior to the global financial crisis.
But a more disturbing possibility is that it is increasingly concerned with its own financial performance. In fact, in recent years ASIC has become a significant source of government revenue.
Its data base, which holds company and director records, reaps around $720 million a year for the Federal Government through access fees, more than double the cost of running the regulator.
That’s not all.
Continued Wednesday – Comedy without art (part 13)
Previous instalment – Comedy without art (part 11)
Dr. Venturino Giorgio Venturini devoted some seventy years to study, practice, teach, write and administer law at different places in four continents. He may be reached at George.firstname.lastname@example.org.
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