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May 18, 2021

Thus Spake Mungo: PM eats shit sandwich over banks

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At Turnbull’s hurriedly convened press conference with Treasurer Scott Morrison to announce a long-delayed and fiercely resisted Royal Commission into the banks the pair looked like a couple of miscreants being forced to share a particularly smelly shit sandwich, and what’s more to pretend that it was all their idea – they were not dragged to the repast kicking and screaming by the Labor Party, the Greens, One Nation, the Xenophon mob, the Nationals and finally a few exasperated Liberals, but taking control to restore confidence and stability.

Of course, no one believed a word of it, but at least Turnbull and Morrison had the grace to admit that while their capitulation was regrettable, it was necessary: the alternatives were far less predictable and potentially far more of a worry, not only for the government, but for the banks, which provided them with a kind of cover for their monumental backflip.

A Royal Commission has it risks; even the best-managed commissions can sometimes go rogue and end up savaging their creators. Go no further than the Royal Commission set up by Malcolm Fraser and headed by Frank Costigan, designed to expose corruption in the waterfront unions but which ended up devouring many of the Liberal Party’s chief backers and even touched on one of his favourite sons, Kerry (The Goanna) Packer.

But at least a Royal Commission devised by the government has some controls. Turnbull can pick his own commissioner, write his own terms of reference and set his own timetable. Of course, there are still pitfalls – the speed of the exercise (getting it out before the banks’ request for a commission hit the stock exchange) meant that the terms of reference were sketchy, the timetable dubious and the commissioner, the estimable Kenneth Hayne, still to be located.

[Turnbull] remained in denial even when Morrison, chatting with the banks as Liberal Treasurers frequently do, was given the bad news. Even if you cannot count, the bankers informed him, we can, and the numbers are in: you’re stuffed.

The coalition parties room may yet demand more concessions than Turnbull, Morrison and the banks are willing to give. But by jumping when they did, the back-flippers have at least stopped the push for the far wider and more dangerous inquiry being proposed by the Senate and almost certain to be endorsed by the House of Representatives.

Turnbull would rather have stuck to his line of a couple of days earlier: no Royal Commission, full stop. But, as Bill Shorten has unkindly remarked more than once: our fearless leader is in office, but not really in government.

He remained in denial even when Morrison, chatting with the banks as Liberal Treasurers frequently do, was given the bad news. Even if you cannot count, the bankers informed him, we can, and the numbers are in: you’re stuffed. All that remains is to negotiate the terms of surrender.

So they gave him a list of what they could live with, and he dutifully jotted it down.

But even then he and Turnbull held off, until the bankers themselves wrote the letter that made the capitulation a joint enterprise. If there was mat-tapping to be done, it was to be at the behest of the cabal that had caused all the angst in the first place.

The best that the government could cobble together was a humiliating retreat, but a one that represented the least worst outcome: a short (well, they hope it will be short) commission, and one limited to the idea of the banks and others, not a more forensic examination of the nuts and bolts of their business. As Turnbull said in a moment of quasi-triumphalism, this will not be an inquiry into capitalism.

Indeed, with a bit of luck it could even embroil the unions through their successful joint management with the employers of superannuation funds. As the superannuation industry pointed out, unlike the banks, none of them have been accused of anything worse than providing better dividends than those offered by the retail sector – predominantly the banks themselves.

By widening the net, it meant that Turnbull’s pretence that the commission would be quick and clean would be highly improbable. But it was a matter of salvaging something – anything – from the wreckage of the policy, which had been propped up for more than two years before collapsing in a smoking ruin.

For the hardline free-enterprisers in the Liberal Party, Turnbull’s surrender will be seen as economic and political treason: John Howard called the idea of a Royal Commission into the banks rank socialism – funnily enough he did not characterise Tony Abbott’s Royal Commission into the trades unions rank fascism, although the parallels are compelling.

In both instances there were, and are, compelling reasons for a forensic inquiry into the many iniquities uncovered by whistle-blowers and media, but in both instances the politics took over. The difference, of course, was simply a matter of numbers: or, as Turnbull delicately put it, government policy remains the same until it is changed.

The big institutions usually enjoy powerful political protection – Labor for the unions, the Liberals for the banks. There are times that this gives them a sense of invulnerability—the banks, for instance, boast that they are too big to fail. And in the last few years in particular, they have seemed to believe that their clout means they can not only bypass normal ethical behaviour, but even the laws of the land.

For that reason alone it is necessary for them to be dragged regularly into line with the standards of the community they are supposed to serve. The last Royal Commission into the banks was way back in 1930; the image then was Mr Moneybags, the bloated, cigar-smoking grinder of the poor. The image today is more sophisticated: still very wealthy but allegedly with at least a vestige of a social conscience – a bit like Turnbull himself.

It is to be hoped that the new Royal Commission can urge them towards conduct more in accord with the wishes of the wider public and less with a single-minded determination to maximise their own advantages. Who knows – some of it might even rub off to Malcolm Turnbull . That in itself would make this tortured and tortuous exercise worthwhile.


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  1. Just to note that my somewhat tougher introduction was bowdlerised by the publisher as too politically incorrect. However the sense is more or less there. Mungo

  2. Mungo

    I live your read …

    But could you please advise what they should be doing instead of criticising what the have done !


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