GRACosway Weekly Wrap Up: Financial Services Fallout
8 February 2019
- The Hayne Royal Commission’s Final Report, released by the Government on Monday, has recommended comprehensive changes across the financial services sector.
- NAB heads Andrew Thorburn and Ken Henry have since resigned.
- The PM has announced funding via the $1 billion Urban Congestion Fund to benefit Victorian commuters.
- The Government’s proposed energy asset divestment legislation continues to provoke debate.
- Liberal MP Tim Wilson has come under fire this week over his connection with an asset management fund run by a distant relative.
- The Royal Commission into Aged Care Quality and Safety will hold its first public hearing in Adelaide next week.
Royal Commission Report Released
The Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was released on Monday afternoon, making 76 recommendations in total. Royal Commissioner Kenneth Hayne called for enhanced regulatory oversight, improvements in culture and governance, changes to the default superannuation system, adjustments in mortgage broker remuneration structures, and a new agribusiness lending system. Treasurer Josh Frydenberg announced the Government’s decision to “take action” on all recommendations, describing the Final Report as a “scathing assessment of conduct driven by greed and behaviour that was in breach of existing law and that fell well below community expectations”. Opposition Leader Bill Shorten said it was “a dark day for Australian banking and a terrible indictment on the greed of the industry”.
According to media reports, Labor will move a motion when Parliament resumes next week calling for two additional sitting weeks in March, to introduce reforms recommended by the Royal Commission. The Opposition will require the support of seven crossbenchers, including maverick MP Bob Katter who previously sided with the minority Government in exchange for water project funding in his seat of Kennedy. Mr Katter has, however, not ruled out supporting the Labor motion, following his past criticism of bank behaviour.
National Australia Bank (NAB) came under sharp criticism from the Royal Commission, which concluded that its conduct “stands apart from the other three major banks”. NAB chief executive Andrew Thorburn and chairman Ken Henry announced their resignations on Thursday afternoon, following a halt in bank share trading. For more information on the Royal Commission, see GRACosway’s analysis of the Final Report.
Congestion-busting funding announcements
Prime Minister Scott Morrison spent last weekend in Melbourne to celebrate Chinese New Year, then flew north to address those affected by the Townsville floods. Back in Victoria on Wednesday, Mr Morrison joined Minister for Cities, Urban Infrastructure and Population Alan Tudge to announce two tranches of funding via the $1 billion Urban Congestion Fund. $140 million in funding will be allocated to combat congestion in the north and south suburbs of Melbourne, while $121 million will be allocated for the east and south-east regions. Victorian Premier Daniel Andrews has rebuffed the “modest” figures, saying the Federal Government should give the State its “fair share” of infrastructure funding, including the $3 billion set aside for the obsolete East-West Link.
Big stick energy
In response to questions over the Government’s proposed ‘big stick’ energy legislation, Treasury representatives have told a Senate hearing that no modelling has been undertaken to determine whether the new regulations would place downward pressure on energy prices. The revelation comes amid ongoing criticism from energy companies over the proposed changes to power asset divestment rules, which they suggest could in fact push prices skyward.
Wilson and Wilson
The Opposition has accused Liberal MP Tim Wilson of unethical behaviour this week over an alleged conflict of interest in his role as chair of the parliamentary Standing Economics Committee, which is currently inquiring into Labor’s contentious policy to repeal cash rebates for franking credits. As part of the inquiry hearings, feedback was provided by Mr Wilson’s distant relative and asset fund manager Geoff Wilson. The Liberal MP is a shareholder in the business – Wilson Asset Management – and disclosed the connection on the parliamentary register of interests in May 2017, but failed to acknowledge it before the committee. When asked if Mr Wilson would be removed as chair, the PM succinctly replied “no”.
The Federal, Queensland, SA, WA, ACT and NT parliaments will sit next week.