12 April 2016
by James Massola
Coalition split on banking royal commission as Malcolm Turnbull faces flak over 'captain's call'Liberal MP Warren Entsch has criticised his government for pre-empting a parliamentary inquiry on banking.
Coalition unity over a banking royal commission is cracking, with eight government MPs now backing an inquiry or saying it should be considered, Malcolm Turnbull under attack for a "captain's call" and legal experts questioning whether corporate regulator ASIC has adequate powers.
The financial services sector is already highly regulated according to Malcolm Turnbull who says Labor is overreacting to the recent problems. Courtesy ABC News 24.
On Monday veteran Liberal MP Warren Entsch said he was "worried about senior colleagues ruling this out when we have a [parliamentary] inquiry under way".
"How can senior members of the government make a captain's call and pre-empt this [parliamentary] inquiry?" asked Mr Entsch, a supporter of Mr Turnbull in the September spill motion.
"It's all very well to say banks have learnt from their mistakes and they will be nicer moving forward, but what about the sins of the past?"
Former prime minister Tony Abbott was, in part, undone by a slew of so-called "captain's calls", which became synonymous with his lack of consultation with backbench colleagues. Mr Turnbull said this would end when he became leader.
Liberal MPs David Fawcett, Bert van Manen and Philip Ruddock - all of whom are members of a parliamentary committee examining the financial services sector - on Monday took to eight the number of government MPs open to a royal commission.
Mr Van Manen said "you can't rule it [a royal commission] out", and Mr Ruddock warned that "the banking industry has serious issues it needs to address if it wants to avoid a royal commission".
Senator Fawcett, the committee chairman, said he would not take the government or opposition's side and that "the committee will consider that [a royal commission]. If the committee decides that's the best way forward, the the committee will recommend that."
Mr Turnbull and Mr Morrison argue the Australian Securities and Investment Commission, the Australian Prudential Regulation Authority and the Reserve Bank have the power to ensure Australia's banks and financial sector is well regulated.
The Prime Minister said: "Labor says they want to have a royal commission into the banks. Well, they haven't told us what the terms of reference would be, so what's it actually going to be about? They've said the word 'royal commission' and said the word 'banks'.
"ASIC has all of the powers of a royal commission; all of the powers of a royal commission plus much more. It has the ability to initiate prosecutions, to take action, to issue fines, to ban people from trading, from operating as company directors, or in financial services."
Fairfax Media revealed on Sunday that government MPs George Christensen, former minister Luke Hartsuyker and Ken O'Dowd all supported, or were open to, an inquiry, joining Mr Entsch and Senator John Williams.
Juliette Overland, a corporate law expert from the University of Sydney Business School, said there were benefits in having a royal commission over a standard investigation by ASIC, including that a royal commission can hold public inquiries.
"Mostly when ASIC conducts an inquiry under section 19 or an investigation otherwise, it isn't something that is generally made public," she said.
"If there was to be a royal commission, and I don't say this as a criticism of ASIC, but something that might be looked at is ASIC's own response to previous issues which have arisen in the finance sector in recent years. For example CBA, and the royal commission itself might look at something like that in the broader context which ASIC itself wouldn't necessarily put on the agenda if it was running an inquiry."
Constitutional law expert George Williams said he didn't think "ASIC was the answer" and that "the reason you have a royal commission is to shine a light on an issue".
"Police have all sorts of powers, but that doesn't mean you don't have a royal commission into organised crime".
Macquarie University law lecturer Margaret Kelly disagreed, arguing that giving ASIC greater powers and resources was a better option.
"Both ASIC and APRA have the infrastructure, the procedures and the bureaucracy. It will also cost the taxpayer less," she said.
In recent years Fairfax Media has revealed significant failings in both ASIC and the banks' handling of major scandals, including the Commonwealth Bank financial planning scandal, which was followed by similar scandals at Macquarie Bank and National Australia Bank.
Labor said on Friday it would hold a $53 million, two-year royal commission if it won this year's election.