If truth is the first casualty of war, then banks are the first casualty of populism – even in a country such as Australia whose banking system is the envy of the world.
In the political climate of 2017, Australia’s banks have become a political football. Taken too far, as the government rightly says, this game can be damaging to the economy.
Although the government resisted the push for a Royal Commission until it bowed to the inevitable yesterday, its own hands are anything but clean. The odious bank tax and Bank Executive Accountability Regime (BEAR) it pulled out of the hat in the last budget were unnecessary as public policies and, wrapped in anti-bank rhetoric, only served to encourage the push for more by those with political motives ranging from embarrassing the government to putting banks – as a symbol of capitalism – in the dock.
In this climate, the push for a Royal Commission took on a life of its own regardless of the facts on the ground. No doubt there are pockets of wrongdoing and malpractice in banking, but it is being addressed in other ways. There is insufficient evidence of a systemic problem to warrant a Royal Commission. This Commission may turn out to be not only the first to be deemed unnecessary by the government establishing it, but also the first to find very little at all in the way of systemic wrongdoing or malpractice to report on. We shall see.
The best that can be said of this sordid episode is that if there must be an inquiry that isn’t needed, a narrow and brief inquiry is the least worst outcome. Some of the advocates wanted a much broader inquiry, but many of the broader issues were thoroughly explored by the Abbott government’s wide-ranging Financial System Inquiry that reported just three years ago.
Robert Carling is a Senior Fellow at the Centre for Independent Studies, a former federal and state Treasury official, and a former official of the IMF.
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