Barry O’Sullivan: banking Royal Commission a “wholesome effort” | Video

Barry O’Sullivan: banking Royal Commission a “wholesome effort”


Politics
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Queensland Nationals Senator Barry O’Sullivan speaks about his role in instigating a banking Royal Commission. that will also examine farming issues

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Earlier this year, the red meat industry pledged to name its new beef prototype “Barry” - after Queensland Nationals Senator Barry O’Sullivan - that’s going to be used for calibrating Dual-Energy X-Ray Absorptiometry (DEXA) technology, to measure carcase quality.

It was a backhanded compliment for the burly, colourful Senator and former police officer with a penchant for using no-nonsense cattle yard type language who prides himself on unashamedly representing the bush, unambiguously in Canberra.

He’d been critically examining DEXA’s merits while playing the unpopular role of devil’s advocate, to examine the technology’s potential flaws, to safeguard taxpayer dollars and any future missteps that could expose cattle producers to more powerful meat processors.

However, it’s safe to say Prime Minister Malcolm Turnbull won’t be bestowing that same type of naming recognition on any innovative troubleshooting tool that could be used to calibrate the way lawyers and others approach the upcoming Royal Commission into banking that he was embarrassingly forced into announcing yesterday.

It was a major policy backflip for the Liberal leader caused by escalating pressure ruthlessly applied by Senator O’Sullivan and rogue Nationals members who’d threatened to back his private member’s Bill that was pushing for a Commission of Inquiry into banking and was being strategically moulded and supported by opposing political forces.

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But rather than seeking individual acclaim for his bold stance, in pursuing a powerful federal Commission of inquiry that he’s long believed was in the national interest - in particular to examine the agriculture sector’s acute concerns - personal hubris wasn’t about to overcome his feelings, after that major upset result was achieved.

There was no packed media conference where Senator O’Sullivan spoke out loudly to welcome his big victory and to mark the occasion with a few friendly jibes at the Liberals.

Nor was there a squirming conga line of Canberra Press Gallery journalists waiting eagerly outside his office, for a one on one interview to gather his likely off-hand comments and clever quotes, basking in the glory, to spearhead the nightly news bulletins and decorate the next day’s daily newspapers.

It was just a blunt, rugged political play akin to roping an elusive bull - ironically timed on the eve of his one-time maverick party leader Barnaby Joyce’s New England by-election day - and a result that he expects will now speak for itself; regardless of whether he gets any semblance of justified credit or not.

“It is a win for the Nationals and others,” an unassuming Senator O’Sullivan told Fairfax Agricultural Media shortly after the PM’s announcement.

“It wasn’t just the Nationals who did this but we obviously led the charge on this - as we have been for a long period of time.

“My Senate colleague (John) “Wacka” Williams is noted as having been active in this space for many years - what we’ve done now is actually give effect to his efforts and concerns.

“This was driven by our concerns around rural lending and cultures within their banks.

“Rural lending and banking was a very important objective for us to look at but insurance is also a concern.

“Some of our people in the bush pay massive premiums way beyond what they ought to for their products so this Royal Commission will give them all a really big opportunity to have all of their matters aired.”

Senator O’Sullivan said the Royal Commission into banking was a Nationals’ initiative and “it couldn’t have happened without us”, but the junior Coalition partners aren’t taking all of the political credit.

“We were the leaders in the initiative but of course the Greens and Labor and crossbenchers all showed an interest in a Commission of Inquiry and they all had input in one form or another into the terms of reference that I developed,” he said of his private members Bill.

“Mind you they’ve had the chance to have done this (Royal Commission) themselves, over a long period of time.

“But it was a wholesome effort and there were stakeholders from the outside too who wanted to drive this and have their input so we’ve accommodated everybody.”

Queensland Nationals MP George Christensen also played a critical role in creating the pressure on Mr Turnbull, by threatening to cross the floor and vote for the private senator’s Bill in the Lower House and was joined in that independent stance, by his state colleague Llew O’Brien.

Yesterday, Mr Christensen said “I just don't understand why it took…a number of National Party backbenchers to drag the Prime Minister kicking and screaming to this decision”.

As Senator O’Sullivan threatened to table his Bill in the Senate yesterday morning, the four major banks had written a letter to the government saying they believed the Royal Commission was now warranted - after years of staunch resistance - to try to end the ongoing politics that was undermining public confidence in their sector.

Soon after, Mr Turnbull revealed the $75 million Royal Commission would be started and is due to report in February 2019, getting ahead of the potentially embarrassing political process Senator O’Sullivan ignited after seeing the success of the strategy used by his WA Liberal Coalition and Senate colleague Dean Smith on same sex marriage legislation.

All about culture change

While Senator O’Sullivan said almost two weeks ago his private members Bill was “driven by excitement” in response to Senator Smith’s political strategy, after the PM’s announcement yesterday, he was anything but animated yesterday.

And he also wasn’t about to stick the knife into his embattled Prime Minister and instead welcomed his capacity to listen and finally act.

“Clearly I won’t go into details of conversations with the Prime Minister but I think it’s fair enough to say now the Prime Minister had a genuine honest belief that what he was doing around prudential regulation, regulation, legislation and the establishment of some oversight provisions, as well as the ability for legacy cases to be heard, was enough,” he said.

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“I just happened to disagree with him - as did my colleagues who were supporting me.

“This is a culture problem and more laws are not going to correct the behaviour of any of the banks or financial or superannuation institutions.

“We are almost overregulated now – there are literally tens of thousands of laws that govern how they function and of course we’ve seen their attitude towards that.

“Not a couple of months ago, 53,000 breaches of regulation around money laundering - the most serious type of behaviour - so these people have a complete and absolute disregard for the law, in certain circumstances.

“This is about changing the culture.”

Senator O’Sullivan said the Royal Commission’s goal of invoking “culture change” was also about driving improved transparency in the banking and financial sector.

“One of the best things you can do about cultural change is to have greater transparency in the engagement between these financial institutions and their clients plus an ability to look in from the outside – so a lens in if you like,” he said.

“For example we have people struggling with their banks over issues because they can’t get hold of their file, or pertinent documents.

“The bank knows, by doing that, they’re able to frustrate their client’s ability to mount a civil case and then forcing them into courts, because sometimes that’s the only mechanism of discovery.

“All this needs to change; it’s an absolute nonsense.”

Senator O’Sullivan said examples of the need to invoke cultural change banking cultural change also existed in the farm sector, in regards to fluctuating debt and equity levels driven by unforeseen seasonal conditions.

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“I don’t think there’d be a contract entered into with a pastoralist in this country that at some stage during that contract wouldn’t have entered into the foreseeable event of the value of that property collapsing below the loan/value ratio,” he said.

“We know market prices, weather and the value of your property are all interconnected.

“Bad weather drives low prices drives and low value in the assets meaning you’re often challenged with cash flow problems so when people need their banks the most, they get them the least.

“We know of instances where the receivers or administrators have gone onto a property and thousands of head of cattle have perished or they’ve charged $400 an hour to inspect a property but they wouldn’t know what they’re looking at anyhow.

“Some of these banks are making 30 per cent on their turn over so they can afford to reinvest some of that profit back into providing good practices so Australians aren’t harmed in their relationships.”

Senator O’Sullivan said the Commission would also need to examine issues like the sale of the former Landmark loans book to ANZ that has been a subject of ongoing conjecture and ventilated during the Senate inquiry into bank lending practices that Senator Williams has co-chaired.

He said farm foreclosures and the practices used by bank appointed receivers during sensitive negotiations to recoup debt would also be critically examined.

“We always have a level of concern and this will be part of the inquiry,” he said.

“Some of the products that people enter into, the banks don’t take into account the rotational nature of your fortunes on the farm.

“When you’ve got a 20 year financial contract that you’re about to enter into with a customer, you have to know, that on at least two or three occasions in that 20 years, that loan is going to come under stress, probably, depending on how much is borrowed.

“So what happens is they enter into contracts that are capable, and predictably are going to fail - but that practice has to cease.”

Senator O’Sullivan said the practice of applying penalty interest rates to distressed farm loans was also in the firing line of the Commission.

“Again when people are on their knees and the paddocks are dry, their cattle are dying and they’ve got no income and they’re seen to default on a loan payment, their interest rate goes up exponentially – it’s a triple cripple,” he said.

“But people on the land need to be given a serious amount of time - I think up to 12-months - when they get into financial trouble, to make alternative arrangements, such as preside over the sale of the property themselves, re-finance, find a partner and things which will allow them to have a dignified exit, if at the end of the day that’s what has to happen.

“People know, when that receiver is driving down the road, fight as you may, but it’s all over.”

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