Royal Commission bang on the money

But it seems every other day we learn of the the big four banks doing the wrong thing.

With the release last week of 11 million papers in Panama exposing massive tax avoidance by major companies and 800 high-wealth individuals, community confidence in big business is waning.

And, when coupled with political parties relying on big business for donations, a royal commission must happen.

The call by Nationals Senators John Williams and Warren Entsch for a royal commission into the Australian financial sector are bang on the money.

Another senator who spent his career in the investment banking industry in Wall Street, New York, US, and domestically in Australia, Greens Senator Wish Wilson, said while there is the current culture within the banking sector of bonus incentives, excessive risk taking occurs, which caused the Global Financial Crisis (GFC).

Prime Minister Malcolm Turnbull, as a former investment banker, should know all is not roses in the sector and should heed the senator’s call.

It is not sufficient to give the banks a slap on the wrist as I sense most Australians are concerned about a mounting litany of Australian banks’ crook actions.

Australia needs a royal commission to investigate what the systemic problems are.

To say the Australian Security and Investment Commission (ASIC) and Australia Prudential Regulatory Authority (APRA) Commission are doing their jobs is laughable, as the truckload of misdemeanours have happened under their watch.

The banks have form in looking to public support through government guarantees.

In late 2008 when the world economy was blindsided by the GFC, the Australian government guaranteed large deposits and wholesale funding because the international banks started restricting access to funding that would have had serious implications for liquidity and lending activity in Australia.

If people are uncertain about the power of a royal commission to expose problems they should look no further than the Royal Commission into Child Abuse, which has exposed huge problems in a large number of institutions.

But before the royal commission, countless inquiries and controls had failed to expose what the royal commission has shown to be a national shame.

Most farmers want to see Malcolm Turnbull win the next election.

But after banks leading people into dodgy investments and the manipulation of interest rates on top of all the problems exposed in the Murray and Senate inquiries, the time has come for decisive action.

Community confidence in our banking sector is shaky and that is not good for the Australian economy.