Australia is in need of a strong financial sector. Photo: Fairfax
The Senate Economics Committee has just completed three days of hearings into the post-GFC climate for our banking system.
The Australian Bankers Association gave evidence that in 2011, the finance and insurance industry contributed $129.8 billion to Australia’s $1.2 trillion economy and has been the largest contributor to the economy since 2006.
The industry as a whole employs nearly half a million Australians and the retail banks paid out $22.5 billion in wages in 2011.
I have constantly said we need a strong banking system, but what we don’t need are some of the unscrupulous practices that were aired at the inquiry. Denise Brailey, President, Banking and Finance Consumers Support Association claimed low doc loans have been handed out with little regard for people’s true income position.
She said of 400 people who have contacted her, all had loan application forms that had been fraudulently dealt with. In other words false income figures had been included on them, not by the applicant, but by a broker or the lender.
The inquiry heard of hoteliers in a seemingly strong financial position having their asset down valued, interest rates tripled and then when they drowned under the mounting interest bill, receivers were called in. The same circumstances saw property developers go to the wall.
We all know receivers are like pit bulls when they get their hands on a business and there is little hope for recovery.
Many of the complaints related to Bankwest, which had been aggressive in chasing business along the east coast, but were then accused of pulling the rug from under their clients to improve their loan book. Bankwest has denied this practice but there were many people who lodged submissions and gave evidence who had similar stories.
Whether GST was passed on to the Tax Office following the sale of assets by receivers was also queried. But probably the most startling revelation out of the three days was the case of a 98-years-old woman who was given a 30 year loan of $440,000 to invest in a development with the promise of a 15 per cent return. It failed and she was left penniless.
I have called for a Royal Commission into white collar crime and the union movement would also come under the microscope. There are more questions raised than answered so far with the Senate inquiry and the committee does have the power to recall witnesses if new information is presented to it.
I stress that Australia needs a strong financial sector, one that Australians can have confidence in. At the present time, that appears to be lacking.
Senator John Williams is a National Party politician and former farmer who lives near Inverell.
