Independents line up with ALP to extend calendar as Reserve Bank governor suggests Australia’s banks could be too profitable

This article is more than 1 year old

This article is more than 1 year old

The Morrison government faces the risk of being forced to schedule extra parliamentary sittings to deal with the recommendations of the banking royal commission, as independents line up with Labor to extend the calendar.

Labor has already demanded an extra fortnight, and other independents are supportive of the idea. The wildcard is Bob Katter. He has not ruled out supporting a motion to extend the pre-election sitting schedule.

The threat of Labor and the independents forcing the government’s hand comes as the Reserve Bank governor, Philip Lowe, suggested the banks could be too profitable.

Bill Shorten demands extra sitting weeks to fast-track banking reforms Read more

Fronting the National Press Club on Wednesday, Lowe noted Australian banks “still have higher returns on equity than many international banks” and added: “I don’t know how long that’s sustainable.”

He said financial institutions in Australia had been “very profitable for decades and when you are very profitable you probably don’t do as much introspection as you probably should”.

Lowe also endorsed the Coalition’s caution on the creation of a user-pays system for mortgage brokers, noting radical changes could impact competition that benefitted consumers when they looked for housing loans.

“In terms of the royal commission’s recommendations on brokers, I agree very strongly with the idea they should have a best-interest obligation,” he said.

“I also agree very strongly that they are essentially providers of financial advice so they should be subject to the same regime.

“How the payments for the brokers work is a more complicated issue. In principle I understand with trailing commissions being banned and the payments being upfront. I think the government is right to be cautious about going the full way and making the borrower pay.

We should have got on with banking royal commission earlier, Turnbull says Read more

“The Productivity Commission has written extensively about this. There are legitimate competition issues and I think it is worth taking the time to work through those competition issues.”

Lowe also said regulators needed to punish bad behaviour, agreeing with a central finding of the Hayne report that there “needs to be more accountability when things go wrong” and that “in some cases, prosecution through the legal process is part of that accountability”.

“I think kind of a more aggressive approach by Asic is called for,” he said, adding that he believed Australia to have a “very good regulatory structure”.

The government is squaring off ahead of the resumption of federal parliament next week, with Scott Morrison declaring he will “simply ignore” losing a substantive vote on legislation, declaring the Kerryn Phelps medical evacuation bill, which looks to have the numbers to succeed, “stupid”.

The prime minister has already rejected calls from Bill Shorten to extend the sitting calendar beyond the set fortnight February sitting and the budget sitting in April, with Morrison instead urging Labor to back existing banking reforms already before the parliament.

But if Katter sides with Labor and the crossbench, the government could lose control of its sitting calendar as well, adding to the pressure facing the minority government.

As one of seven crossbenchers, Katter’s vote becomes crucial, as it gives Labor the absolute majority it needs to win a motion for additional sitting days.

Scott Morrison won't call snap election if defeated on 'stupid' refugee transfer bill Read more

An outspoken supporter of the banking royal commission, Katter, who has promised the government supply, and usually abstains from what he considers “political games”, made a point of saying he would not rule out his support to force parliament to sit longer, in order to deal with the substantive banking royal commission reforms.

Currently dealing with the Townsville floods which have inundated his electorate, a spokeswoman for Katter told Guardian Australia the Queensland MP was considering the option and would consult with his crossbench colleagues and “others” early next week.

Katter had previously pushed for a “shadow” sitting of parliament in November 2017, when the Turnbull government cancelled a scheduled sitting in the wake of the section 44 constitutional crisis.

Cathy McGowan’s spokeswoman pointed to the Indi MP’s vote in the House in November, when she supported Labor’s attempts to extend the calendar, while Adam Bandt and Phelps also said they would vote yes.

Andrew Wilkie said he would “absolutely” support an extension, while both Julia Banks and Rebehka Sharkie are also understood to be looking favourably at the move.

While sitting weeks are scheduled beyond the 2 April budget week, they are unlikely to be held, with the election expected to be called just after the budget is delivered, with the likely poll date either 11 or 18 May.

The government only just managed to have its original sitting calendar passed in November last year, winning the vote by one, 72 to 71.

Labor is eyeing off resuming that fight, with Shorten having written to Morrison on Tuesday to request March sitting weeks.

“Over the past 24 hours, treasurer Frydenberg has appeared to use the small number of remaining sitting days as an excuse to delay legislative changes. This should not be the case,” Shorten wrote.

“It’s critical that these changes are legislated as soon as possible and I request that you recall both Houses of Parliament for 5-7 March and 12-14 March to ensure this can occur before the election.”

That too was rejected.

“We won’t be lectured by Bill Shorten who still hasn’t outlined which recommendations Labor would implement,” a spokesman for Morrison said.