Opposition keeps pressure on Coalition over banking reform but is set to make concessions to mortgage broking industry

This article is more than 1 year old

This article is more than 1 year old

Labor will create a new compensation scheme allowing some victims of banking scandals to have their cases reopened, and will also lift the current cap on claims to $2m as part of its response to the Hayne royal commission.

As well as allowing victims to reopen cases, giving people a chance to re-prosecute their complaints and potentially gain compensation up to the new caps, Bill Shorten will also pledge on Friday to put non-financial losses on the same footing as financial injury.

Reserve Bank will cut rates twice in 2019, Westpac chief economist says Read more

The new Labor policy would allow consumers and small businesses to have claims heard for actions dating back to January 2008. People will be given two years to submit their material.

The scheme, which is more generous than the one currently proposed by the Morrison government, will be funded by the financial services sector through a levy.

Friday’s announcement follows a move by the opposition earlier in the week to release new legislation implementing the Hayne recommendations in an effort to pressure the government to move faster.

An announcement on the treatment of mortgage brokers is also imminent. Guardian Australia understands the policy Labor has considered includes replacing trailing commissions with an up-front fee paid by the banks and improved transparency and disclosure of that fee.

Immediately following the release of the Hayne report, Labor signalled it would adopt the recommendation on mortgage brokers – unlike the government, which expressed reluctance about implementing a user-pays system – but internal pressure has led to that position being reworked.

Brokers have unleashed a lobbying campaign with Labor MPs that has succeeded in heightening concerns about the potentially negative consequences if new Hayne-inspired regulations result in a diminution of competition in the home-lending market. Brokers and small banks have warned that an up-front fee, if paid by consumers, would wipe the industry out and decrease competition in the mortgage market.

The new policy on compensation comes as the shadow treasurer Chris Bowen will use a speech on Friday to attack the Coalition’s record on jobs. He will argue that despite growth driven by public spending, Australia’s employment rate and wages growth now lag behind comparable countries.

In a speech to be delivered at the Committee for the Economic Development of Australia, the shadow treasurer will frame the upcoming election as a chance to “get productivity and wages going again” while rebuilding the revenue base with Labor’s policies to close tax loopholes.

Labor has come under sustained attack from the Coalition for its decision to end cash-rebates for franking credits for self-funded retirees no longer paying tax but is determined to make a virtue of big-target economic policies to make the budget more sustainable.

Australia is ready for a new government – but not a truly progressive agenda | Peter Lewis Read more

Bowen will argue that the Coalition has been “found wanting” even on its preferred measure of “jobs and growth”, its case for re-election at the 2013 election. There are “fewer people employed full time now as a percentage of the labour force than there were in 2013”, he will say, 68.6% down from 69.7%.

Some 1.8m want a job or want more work due to “record under-employment” of 1.1m people, he says.

“The party of private enterprise would have people believe that we’ve seen rapid jobs growth in the private sector because of their superior economic competence.

“But actually, a disproportionate component of job creations have been in public or publicly funded industries.”

Bowen cites the fact that more than 570,000 jobs were created in public-funded industries such as health, education and public administration. The National Disability Insurance Scheme – a “Labor initiative” – is expected to add 163,000 jobs, he says.

“While we were doing better than most other advanced economies during and in the aftermath of the [global financial crisis], we’ve now got an unemployment rate inferior to comparable nations like the UK, US and New Zealand.”

Bowen said the government’s promise of 1.25m jobs over five years “far from being ambitious” is “actually just keeping in line with historic trends”, if growth stays at the historical average rate of 1.9%.

On wages, Bowen notes that then-treasurer Scott Morrison predicted 18 months ago that “consumers will start to see their real wages growing in line with productivity again” but Bowen says “this has not happened”.

“They have had to downgrade their wages growth forecasts in every one of their budgets and they will have to again in April.”

Bowen said real wages as measured by the real value of compensation of employees per hour increased by just more than 1% over the last five years, compared with a 9% increase from 2008 to 2013.

Between 2013 and 2017 Australia ranked 27th of 35 countries for wage growth in the OECD, with wage growth less than half the average, he says.

“So over the tenure of this government we’ve gone from doing better than most to doing worse than most.”

On Thursday the minister for jobs Kelly O’Dwyer sad that full-time employment was at a record high of 8,743,100 after growing by 236,100 over the year.