This article is more than 2 years old

This article is more than 2 years old

The Liberal National party senator Barry O’Sullivan has circulated an exposure draft of his bill to set up a commission of inquiry into Australia’s banking industry.

The terms of reference would require a commission of inquiry to consider whether “banking, insurance, superannuation or financial services providers are engaged in unethical or unlawful conduct” in Australia, and if Australia’s regulatory scheme needs an overhaul.

They would also require the commission to consider if consumers are able to fairly resolve disputes in Australia, and if the major banks have been mistreating rural businesses.

But the commission will not be asked to consider the role and influence of bank lobbyists, nor donations from banks to political parties.

The draft, seen by Guardian Australia, was sent to O’Sullivan’s Coalition colleagues on Thursday, as well as Labor, Greens, and other Senate crossbenchers, to give them time to consider it at the weekend.



O’Sullivan would like to introduce the bill to the Senate next week. Despite the Turnbull government abruptly cancelling next week’s sitting of the House of Representatives, the Senate will still be sitting.



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The former prime minister John Howard slammed the idea of a bank royal commission on Thursday, calling it “rank socialism”.

He told Sky News host David Speers that if the Coalition allowed an inquiry to proceed it would damage the Turnbull government irreparably.

“I say to my former colleagues and the people I still support, don’t embrace a royal commission, and to those in the National party and elsewhere who might see this as some kind of retaliation for cooperation between people on the same-sex marriage issue, I would say that I agreed with those people in the National party on the substance of the same-sex marriage issue, but that is over,” he said, in an interview recorded to be aired in full on Thursday evening.

“Let’s not visit upon the Coalition and the fortunes of the government your anger and disappointment about that issue.”

O’Sullivan has proposed that a commission of inquiry into the bank should comprise three commissioners: a former judge, a person with expertise in banking, insurance, superannuation or financial services, and a community representative.

That differs from the Greens-sponsored plan for a commission of inquiry that has already passed the Senate. Under the Greens plan, the commission would comprise a single, former judge.

The Greens’ bill, if passed by the House of Representatives, would specifically require a commission to consider the role and influence of bank lobbyists, and donations from banks to political parties.

The Greens’ party room will consider the proposal on Monday and Tuesday.

Labor leader Bill Shorten told Guardian Australia he would consider O’Sullivan’s proposal very carefully.

“It’s becoming clearer by the day that the prime minister shut down parliament to shut down a royal commission into the banks,” he said.

“His backbench is openly defying him, his cabinet is leaking against him – he’s increasingly isolated in trying to protect the banks.

“The game is up – it’s time for Mr Turnbull support Labor’s royal commission into the banks.”



O’Sullivan’s decision to push ahead with his bill follows this week’s cabinet discussion about allowing a parliamentary inquiry into the banks.

If Malcolm Turnbull allowed a parliamentary inquiry to proceed it would be a significant U-turn. He has steadfastly refused to pursue a bank royal commission for years, and has spent considerable political capital doing so.

With the latest push for an inquiry coming from O’Sullivan, the Australian Bankers’ Association has become increasingly frustrated.

And the big-four banks have reportedly enlisted Australia’s top commercial law firms and senior counsel in readiness, viewing the prospect of an inquiry as almost inevitable.

Political staff are also concerned that if a commission of inquiry is passed by both houses of parliament, its constitutionality could still be referred to the high court.

That’s because a “commission of inquiry” has only been established once, in 1986, to investigate the former Labor minister and high court justice Lionel Murphy. At the time, three judges were appointed to oversee the inquiry to provide independence.

The idea to pursue a commission of inquiry was raised by the Greens senator Peter Whish-Wilson in 2016. The then-clerk of the Senate, Rosemary Laing, advised Whish-Wilson that parliament could establish such an inquiry if the government refused to allow a royal commission.

Laing’s advice suggested a commission of inquiry into the banks would be possible although there would be difficulties, such as funding the inquiry (which the government would have to allow).

She noted that even if the commission bill passed, it could be challenged for validity and “costly interference could be run by interests opposed to such an inquiry”.

“Recourse could be had to litigation at every step to frustrate the commission if the opponents were determined and deep-pocketed enough, including challenges by individual witnesses, not to mention challenges to the appointment of commissioners in the first place,” Laing wrote.

O’Sullivan has been strongly pushing his own idea for a commission of inquiry since last week, when the same-sex marriage postal survey returned a yes vote.

Government accused of avoiding revolt as parliamentary sitting week cancelled Read more

He rejects reports that he has started pushing for an inquiry in retaliation over the same-sex marriage bill, which was introduced to the Senate by the Liberal senator Dean Smith.

It has been reported that O’Sullivan and some of his Coalition colleagues feel they were ambushed by Smith’s same-sex marriage bill, and are now trying to use a similar strategy to embarrass the Turnbull government on banks.

The treasurer, Scott Morrison, has confirmed that cabinet considered the option of allowing a parliamentary inquiry into the banks to go ahead, given the political reality of a handful of Nationals MPs willing to cross the floor.

But senior government ministers are reportedly furious that news of the cabinet meeting was leaked to the media, believing the leak was designed to “create tensions” between cabinet ministers that do not exist.

The Greens and Labor are looking forward to seeing the exposure draft of O’Sullivan’s bill and the terms of reference he is proposing for any commission of inquiry.