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The Jenkins review has 28 recommendations to fix parliament’s toxic culture – will our leaders listen?

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Misconduct in Parliament

The Jenkins review has 28 recommendations to fix parliament’s toxic culture – will our leaders listen?

Former Liberal staffer and sexual assault advocate Brittany Higgins has called for “immediate action” on misconduct in Parliament, after a landmark Human Rights Commission report.

The Jenkins review has 28 recommendations to fix parliament’s toxic culture – will our leaders listen?

Lukas Coch/AAP

Sonia Palmieri, Australian National University

In the wake of Brittany Higgins’ shocking allegations about being raped in a ministers’ office by a colleague, Prime Minister Scott Morrison initiated multiple inquiries.

Arguably, the most significant was the independent review into parliamentary workplaces, headed up by Sex Discrimination Commissioner Kate Jenkins and supported by Labor and the crossbench.

The review has been underway since March, speaking to current and former MPs and employees at parliament house and its associated workplaces – such as electorate offices and the press gallery. On Tuesday, the 450-page report, Set the Standard, was released.

As Jenkins observed, parliament house should be something “Australians look to with pride”.

This report represents a wholesale change strategy, and calls for leadership and accountability across a diverse parliamentary “ecosystem”. This new roadmap is grounded in the testimony and experiences of more than 1,700 contributors, including 147 former and current parliamentarians.

What did the report find?

The report included a survey of current parliamentarians and people currently working at parliament house (such as staffers, journalists and public servants). More than 900 people responded.

It found more than 37% of people currently in parliamentary workplaces have personally experienced bullying in a parliamentary workplace. As one interviewee noted:

Frequently, like at least every week, the advice was go and cry in the toilet so that nobody can see you, because that’s what it’s like up here.

It also found 33% of people currently in parliamentary workplaces have personally experienced sexual harassment in a parliamentary workplace. As one interviewee reported:

Aspiring male politicians who thought nothing of, in one case, picking you up, kissing you on the lips, lifting you up, touching you, pats on the bottom, comments about appearance, you know, the usual. The point I make with that… was the culture allowed it, encouraged it.

The report notes a devastating impact on people as a result of these experiences. This included an impact on their mental and physical health, confidence and ability to do their job, as well as their future career, “these experiences also caused significant distress and shame”.

Sex Discrimination Commissioner Kate Jenkins
Sex Discrimination Commissioner Kate Jenkins has been working on the parliamentary review since March.
Dan Himbrechts/AAP

The drivers behind this behaviour

A critical part of the report looks at the drivers which contribute to misconduct in parliamentary workplaces. Participants also described risk factors which interact with these drivers to endanger their workplaces.

The drivers include:

  • power imbalances, where participants described a focus on the pursuit and exercise of power as well as insecure employment and high levels of power and discretion in relation to employment
  • gender inequality, including a lack of women in senior roles
  • lack of accountability, including limited recourse for those who experience misconduct
  • entitlement and exclusion, or “a male, stale and pale monopoly on power in [the] building”

The risk factors include:

  • unclear standards of behaviour, leading to confusion about the standards that apply
  • a leadership deficit, such as a prioritisation of political gain over people management
  • workplace dynamics, a “win at all costs” and high-pressure and high-stakes environment
  • social conditions of work, including “significant” alcohol use and a “work hard, play hard” culture.
  • employment structures and systems, such as a lack of transparent and merit-based recruitment.

Recommendations

There are 28 recommendations in the report.

They include a statement of acknowledgement from parliamentary leaders, recognising people’s experiences of bullying, sexual harassment and sexual assault in parliamentary workplaces, targets to increase gender balance among parliamentarians and a new office of parliament staffing and culture.

Former Liberal staffer Brittany Higgins.
Former Liberal staffer Brittany Higgins was briefed on the report before it was made public.
Lukas Coch/AAP

The report also wants to see the professionalisation of management practices for parliamentary staff and a code of conduct for parliamentarians and their staff. An independent commission would enforce these standards.

The report also calls for a new parliamentary health and well-being service.

Where to from here

Two key press conferences – from Morrison and Jenkins – accompanied the release of the Set the Standard report. But the change expected by the report requires much more than words – it requires concerted action.

Parliament now needs to endorse and implement a number of key accountability mechanisms to ensure that, as an institution, it ensures all building occupants are safe and respected at work. These include the office on parliamentary staffing and culture and independent parliamentary standards commission.

In addition, the report calls on the parliament itself to continue reflecting and thinking through appropriate changes. For example, the parliamentary work schedule is shown to drive a workplace culture that values “presence and endurance” over remote working and flexibility. Sitting in the chamber at 9pm does not necessarily equal productivity, particularly when it is propped up – among political staffers – with alcohol.

There is no simple solution here. Some argue long hours in parliament house mean longer periods away from parliament, in the electorate, with families. Others argue the work day should end – as it does in other workplaces – before dinner. Jenkins recommends parliament does its own review of the sitting schedule. Hopefully this will create “buy in” from parliamentarians, but reviews like this have been undertaken before (and have not led to cultural change).

For this report to lead to meaningful change, everyone in all the many, varied parliamentary workplaces has to take responsibility for the systemic inequality that drives toxic workplace behaviour in the building.

Responsibility is not equally distributed though. Morrison may call for a bipartisan approach, but he currently leads the government responsible for instigating the inquiry and implementing its recommendations.

His challenge will be in convincing the electorate he means it when he says he wants to fix this “very, very serious problem”.


If you or someone you know is impacted by sexual assault, family or domestic violence, call 1800RESPECT on 1800 737 732 or visit www.1800RESPECT.org.au. In an emergency, call 000. International helplines can be found via www.befrienders.org.The Conversation

Sonia Palmieri, Gender Policy Fellow, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Labor $2.4 billion plan to expand suburban and regional access to full-fibre NBN

Michelle Grattan, University of Canberra

Anthony Albanese is promising a Labor government would invest $2.4 billion to boost the NBN, expanding full-fibre access to 1.5 million homes and businesses.

With the faux election campaign in full swing, although the election isn’t until next year, Albanese on Wednesday will release a policy designed to push fibre deeper into the suburbs and regional areas.

Labor will pledge that more than 90% of premises across Australia in the fixed line footprint – more than 10 million premises – would have access to “world-class gigabit speeds” by 2025.

“Labor will also keep the NBN in public hands, keeping internet costs for families affordable while ensuring improvements in the network,” Albanese and shadow communications minister Michelle Rowland say in a statement.

The opposition says its proposed investment would be funded by a combination of Commonwealth loans, free cash flows and equity if deemed appropriate. The mix would be determined in government.

The plan would run fibre into the street, giving those relying on copper wire the choice of having fibre connected by NBN without extra cost to their premises to get faster speed.

“Owners of these properties, mainly in the outer suburbs of our cities and in regional areas, were dudded by the Coalition when it took an axe to Labor’s original NBN design in 2013,” the policy says.

“It is estimated 660,000 premises in the regions will benefit under this plan, and 840,000 in the suburbs.”

The policy says 7.5 million households and businesses would be on a full-fibre connection or have access to one, and nearly seven in eight premises in the fibre to the node footprint would have fibre access.

Labor says its plan would create 12,000 jobs for construction workers, engineers and project managers in the regions and suburbs.

Albanese and Rowland condemn the Coalition’s oversight of the NBN as “a masterclass in technological incompetence and mismanagement causing Australia to trail behind other developed countries, slipping to 59th in the world on average broadband speeds”.

They say this has been “a drag on our economy. It has undermined the competitiveness of small businesses and left our health care and education sectors reliant on patchy, outdated technology”.

Under Labor’s original plan, unveiled by the Rudd government in 2009, the NBN was set to install fibre-optic cables to 93% of Australian homes and businesses, as part of a wholesale replacement of the existing copper network.

This “fibre to the premises” network would have delivered speeds of 100 megabits per second and above to almost the entire population, with wireless and satellite internet connections covering the remote areas not covered by the new network.

But the plan was significantly scaled back by the Abbott government in response to concerns the $37.4 billion price tag, including $30.4 billion of public funding, was too high.

The replacement NBN plan involved a mixed approach in which , while others would make do with “fibre to the node” – optical cables to a central hub from which the existing copper network would service individual premises.

The rollout of the revised plan was beset with technical problems in many areas, while some experts decried the mixed-technology plan as short-sighted (see https://theconversation.com/expert-panel-the-state-of-the-national-broadband-network-56073).

While other nations have uniform 100Mbps broadband, Australia has languished in the international league tables, offering speeds of 25Mbps across much of the NBN.

Telecommunications firms such as AT&T in the United States have begun designing networks capable of delivering 1 gigabit per second (1,000Mbps) as part of efforts to future-proof their infrastructure for the coming decades.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Garry Linnell: Advance Australia Fair is just ‘beautiful lies’

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Garry Linnell: Advance Australia Fair is just ‘beautiful lies’

 

Every nation tells lies about itself. It’s how history is made.

Little fibs are buffed and shined and presented as facts. Distortions and exaggerations are given a lick of paint and turned into brightly shining legends.

Even absolute falsehoods can be burnished enough until they are accepted as truths.

We Australians also don’t mind telling the odd whopper. We loved one of them so much, after all, we turned it into our national anthem.

Advance Australia Fair was composed by a well-meaning Scottish schoolteacher more than two decades before the British parliament finally – and reluctantly – allowed the six Australian colonies to join together and become a self-governing nation.

It was a hit from the first time it was played because its receptive white audience, which loved its stirring patriotic appeal, already accepted as fact all the lies the nation had been founded upon.

Apparently many of us – including Prime Minister Scott Morrison – still do.

Last week rugby league’s governing body – attempting to sidestep potential controversy over the opposition of Indigenous players to the song – decided not to play the national anthem before the start of this month’s delayed State of Origin series.

Within two hours Mr Morrison, a passionate rugby league fan, had made a phone call and the decision had been reversed.

For a man who fled to the warmth and safety of Hawaii earlier this year as the rest of the country burned, the superficial “furore” over the NRL’s anthem decision gave him the chance to cloak himself in the flag and once more portray himself as the defender of Australian values.

But exactly what values was the Prime Minister defending?

When Advance Australia Fair first became popular, Australia was a nation of forelock-tuggers who, desperate to rid themselves of the convict stain, would do anything to please their English masters.

In 1895, the acclaimed American writer Mark Twain visited Australia on a speaking tour designed to help him out of bankruptcy.

He was an ardent imperialist at the time (although he later did an abrupt about-face) and he was impressed with the way Australians always deferred to England by calling it “home”.

“It was always pretty to hear it,” Twain wrote.

“Often it was said in an unconsciously caressing way that made it touching … and made one seem to see Australasia as a young girl stroking Mother England’s old gray head.”

This need to bow and scrape helped create what the writer Peter Carey so brilliantly identified in his sprawling novel Illywhacker as the ‘Imaginary Englishman’.

he Imaginary Englishman was a third- or fourth-generation Australian, often with convict origins, who rounded their flat vowels and ponced about wearing gloves, camel hair coats, clipped military moustaches and ties that hinted at vague private school backgrounds.

The Imaginary Englishman believed in the greatness of the Empire.

He drank tea, ate scones and no doubt sang along lustily to Advance Australia Fair, revelling in all the lies about his nation.

He might agree the land itself was ancient. But its original inhabitants? They lacked culture, intelligence and ambition.

“He is a coward,” wrote Twain about the Australian Aboriginal, echoing the views of the colonialists. “There are a thousand facts to prove it.”

More than a century later, Scott Morrison has become the Imaginary Australian.

Of course, the Prime Minister does not hold those same colonial views.

He is certainly not a racist – and he has spoken many times about Australia’s need to reconcile with Indigenous Australians and atone for the mistakes of the past.

Prime Minister Scott Morrison and Indigenous Australians Minister Ken Wyatt announced the targets for the Closing The Gap initiative in July. Photo: AAP

But he is an Imaginary Australian because he clings to an antiquated notion of what an Australian really is, or ought to be.

By raising the spectre of the NRL being “unAustralian” by refusing to play the anthem, Mr Morrison was playing to an audience he thinks truly represents who we are.

The world of the Imaginary Australian is a land where endless frames of Hills Hoists line the horizon, where blokes in their 60s who like to have a beer at the footy wake up to the sound of conservative talk radio, who still recite Paul Hogan jokes at the pub, who like to take the missus for a feed at the local Chinese on a Saturday night after a big win on the ponies.

The Imaginary Australian believes in the myths of Gallipoli. He is still disturbed when men grow their hair below their collar. He thinks there is nothing wrong in playing the national anthem before a sporting event and wonders why Bunnings doesn’t do it every Saturday morning when its doors swing open and the first raw snag is placed on the grill.

The Imaginary Australian doesn’t understand why many consider Advance Australia Fair to be sentimental claptrap from an era we left behind long ago, or that many of his countrymen actually find it offensive and that its lyrics no longer speak to the nation or represent what we have become or aspire to be.

It’s up there with all the other lies we tell the world about ourselves, including that one about us being larrikins who distrust authority and love giving the middle finger to the establishment.

Truth is we are one of the most law-abiding and deeply conservative societies not living in a dictatorship, happy to drown in the regulations and bylaws of the most over-governed nation on the planet.

Twain found Australia’s history curious and strange. “It does not read like history,” he said, “but like the most beautiful lies.”

We’ve come a long way since he visited these shores. An enormous amount has changed for the better.

But some of the lies persist. And sadly, the song remains the same.

Walkley Award winner Garry Linnell is one of Australia’s most experienced and respected journalists and editors

Garry Linnell: Advance Australia Fair is just ‘beautiful lies’

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Garry Linnell: Advance Australia Fair is just ‘beautiful lies’   Every nation tells lies about itself. It’s how history is made. Little fibs are buffed and shined...

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Federal parliament just weakened political donations laws while you weren’t watching

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Feds weakened laws

Political donations

While Australians were distracted last week by Melbourne’s lockdown ending and the final days of the Queensland and United States elections, both major parties joined forces in federal parliament to weaken political donations laws.

Allowing secret donations from dodgy donors

While you were asleep

The legislation passed last week overrides state bans on property developer donations in two ways.

Federal parliament just weakened political donations laws while you weren’t watching

Lukas Coch/AAP

Luke Beck, Monash University

While Australians were distracted last week by Melbourne’s lockdown ending and the final days of the Queensland and United States elections, both major parties joined forces in federal parliament to weaken political donations laws.

This will make it easier for federal politicians to accept secret donations from property developers.

What’s the backstory?

In 2019, the High Court upheld Queensland laws banning property developers from making donations to political parties. The ban was introduced by the Palaszczuk government after a recommendation by the state’s Crime and Corruption Commission.

The Queensland ban applies to donations made to state and local political campaigns as well as general donations to political parties. A general donation might be used for federal, state or local political purposes or for the costs of running a party.




Read more:
Fundraising questions have interrupted the Queensland LNP’s election campaign. What does the law say?


At the same time, the High Court also struck down a 2018 federal law that said property developers could ignore state laws banning them from making general donations to political parties. (Yes — federal parliament really did pass a law overriding state anti-corruptionpowers!). The High Court said federal parliament has no power to regulate political donations that merely “might be” used for federal campaigns.

Property developers are also banned from making political donations in New South Wales and the ACT.

Allowing secret donations from dodgy donors

The legislation passed last week overrides state bans on property developer donations in two ways.

First, the legislation introduces a new provision to replace the 2018 federal law struck down by the High Court. This new provision allows property developers (and others banned from making donations under state laws) to ignore state laws banning them from making political donation where the donation is “for federal purposes”.

High Court, with Parliament House in background.
The High Court struck down a federal law on donations in 2019.
Lukas Coch/AAP

Second, the legislation allows property developers and political parties to ignore state laws requiring that donations be disclosed. In NSW and Queensland, donations of $1,000 or more need to be disclosed. Under the new federal law, only donations of $14,300 or more made by property developers “for federal purposes” need to be disclosed.

The explanation given for the new laws is that state laws shouldn’t apply to federal donations.

According to Finance Minister Mathias Cormann, the new laws “better clarify” the interaction between federal and state electoral laws.

The revised provisions ensure that federal law only applies exclusively to donations that are expressly for federal purposes, while fully respecting the application of state laws to amounts used for state purposes.

Labor’s Don Farrell, who is shadow Special Minister of State, told the Senate,

it’s not Labor’s intention in any way to weaken any of those provisions already in place in the states, but the Commonwealth parliament should be able to make laws with respect to Commonwealth elections, and those laws should not be overridden by the states.

Why this is bad for integrity

If you are a property developer wanting to curry favour with the NSW Labor Party or the Queensland Liberal National Party, you are now allowed to make a donation of $14,299 and no one will ever know. All you need to do is tell the party the money is “for federal purposes”.

While the law requires parties to keep money donated “for federal purposes” in separate bank accounts, a donation “for federal purposes” frees up money from other, general donations to be used for state purposes.

The Greens and independent MPs lined up to criticise the new law.
As member for Indi, Helen Haines told parliament

this bill locks in the status quo when it comes to the current political donations culture at the federal level.

Meanwhile, Tasmanian lower house MP Andrew Wilkie described the law as allowing “brazen money laundering”. Senator Jacqui Lambie said the law was “a doozy” of a way “to hide big donor money from the voters” and “the latest in a long line of betrayals of the public’s trust”.

Federal integrity laws are too weak

Federal parliament had an opportunity to introduce better federal political transparency measures. They could have lowered the federal donations disclosure threshold so the public knows where federal politicians get their money. They could have introduced real-time reporting of donations so the public doesn’t have to wait until after each election to find out the identities of the biggest donors.

Labor has introduced bills on both these measures. Instead of dealing with those, both major parties took the time and effort to override state anti-corruption laws.

To add icing on top, the Morrison government has now released a draft bill for a federal integrity commission with proposed powers so much weaker than existing state anti-corruption commissions that a former judge called it a “feather duster”.

Australians deserve much better than this.




Read more:
Explainer: what is the proposed Commonwealth Integrity Commission and how would it work?


The Conversation


Luke Beck, Associate Professor of Constitutional Law, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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The spread of coronavirus in Australia is not the fault of individuals but a result of neoliberalism

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Neoliberalism

spread of coronavirus

For decades, advocates of the privatisation of public services have boasted of the cost savings of doing so. Today, we are counting the cost

Privatisation of public services

Counting the cost

Neoliberalism is spreading coronavirus faster than any “reckless teenager” ever could.

Neoliberalism is spreading coronavirus faster than any “reckless teenager” ever could. Privatised guards at quarantine hotels, private aged care centres that put profits ahead of staffing levels, and the fact that those in charge neglected to have their health professionals appropriately evaluate the risk of the Ruby Princess, are the major causes of Covid-19 transmissions and deaths in Australia.

Put simply, if Australia relied on a well-paid, well-trained and well-resourced public sector to protect us then there might have been no shutdown in Victoria, no restrictions on interstate travel and no forecast of double-digit unemployment. For decades, advocates of the outsourcing and privatisation of public services have boasted of the cost savings of doing so. Today, we are counting the cost. We will be counting it for years to come.

Among the serious problems found were “Dreadful food, nutrition and hydration, and insufficient attention to oral health, leading to widespread malnutrition, excruciating dental and other pain, and secondary conditions.”

Australia is one of the richest countries in the world and while our governments spend more than $50bn a year on the aged pension and $43bn on tax concessions for superannuation – to provide “dignity” for older Australians – high levels of mismanagement and profit mean that even $20bn in commonwealth funding isn’t enough to keep maggots, let alone Covid-19, out of Australia’s privatised aged care system.

Most aged care homes in Australia are privately owned and operated, but in Victoria, there are 178 government-run centres. And unlike their private “competitors”, the government-run aged care centre are burdened with “red tape” – such as minimum staffing levels. At the beginning of August, five of the Victorian cases involve one publicly run home and the remaining 923 cases were in private and not-for-profit homes.

When you don’t care about the future, cost-cutting is easy. If you stop getting your car serviced, insuring your house and going to the dentist you can save thousands of dollars a year. But, contrary to decades of neoliberal rhetoric, there is a big difference between saving money and increasing efficiency. Some short-term savings can cost you a fortune in the long run.

In 2018 Scott Morrison announced the royal commission into aged care quality and safety, after shocking evidence of abuse and neglect were reported. While the royal commission is ongoing, the 2019 interim report found:

We have seen images of people with maggots feeding in open sores and we have seen video and photographic evidence of outright abuse.

The combined impact of the evidence, submissions and stories provided to the Royal Commission leads us to conclude that substandard care is much more widespread and more serious than we had anticipated.”

Neoliberalism has undermined the foundations of the modern welfare state that Australia spent the 20th century building

Of course, the private sector hasn’t just done a poor job of keeping Covid-19 out of aged care homes, it’s done a poor job of keeping people infected with the virus contained in their quarantine hotels too.

Victoria’s reliance on a poorly trained and poorly paid pool of private security providers seems likely to be a major cause of Australia’s largest Covid-19 outbreak and it’s now been revealed that a private guard at a Sydney quarantine hotel not only contracted the virus, but worked shifts at a court house and food market after he was infected.

And then there is the Australian Border Force. Australia’s parliamentary democracy was built on the premise of ministerial accountability for the delivery of services by a strong and independent public service. How old fashioned and “inefficient” was that!

In 2015, the Coalition government created Border Force by merging the Australian Customs and Border Protection Service with the immigration detention and compliance functions of the then Department of Immigration and Border Protection.

The minister for home affairs, Peter Dutton, spelt out the rationale for this enormous consolidation of (his) power, in a speech lauding the formation of this new mega-agency. In Dutton’s words, his preferred structure “removes unnecessary duplication and enables the deployment of a greater proportion of resources into the front line. It also contributes to a more efficient government footprint that will assist in achieving fiscal repair and ensuring the sustainability of government operations.”

Dutton went on to declare that “By removing the traditional silos of immigration and customs, my department – and within it the Australian Border Force – will deliver an improved capability that truly focuses border policies, strategy and operations in an integrated and holistic way.”

Despite mouthing banal neoliberal platitudes about footprints, fiscal repair and silos, when the Ruby Princess allowed passengers with Covid-19 to disembark, neither Dutton nor his agency showed any kind of remorse for the debacle that resulted in deaths and economic destruction. The entire rationale for creating Border Force was to remove “silos” and increase efficiency, but the minister for home affairs’ only excuse for the most deadly failure of border protection in modern history is to blame other departments.

One of neoliberalism’s best tricks is to blame “the market”, “the bureaucracy” or “rogue individuals” for the predictable consequences of government decisions. But sadly, even before Covid-19 came along, there were allegations that the companies who employed security guards do not put enough effort into training or monitoring their staff.

Likewise, with aged and disability care. While there are shocking examples of individuals neglecting and even abusing those in their care, there is also enormous evidence that some of the lowest paid workers in the country work unpaid overtime to provide the best care they can in some of the worst facilities you could imagine. If a company is well managed, how could the poor performance of a single staff member go unnoticed for months or years?

Neoliberalism hasn’t just undermined the quality of specific sectors like aged care and security but, by undermining the centrality of secure jobs that come with sick leave, career leave and annual leave, it has undermined the foundations of the modern welfare state that Australia spent the 20th century building. People without sick leave feel the need to go to work when they are sick because they have no other choice. People with full-time work don’t need to cobble together an income working shifts at multiple sites. And people with stable employment are more likely to have been given the training they need and be surrounded by others who have received that training.

It’s not the fault of individual security guards, aged care nurses or Border Force officers if their employers haven’t given them the training they need to do their important work well. It’s the fault of their employers, and ultimately, of governments that are willing to contract out some of the most important, sensitive and intimate work in Australia to whatever private company offers the lowest price or the largest donations.

It’s not the market’s fault that there are no minimum staffing numbers or minimum training standards in commonwealth-funded and privately run aged care homes. It’s the Morrison government’s. And it’s not the market’s fault if the private security guards protecting us from Covid-19 are poorly trained.

As individuals we have a responsibility to wash our hands, respect social distancing rules and wear masks when appropriate. But if we really want to protect ourselves from this pandemic, and future threats, we need to ensure we hold government ministers responsible for the outcomes they deliver.

The biggest threat of neoliberalism isn’t further funding cuts or more deregulation. It’s the ability to convince Australians that the minister for home affairs isn’t responsible for Border Force, and Border Force aren’t responsible for protecting our borders.

• Richard Denniss is the chief economist at independent thinktank The Australia Institute

This article was originally published in The Guardian

The Federal Government Funds Aged Care and it regulates Aged Care

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Secret report flagged aged care workforce woes in April

Federal authorities were told four months ago

The report warned of problems in keeping staff, recruiting agency nurses and sending residents to hospital during the nation’s first major aged care home COVID-19 outbreak. But the report was kept confidential after it was handed to federal authorities on April 14 and was only made public in recent days after being lodged with the royal commission into aged care.

Months of inaction

Aged care in crisis

1st Dog originally published in The Guardian https://www.theguardian.com/commentisfree/2020/aug/19/we-are-232-days-into-the-coronavirus-and-aged-care-in-australia-is-in-a-deadly-meltdown

Secret report flagged aged care workforce woes in April

Writes David Crowe, SMH’s Chief political correspondent

Federal authorities were told four months ago aged care centres would struggle to find staff in an outbreak, with a confidential report listing the urgent lessons from the first wave of infection.

The report warned of problems in keeping staff, recruiting agency nurses and sending residents to hospital during the nation’s first major aged care home COVID-19 outbreak. But the report was kept confidential after it was handed to federal authorities on April 14 and was only made public in recent days after being lodged with the royal commission into aged care.

The report into Dorothy Henderson Lodge, the Sydney centre where six residents died from coronavirus, revealed the workforce pressures months before the same problems took authorities by surprise in Victoria.

‘‘When the first case was diagnosed, many personal carers stayed away from work and others were distressed and fearful; all were quarantined for two weeks,’’ says the report by Professor Lyn Gilbert, the director of infection control for the Western Sydney Local Health District. ‘‘Maintaining adequate numbers of agency nurses was difficult and costly.’’

Federal Health Department Secretary Brendan Murphy argued last month that authorities could not foresee the sudden withdrawal of most workers from Melbourne’s St Basil’s home because it had not happened elsewhere.

But authorities were told of the lessons from the NSW outbreaks, where an estimated 87 per cent of workers had to go into quarantine.

Professor Gilbert also conducted a review of Newmarch House but the federal government is yet to release the document. She has also been asked to conduct a review of St Basil’s.

The reviews come as Prime Minister Scott Morrison strongly denies claims made to the royal commission that he and his ministers did not develop a specific pandemic plan for aged care.

Mr Morrison told the ABC yesterday aged care was a shared responsibility because the states looked after public health.

‘‘We regulate aged care but when there is a public health pandemic, then public health, which, whether it gets into aged care, shopping centres, schools or anywhere else, then they are … matters for Victoria,’’ he said.

Labor leader Anthony Albanese said this was ‘‘passing the buck’’.

‘‘The Morrison government runs, regulates and is responsible for aged care,’’ Mr Albanese said.

The federal Health Department commissioned Professor Gilbert to review Dorothy Henderson Lodge, run by BaptistCare, and received her report in April.

The report notes the first COVID-19 case was diagnosed on March 3 in a nursing assistant and was followed by infections among two more staff and four residents within two days.

Australia’s Ruby Princess Cruise Ship Nightmare

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#ScoMo #ScottyFromMarketing

Scott Morrison’s coronavirus mea culpa was barely disguised score-settling with Daniel Andrews

Ruby Princess

Coronavirus fallout: Cruise industry takes a battering

Ruby Princess: Class action building against cruise operator

COVID-19 data centre

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Australia’s COVID-19 Data centre

by Sydney Morning Herald

Australia’s dirty secret and the trial too sensitive for an open court

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Scott Morrison has stated he wants to govern in the “Howard tradition”, but sadly that has also entailed adopting the worst of John Howard’s strategies: to admit or explain as little as possible. Recall the former prime minister’s commitment to the Iraq war without parliamentary debate, the Tampa and children-overboard affairs, the Wheat Board scandal, and the bugging of the government of Timor-Leste, just to mention the most conspicuous cases.

Secret whistleblower trial will only add to Australia’s shame over spying cover-up

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.

Article originally published in SMH

There has never been a full accounting for these decisions. Indeed, in some cases there has been blatant cover-up. Moreover, there has been little discussion of the longer-term consequences. Successive governments since have acted as if they are beyond reproach.

In this vein, the Morrison government has avoided accountability for the sports rorts and other slush fund excesses. It is not commenting on ABC findings that Australian troops killed as many as 10 Afghan civilians during a 2012 raid in Kandahar Province, hiding behind an expected report from the Inspector-General of the Defence Force on alleged war crimes in Afghanistan. This begs the question of the appropriateness of the ADF investigating itself.

The government is also attempting to stop the Auditor-General providing evidence that was critical of their $1.3 billion deal to purchase a new combat vehicle from arms manufacturer Thales, some two years after having used extraordinary powers to redact aspects following complaints from an “aggrieved” Thales.

And the government is still pursuing barrister Bernard Collaery in the courts over claimed breaches of intelligence secrecy laws in relation to an operation in Dili in 2004, when the Howard government spied on and bugged Timor-Leste officials’ private discussions about maritime boundary negotiations – to give Australia the upper hand.

Sixteen years after Australia’s spying activities against a friendly neighbour – diverted from the war on terrorism – the Morrison government is going to incredible lengths and expense to prevent the full facts from being admitted, to prevent ministers and bureaucrats of the Howard administration being held to account or the identification of business interests that were favoured.

The ACT Supreme Court ruled last month, in the government’s favour, that sections of the Collaery trial would be held in secret because material identified by the Attorney-General as sensitive should remain classified.

It is probably more than coincidence that Timor-Leste’s original negotiator, Xanana Gusmao, was keen to testify, having forced a renegotiation of the maritime boundaries through action in the Permanent Court of Arbitration in the Hague. Ironically, it backed a boundary that the Howard government had spied to avoid.

By objective assessment, this espionage was illegal, immoral and corrupt – a rich country seeking to disadvantage one of the poorest – to the obvious benefit of private companies, initiated by a government that had been wallowing in its role in achieving Timor-Leste’s independence. Our governments would, of course, defend secrecy about espionage aimed at combating terrorism and other security threats, but surely this doesn’t extend to blatantly commercial ventures that are against the interests of our friendly neighbour and, indeed, our national interest?

How is it consistent that our government takes a strong position against Chinese aggression in the South China Sea, but defends its spying activities to the detriment of Timor-Leste? How is this consistent with our defence of the global “rules-based system”?

The effect of the Witness K and Collaery cases is to send a chill through anyone who might contemplate exposing the immoral and illegal actions of their government.

There are important questions about the agendas and relationships of the public service and private sector advisers who drove and implemented this breach of foreign policy strategy, and about those who stood to benefit, and by how much they may have benefited financially or in what other way?

There are also important questions concerning conflicts of interest and whether some involved had existing or prospective relationships with the private sector beneficiaries at the time of the spying and subsequent negotiations, or were to benefit post politics?

All up, an overwhelming case for a National Integrity and Corruption Commission, with real teeth.

To recap, Collaery became the approved legal representative for Witness K, the Australian spy who thought there was something rotten about that operation. After unsuccessful attempts to raise the alarm through official channels, Witness K resorted to blowing the whistle and, ultimately, pleaded guilty last year to breaching secrecy laws.

But Collaery, the lawyer representing the whistleblower, is also accused of breaching those laws and will fight the charges – albeit while he is prosecuted under worrying secrecy.

Dili: Some of East Timor’s most respected political leaders are demanding the Morrison government drop the prosecution of Australian whistleblowers Bernard Collaery and former spy Witness K, as the Prime Minister prepares to land in East Timor on Friday.

Protesters marched through the streets of Dili on Wednesday in support of dropping the charges against Mr Collaery, a Canberra lawyer, and Witness K, a former Australian Secret Intelligence Service agent who revealed Australia had bugged East Timorese government offices during negotiations over a maritime boundary.

Jose Ramos Horta, a Nobel laureate and former prime minister and president of East Timor, told the Sydney Morning Herald and The Age it was “incomprehensible that in the current circumstances, on the merits of the case, they [the Morrison government] don’t stop it”.

“If Australia doesn’t show political leadership, moral leadership on this issue, every time we talk to Australian leaders I will wonder if they have a tape recorder in their pocket [or] if my office has been bugged,” he said.

Mr Morrison is due to meet Prime Minister Taur Matan Ruak in Dili on Friday to formalise the March 2018 agreement that finally creates a maritime boundary between East Timor and Australia. That deal unlocked access to oil and gas fields including the Greater Sunrise field, which is worth up to $US50 billion ($74 billion), and splits revenue from the field up to 80-20 Timor’s way. It replaces an earlier agreement, negotiated by the Howard government in the early 2000s, which had a 50-50 revenue split.

That deal was dumped by East Timor when it emerged the Australian government had bugged the government during negotiations. Witness K, who participated in the bugging operation and his lawyer,  Mr Collaery, are now being prosecuted for breaching Australia’s secrecy laws. Witness K, whose name cannot be revealed for legal reasons, has indicated he is prepared to plead guilty.

But to many in East Timor, the pair are heroes who ensured a fair go for the tiny nation.

Former president and prime minister Xanana Gusmao told the ABC’s Four Corners he was willing to fly to Canberra to give evidence in support of Mr Collaery and Witness K. Mr Gusmao led the Timorese negotiations over the boundary, was a hero of the resistance to Indonesian occupation and remains an influential politician.

Mr Morrison is due to meet Mr Gusmao and President Francisco Guterres on his trip to Dili, which is the first by an Australian prime minister since Kevin Rudd’s visit in 2007. This visit marks the 20th anniversary of 78 per cent of East Timorese voting for independence from Indonesia.

Former East Timorese deputy prime minister Jose Guterres was another who said Mr Collaery and Witness K should not be prosecuted.

“Bernard Collaery loves Australia, I have known him for many years, he is a great guy. He and Witness K, I know he was an intelligence guy but even if you work in intelligence you are not a machine, you have common sense,” he said, adding the agent had spoken out because the bugging was ethically wrong.

Tomas Freitas, a spokesman for MKOTT (the movement against the occupation of the Timor Sea) which organised the protest, said the pair were “heroes” to ordinary East Timorese. Attorney-General Christian Porter, who has the power to drop the case, should do so immediately as prosecution would harm bilateral relations, Mr Freitas said.

“If it was not for Witness K and Bernard Collaery this [revised] treaty would not have been negotiated, agreed and signed,” he said. “The [independence referendum] celebration of the 30th of August 2019 and the signing of the maritime boundary will not be complete without the freedom of the pair.”

Porter said on Tuesday that pursuing the cases against Witness K and Collaery remained in the public interest, and that there was a reasonable chance of conviction.

Question marks remain over whether the Greater Sunrise field is viable, with opposition and civil society groups criticising the huge investment. But East Timor’s government believes the field’s development will open the door to greater economic development for the tiny island nation of about one million people.

Stop punishing Witness K for telling the truth on East Timor

Australia’s prestige in our region rests not just on our aid or our military might but also, we hope, on our reputation for dealing fair and straight.

That is why Prime Minister Scott Morrison made a serious mistake on a historic trip to East Timor last week by refusing to address the injustice Australia is committing against two of the tiny island nation’s best friends.

The story goes back to 2004 when the Australian Secret Intelligence Service (ASIS) bugged the offices of East Timor’s prime minister during negotiations over sharing out the oil under the contested Timor Sea.

The story goes back to 2004 when the Australian Secret Intelligence Service (ASIS) bugged the offices of East Timor’s prime minister during negotiations over sharing out the oil under the contested Timor Sea.

With this illegally obtained inside information, Australia tricked East Timor into signing a rigged contract that would have funnelled as much as $5 billion more to Australia. Woodside Petroleum is the operator of the Greater Sunrise joint venture.

Imagine the outrage if China were found to be doing that now in the South Pacific.

East Timor might have never known about this dirty business but for the bravery and decency of an ASIS agent who blew the whistle about the bugging and offered to testify in a case East Timor brought against Australia at the International Court of Arbitration in The Hague in 2013.

ust as the case was about to go court, Australia shamefacedly agreed in 2016 to renegotiate the treaty in exchange for East Timor dropping the suit.

Yet once the new treaty was agreed, Australia brought charges against the ASIS whistleblower, known in documents only as Witness K, and his lawyer Bernard Collaery who helped him get the message out to the Hague.

Prime Minister Scott Morrison tried to turn the page on this disgraceful episode last week when he travelled to Dili to exchange diplomatic notes confirming the revised deal.

That signature might resolve the narrow commercial issue of sharing the oil revenue but Australia can only show it has learnt the moral lesson by dropping the case against Mr Collaery and Witness K.

Instead, Mr Morrison made the weak excuse that the case against Mr Collaery and Witness K was an internal Australian matter.

While East Timor Prime Minister Taur Matan Ruak diplomatically accepted this was not his business, Mr Morrison’s stance was deplored as a betrayal by heroes of East Timor’s independence movement including Xanana Gusmao and Jose Ramos Horta, and by Shirley Shackleton, widow of one of the Balibo Five journalists who died reporting on Indonesia’s illegal invasion in 1975.

The refusal to drop the prosecution also raises questions about our weak laws on the protection of whistleblowers, whether they be in ASIS or the banks or the Australian Tax Office.

Of course, in the interests of national security, our foreign spies sometimes break the law of the countries where they operate and given the nature of their work it would be ridiculous to subject them to the same scrutiny as other public servants.

But this was clearly an abuse of their powers which had nothing to do with national security.

While Witness K has said he could plead guilty, Mr Collaery says he will fight the case through the courts in order to expose what happened. That is a noble plan but the risk is that ASIS will try to have the case heard in secret and the facts, so long suppressed, will never be known.

That would be a new injustice. Australians have a right to know what is done in their name.

Bank deposit insurance: Is your money safe and at what price?

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The Club

Imagine you woke up one day to find your bank account had been wiped out.

Your entire life savings has evaporated overnight, but not because some anonymous fraudster had stolen it.

It happened because the very banking institution that regulators have repeatedly told you is “unquestionably strong” has faltered.

The bank has taken your deposit and converted it into shares to ensure its own survival.

Banks move to 'bail-in' your money.

Discover Your Lifestyle

A Senate inquiry is being asked to consider whether there is need to tighten up a “loophole” that could give APRA the power to “implement, authorise or direct bail-in to deposit accounts”..

Bank deposit insurance: Is your money safe and at what price?

Stephen King, Monash University

How safe is your money?
wikimedia

In October 2008, at the height of the Global Financial Crisis (GFC), the federal government decided to guarantee bank deposits. The ‘financial claims scheme’ (FCS), was an emergency measure to protect the banking system.

Initially, deposits up to $1m at ‘authorised deposit-taking institutions’ (ADIs) were insured by the government at no charge. From February 1, 2012, the cap was dropped to $250,000 per person per institution. The government also had a scheme to guarantee large deposits that finished on 31 March 2010.

Government deposit insurance is new in Australia. Traditionally, bank deposits were not insured. If a bank went belly-up, depositors joined the queue along with other unsecured creditors. Their protection was that they jumped to the front of the queue.

But the GFC showed that bank deposits were, for all practical purposes, insured. Politically, the federal government could not allow depositors to face the risk of bank bankruptcy. They had to intervene. Hence, Australian deposit insurance was born.

This was not a surprise. Experience had shown that governments could not stand aside and let the market work when voters had money at risk. As the Reserve Bank of Australia (RBA) noted, if a bank failed:

“[T]he Government would be under pressure to make an ad hoc response, as was demonstrated by the failure of the general insurer HIH in 2001”.

The government had announced the introduction of a form of deposit insurance in 2008 but the GFC beat them to it. And we had an ad hoc policy response.

The current FCS covers about 99 per cent of deposit accounts in full. But it has some features which, at a minimum, need to be debated.

The FCS provides insurance to banks but does not charge them an insurance premium. If a bank fails the government pays out insured deposits and recovers the money, first from the failed bank and then through a levy on other banks.

This is odd.

It means that banks receive a benefit that they do not pay for. Deposit insurance benefits the banks. It makes it easier for a bank to raise funds and compete with other financial institutions that are not insured by the government.

Deposit insurance also has a ‘dark side’. It encourages banks to take risks. So the FCS must be accompanied by strong regulatory intervention through the Australian Prudential Regulation Authority (APRA). Australia has strong regulation but even the best regulation can be gamed.

An alternative is to charge the banks for their insurance. That charge could depend on the risk of bankruptcy. The more risky the bank, the higher the charge. Indeed, that is exactly what the government did with the guarantee on large deposits during the GFC.

While a risk-rated premium improves banks’ incentives, it doesn’t improve depositors’ incentives.

Martin Byford and Sinclair Davidson from RMIT have looked at this problem and come up with a novel solution. APRA could explicitly rate the banks. The payout that depositors receive under the FCS if their bank defaults would be directly related to that rating. If your deposits are in a riskier institution, then you get less protection than if they are in a safer institution. Indeed Byford and Davidson suggest a simple linear scheme.

“[A] depositor with $10,000 deposited in a ‘93’ rated bank [out of 100] would be guaranteed to receive $9,300 in the event of a bank failure”.

The scheme creates an explicit measurement of bank risk and gives incentives to both depositors and financial institutions. If you are a risk averse depositor you may only look at a high-rated bank. But such a bank will pay a low interest rate. Other depositors may be willing to take more risk, but lower-rated institutions will have to pay depositors a higher interest rate to attract their funds.

So the Byford and Davidson scheme combines flexibility with strong incentives.

To work, however, the government would need to be able to let depositor/voters lose some of their money if they put funds in a risky institution that goes bankrupt. This may be easy for small ADIs but harder for a ‘too big to fail’ major bank.

While the Byford and Davidson scheme may not have all the answers, we at least need a debate on the issues.

Currently the banks receive ‘free’ insurance that is not tied to their underlying risk. At a minimum, creating better incentives through an up-front risk-based premium with more depositor information and incentives would be a useful adjunct to APRA’s regulation.

The RBA’s argument against upfront premiums is that they are unlikely to accrue to the point where the funds match the liabilities if a bank fails. This is true but irrelevant.

The point of a risk-based deposit insurance premium is to provide good incentives to banks and depositors.

The current insurance scheme cross subsidises risky banks. If a bank takes increased risks with their funds then they pay no more for insurance despite the increased risk. In contrast, when the insurance premium increases with risk, banks face an explicit cost when they take risky actions.

The current FCS also removes any incentive for depositors to monitor their bank’s level of risk. It is a one size fits all scheme. Even if a depositor was happy to take more risk (with a higher rate of return), the depositor couldn’t do so. So the current deposit insurance arrangements encourage banks to take increased risk and take away the incentive for depositors to find out about that risk. It places all the responsibility for the security of the financial system back on APRA and makes APRA’s job harder. To me, that doesn’t sound like the way to design a deposit insurance scheme.The Conversation

Stephen King, Professor, Department of Economics, Monash University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Coronavirus crisis heightens fears bank deposits could be wiped out under ‘ambiguous’ laws

Imagine you woke up one day to find your bank account had been wiped out.

Your entire life savings has evaporated overnight, but not because some anonymous fraudster had stolen it.

It happened because the very banking institution that regulators have repeatedly told you is “unquestionably strong” has faltered.

The bank has taken your deposit and converted it into shares to ensure its own survival.

You now own those shares, but you’ve taken on more risk than you signed up for, and there’s a possibility those shares could end up being worthless.

This is a scenario of a bank moving to ‘bail-in’ your money.

If you think this totally impossible, think again. It happened in Cyprus not so long ago.

While a bail-in situation in Australia is currently a highly improbable scenario, people are feeling more nervous about their financial future amid the coronavirus crisis and deepest recession since the Depression.

A Senate inquiry is now being asked to consider whether there is need to tighten up a perceived legislative “loophole” that could give the nation’s banking regulator, the Australian Prudential Regulation Authority (APRA), the power to “implement, authorise or direct bail-in to deposit accounts”.

Is Australia at risk of an imminent ‘bail-in’?

Before understanding the history behind the current Senate inquiry, it is worth noting Australian banks are not in the same boat as the Cyprus banks were in 2013.

Our banks are still well-capitalised and profitable and are being supported by regulators throughout the COVID-19 crisis.

Furthermore, should their situation deteriorate because of the pandemic, the Federal Government has repeatedly vowed it will protect Australians’ bank deposits.

Under the Financial Claims Scheme, Australians’ savings with authorised deposit-taking institutions (ADIs) are guaranteed for deposits up to $250,000 per institution (if someone has two different accounts with the same bank, even if under different brands, the limit applies).

This deposit guarantee effectively commits the Government to the opposite of a ‘bail-in’. It is a ‘bail-out’.

It is also highly political unpalatable, and therefore extremely unlikely, that APRA would move to direct banks to bail-in people’s deposits.

Afterall, a core part of APRA’s mandate is to protect the interests of depositors, policyholders and superannuation fund members.

And, as the Cyprus case showed, retaining the confidence of retail depositors during a crisis is crucial to avoiding wider financial contagion.

Nevertheless, the mortgage loan book of Australian lenders has risen to almost $2 trillion.

And, as many economic commentators and the International Monetary Fund (IMF) have warned for years, if property values suddenly plummeted, that could turn into a huge liability and pose a risk to banks and the wider financial system.

Pedestrian walks past Reserve Bank building in Sydney
Australian banks are still well-capitalised and profitable, and are being supported by regulators throughout the COVID-19 crisis.(Reuters/file)

How a law change could explicitly prevent ‘bail-ins’

So, how did the Senate inquiry come about and what is it examining?

One Nation Senator Malcolm Roberts has introduced a proposed law change called the Banking Amendments (Deposits) Bill 2020, which was referred to the Senate Economics Legislation Committee in June.

In his words, “the bill stops failed banks taking our money”.

The fear about legislative loopholes initially surfaced following the GFC when a number of concerned individuals with links to the far-right political party Citizens Electoral Council (CEC) started writing letters to their local MPs.

The party is accused of being affiliated with the international LaRouche Movement, which was led by American political activist Lyndon LaRouche, who critics described as a political cult that promotes conspiracy theories and antisemitism.

The CEC, including its research director Robert Barwick, were asking for changes to the law that enshrine that their deposits are in fact safe, following legislation known as the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017.

This legislation gave APRA the power to allow a bail-in financial instrument known as “hybrid securities”, a financial instrument described at the time by former ASIC chairman Greg Medcraft as “a ticking time bomb”.

ASIC chairman Greg Medcraft
Former Australian Investment and Securities Commission (ASIC) chairman Greg Medcraft had described “hybrid securities” as a ticking time bomb.(AAP: Julian Smith)

Around that time, the Senate Standing Committee on Economics, which was chaired by Senator Jane Hume, examined the law surrounding bail-in of hybrid securities.

It said it did “not consider that the bill would allow the ‘bail-in’ of Australians’ savings and deposits” since “depositors are protected both by the FCS and under the Banking Act”.

The legislation passed in 2018.

Now fast-forward to 2020, with fears of a financial meltdown heightened as Australians lose their jobs, JobKeeper payments about to taper off and bank loan repayment holidays coming to an end.

The Senate has already been hit with about 200 submissions — mostly from self-funded retirees and older Australians who have accumulated life savings and therefore have large deposits in the bank.

These submissions all run along a similar theme: the need to remove all legislative uncertainty to stop “the legalised theft of bank depositor’s savings”.

For these citizens, in the aftermath of the banking royal commission, verbal assurances from APRA, the Reserve Bank of Australia and political leaders just aren’t enough.

They say if the Government and regulators are serious about protecting peoples’ deposits, there should be “no ambiguity” in the law. They want the Banking Act amended.

Pauline Hanson stands smiling beside Malcolm Roberts.
One Nation senators Pauline Hanson and Malcolm Roberts have proposed the Banking Amendments (Deposits) Bill 2020.(ABC News)

Those who argue law is ‘ambiguous’ rely on one legal opinion

So is the current legislation ambiguous?

Most of the individual submissions that argue the law is vague and are in support of the Bill passing, rely on one legal opinion. That of Robert H Butler, a solicitor from Chatswood in Sydney, and a member of the Citizens Electoral Council.

Mr Butler points out two problems with the existing laws.

Firstly, he says the 2018 Act that allows bail-ins of hybrid securities, in referring to them, also uses the words “any other instrument” without defining what this means.

Mr Butler argues that bank deposits could be “other instruments”.

He acknowledges that “the Government has contended that these words do not extend to deposits” but says “the reference to ‘any other instrument’ would be unnecessary if the power only applied to instruments with conversion or write-off provisions”.

Secondly, Mr Butler argues, that even if the words ‘any other instrument’ don’t encompass deposits, the banks themselves could change certain terms and conditions and draw on deposits.

Treasury says Bill is ‘unnecessary’

Treasury and the Australian Bankers Association have swiftly rejected the argument that the law is ambiguous.

Treasury says in its submission that it “considers the Bill to be unnecessary”.

It says there are currently two explicit legislative provisions in the Banking Act specifically directed to protecting deposits.

“First, section 13A(3) of the Banking Act provides for priority repayment of ‘protected accounts’ (including ‘deposit accounts’ within the meaning of the Bill) in the unlikely event that an ADI were unable to meet its obligations,” it said.

“Secondly, Part II, Division 2AA of the Banking Act establishes the FCS. The FCS guarantees protected accounts (including ‘deposit accounts’ within the meaning of the Bill) up to a cap of $250,000 per account holder, per ADI.”

Treasury also says the reference to “other instruments” relates to the theoretical possibility of APRA recognising other classes of capital instruments in the future.

“Importantly, the reference to ‘other instrument’ could never relevantly apply to deposit accounts, because … the contractual terms of deposit accounts invariably provide for full repayment of principal and interest (subject to fees).”

Federal Treasury building in Canberra
Treasury argues there are two explicit legislative provisions in the Banking Act specifically directed to protecting deposits.(ABC News: Kathleen Dyett)

Ex banking lobbyist says deposits should be up for grabs

Interestingly, some argue the Bill should be changed to do the exact opposite: the Banking Act should make it explicit that bank deposits are at some risk of write-off or conversion to shares.

Nick Hossack, a public policy consultant, former policy director at the Australian Bankers Association and former adviser to John Howard, is making that argument.

Mr Hossack argues bank shareholders and executives “have financial incentives to take levels of lending risk that exceed the socially optimal level of risk”.

“The Bill in effect shifts bank lending risk back onto taxpayers,” he said.

With smaller banks, there was a “feasible option of government authorities allowing a failure and putting the bank through an insolvency process where there is at least some risk that depositors will lose money”.

But allowing a failure of big banks was “not a realistic option”.

An NAB bank building is pictured in Sydney
Nick Hossack says the law should make it explicit that bank deposits are at some risk of write-off or conversion to shares.

Could banks change terms and conditions against depositors?

Martin North from research firm Digital Finance Analytics, together with former Liberal economic adviser John Adams, have been making regular YouTube videos on the possibility of a bail-in.

Both Dr North and Mr Adams argue, in separate submissions, that big banks have already changed their terms in the past few years.

For example, one big bank states that, “we may give you a shorter notice period, or no notice of an unfavourable change if we believe doing so is necessary for us to avoid, or reduce, a material increase in our credit risk or our loss”.

This, both Dr North and Mr Adams argue, allows the banks to, without notice, change conditions of these accounts to potentially activate deposit bail-in at the request of the regulators – essentially a bail-in.

He added that a bail-in is something that would occur before a bank fails, and so government deposit guarantees ($250,0000 per institution and customer) would not be activated.

A man in a grey jacket and striped blue shirt gestures with his hands.
Martin North says banks can change terms and conditions of accounts to potentially activate deposit bail-in at the request of the regulators.(ABC News)

Why global regulators support ‘bail-in’

The possibility of a bail-in in Australia needs to be viewed in a wider global context.

Following the 2008 financial crisis, international regulators have consistently argued that governments need to have clear policies on bail-in.

These policies don’t necessarily relate to deposits, but wider financial instruments designed to be converted into shares in the event of a crisis.

Firstly, the 2019 IMF Financial System Stability Report calls on authorities to introduce a “statutory bail-in regime, based on best international practice”.

Secondly, the G20-backed Financial Stability Board, which is charged with monitoring and assessing vulnerabilities affecting the global financial system, recently released a report evaluating the “too-big-to-fail” banking reforms.

The report suggests “governments must have the powers, the information and the incentives to move from bailout to bail-in”.

It explicitly states that this would involve giving authorities (in Australia’s case APRA) independent legal power to resolve a banking crisis without the consent of the banks, shareholders and their customers.

While the IMF does not define what ‘best international practice’ looks like, Dr North and Mr Adams note in their submissions that international examples of ‘statutory bail-in’ do already exist in New Zealand, the European Union, the United States and Canada.

Rally in front of NY Stock Exchange
Following the 2008 financial crisis, international regulators have consistently argued that governments need to have clear policies on bail-in.(Spencer Platt: Getty Images: AFP)

Transparency is key in an uncertain world

In a world where financial risks are heightened, regulators and political leaders need to be transparent.

Just days ago, chairman of the Financial Stability Board, Randal K. Quarles, delivered a speech warning that while too-big-to-fail banking reforms have strengthened the global financial system since the 2008 crisis, regulators should improve how they deal with the possibility of distressed banks.

He did not specifically mention ‘bail-in’, but noted in the aftermath of COVID-19, all FSB members — made up of 24 central banks including the Reserve Bank of Australia — need to consider how to “improve their resolution capabilities so they are fully prepared to respond to a bank failure or a crisis”.

This global discussion about bail-in policies coincides with the Federal Government’s proposal to introduce laws that would ban cash transactions above $10,000 and make it a criminal offence to use cash for most transactions above that limit.

It also comes at a time when there’s been evidence of wealthier Australians pulling large sums of cash out of their bank accounts.

The inquiry is due to report back in early August. It may well find that there is no institutional risk of a bail-in in Australia.

That being the case, the perception that there is legal ambiguity could be further tested if the inquiry holds public hearings that include the views of others, including independent legal experts.

Politically, it is likely the Government will remain reluctant to change the law to more clearly state there will not be bail-ins.

Such a move could send a signal to the wider community that it feels there is a risk and that might spook the public into a bank run, where a large number of people rush to pull out their deposits.

But depositors need to be provided with clear information so that they are aware of the risks they face in the event that a worst-case scenario eventuates.

Only then can they make informed decisions about what they do with their money.

Article originally published by the ABC