Two numbers tell the same story. One is zero and the other is 19 billion. The first is the number of prosecutions recommended by the Hayne royal commission. The second is the amount invested in a record day for bank stocks following the release of its report.
One is like the other: craven, predictable and depressing. The report is eviscerating, as were the hearings. Its recommendations are conservative, as was its commissioner. Those $19 billion are the gap between what punishment the market thought the banks deserved and what they got. The gap is the scale of the reform that did not happen.
We now know the banks helped shape the commission’s terms of reference. We know they told Scott Morrison the scope should be limited, that “its terms of reference should be thoughtfully drafted and free of political influence”. They also wanted it to be quick: “It is also important that any inquiry reports back in a timely manner so that we can have certainty about the findings and move forward to implement any recommendations.”
It seems neat. The letter came from Ken Henry, a former head of Treasury who went on to head one of the Big Four banks, and who resigned in the wake of the commission’s findings. At time of writing, the bank’s likely replacement as leader was a former Liberal premier. The world is small at the top. Henry will probably stay on as a director of the Australian Securities Exchange and a member of its audit and risk committee.
A year ago, Kenneth Hayne had the makings of a folk hero. This paper praised him as “the unexpected commissioner of an unpredictable royal commission”. Even as he refused to smile through a photo opportunity with Josh Frydenberg last week, he seemed to be a man chafing against greed and vested interest. In reality, he was a man who didn’t want to be in a photograph. He can seem outspoken, but really he is just abrupt. Rudeness looks like passion when it is pointed in the right direction, and the royal commission was a room of worthy targets.
This is the same Kenneth Hayne who gave the leading judgement in the Al-Kateb case, which held a stateless person could be held indefinitely, even if they were answering no charge. He is the same Kenneth Hayne who made his name in commercial disputes.
And this is the same government that voted against a royal commission 26 times, that dismissed it as a “whinge” and claimed the banks were at once sufficiently responsible and also too fragile to withstand such an inquiry.
This is the same government that is running a sham inquiry into franking credits and that filleted the financial regulator on taking office.
Morrison prepared for the commission’s report by saying he wanted “the oil that lubricates our financial system” to continue to flow. “The easiest way to ensure nobody gets hurt is to lend nobody any money. But if nobody gets lent any money then everybody gets hurt. So I think we have to be sensible.”
In the end, the commission ensured stability. Not only of the financial system, but also the system of privilege upon which it is built.
This article was first published in the print edition of The Saturday Paper on Feb 9, 2019 as "Loyal commission". Subscribe here.