Like the Turnbull government, this government has a tendency to half-smart political tactics: ideas that sound great when cooked up inside the febrile environment of Parliament House but that, out in the real world, beyond Canberra and the political obsessives of the press gallery and commentariat, end up misfiring.
Michaelia Cash’s office’s tip-off to the media about government-instigated raids on the Australian Workers’ Union was your textbook half-smart idea; the only good that came from it from the Liberal point of view was wrecking the hopeless Cash’s prospects for advancement, even if the government’s handpicked Director of Public Prosecutions somehow invented a reason not to prosecute anyone over it. The idea to have a hopelessly partisan inquiry into Labor’s franking credit policy, and to put Tim Wilson in charge of it, is another piece of half-smart politicking that is now blowing up in the government’s face.
The idea that, because it had become a minority government, the Coalition would just dump a whole bunch of parliamentary sitting days in order to avoid being embarrassed in the lead-up to the election had half-smart written all over it. It’s not as if (rightly or wrongly) voters are already convinced politicians work hard; “the part-time parliament” charge was always going to resonate with the electorate.
And whoever devised the idea didn’t check the calendar of key political events in the new year, unless they assumed banking Royal Commissioner Kenneth Hayne wouldn’t recommend major reforms to address the problems of the financial services sector. Not the kind of arcane reforms that David Murray proposed after his inquiry — many of which sit ignored on a shelf in the treasurer’s office, perhaps dutifully passed from Joe Hockey and Scott Morrison to Josh Frydenberg — but reforms to address the seething hatred voters feel for the banks and to end billion-dollar theft, reforms to address the perception that the banks do what they like and nothing ever changes.
Labor might have initially struggled with the government’s line on Hayne’s recommendations; the latter was going to implement 75 of the 76 and find another way to deal with the mortgage broker fee one, which is universally agreed would decrease competition and benefit the banks. But the unlikelihood of any legislative action before the election is fertile political soil for an opposition desperate to portray the Liberals as continuing their protection racket for the banks. That was Labor’s opening.
Labor is correct that some recommendations, like getting rid of grandfathered commission and an annual opt-in for fees, could be legislated quickly. There’s no need for industry consultation; these issues were canvassed at inordinate length during the Future of Financial Advice consultations and again in submissions to the royal commission. Hayne dealt dismissively — almost contemptuously — with the objections to abolishing grandfathering. It would take an hour of drafting and a few minutes of parliamentary time. There is certainly no good reason for the government’s proposal to delay the abolition of grandfathering until 2021, other than to allow the diminishing minority of advisers who are rorting their clients an extra year or 18 months of commissions.
The delay will feed perfectly into Labor’s narrative that the Liberals aren’t committed to fixing financial services, and that under Scott Morrison (“ASIC is a tough cop on the beat”, a royal commission is a “populist whinge”) nothing will actually change. It’s a toxic image for a struggling government. The smart play — instead of the half-smart play — would be an extra week or fortnight of sittings devoted to implementing some of the easier Hayne recommendations, allowing Morrison to tell voters he’s getting on with it
“Labor might have initially struggled with the government’s line on Hayne’s recommendations; the latter was going to implement 75 of the 76 and find another way to deal with the mortgage broker fee one, which is universally agreed would decrease competition and benefit the banks.”
I think it is “universally agreed” between those who benefit from mortgage brokers getting paid by commission. But not “universally agreed” in reality.
“Rather than hiding from parliament, there is political advantage in Scott Morrison bringing on extra sittings and going hard, early on Kenneth Hayne’s royal commission recommendations.”
I don’t think there is great advantage in it for the LNP.
Labor was always going to support the recommendations, and likely would go harder on the banks than the LNP would.
But that may be the point – the LNP have no intention of going hard on the recommendations. As evidenced by the terms of reference, the limited time given to the RC and the intention to not have some things changed until 2021.
The gov’t has hedged by saying they will “act on” all the recommendations, not “implement” them. This confirms your comment they won’t go all out.
Tossing the recomendations into the rubbish bin is ” acting on ” the recomendations.
I was stunned that the sitting days to govern this country were able to be manipulated too suit any political party… surely there needs to be a minimum requirement per year and a maximum period that parliament can go on break.
The Libs are finished hopefully, unfortunately ALP are much the same on any policy and little will change.
The fact that an absurd Lib vote buying policy like the Franking credits ATO cash back for non-tax payers is receiving so much commentary illustrates how little the ALP differ in their financial thinking from the Libs.
ATO cash back repeal should be part of a far greater tax reform package from the ALP. Sadly neither party provide an alternative to the other, they exist to for existences sake alone.
The government might consider making haste slowly.
There were numerous serious wrongs identified, but the broker channel was not found guilty of any of them. These recommendations as they affect brokers are based on flawed logic; i.e. if the provider of the loan pays the broker’s commission, why would brokers be incentivised to put their clients needs first? Right?
Um… maybe they’d like to create a positive reputation and obtain repeat business.
If these recommendations are directly implemented, there may not be a mortgage broking industry in a few years’ time and a majority of home loans currently originating via the broking channel be be diverted to the big four retail banks; financial reward for the entities who committed the most egregious crimes.
The issue of trailing commissions has been widely misunderstood. In the original model—going back 20 years—it WAS all upfront commission and the commissions were heavy. Then, to improve the situation, ‘upfront’ was reduced and ‘trail’ introduced for two reasons. [1] The lenders wanted to spread out the commission for cashflow and short-term profitability reasons, and [2] it was thought that having an ongoing remuneration stream would encourage positive behaviour from brokers by providing them with the incentive to offer loans in the long-term best interests of the borrower, and decrease the incentive to churn.
It appears that the people who are now doing the analysis have no understanding of how the process works. What would Commissioner Haynes think if an experienced home loan broker ran an inquiry into poor practices in the legal profession?
If things go as the Royal Commission recommends, there may be nobody left in the broker channel in 3 years time. The Big-Four will have won!
Can this political chancer, opportunist and hypocrite PM afford to be seen to be limp-wristed in his application of the lash – before the election?
Rather, stay his hand and do what the banks want – if/after he wins?
With his usual form of interpreting anything the way he wants.