The misbehaviour by banks and other big financial players revealed by the royal commission is so extensive and so shocking it’s likely to do lasting damage to the public credibility and political influence of the whole of big business and its lobby groups.
That’s particularly likely should the Coalition lose the looming federal election. If it does, that will have been for many reasons. But it’s a safe bet that pollies on both sides will attribute much of the blame to the weeks of appalling revelations by the commission.
With Labor busy reminding voters of how much effort during its time in office the Coalition spent trying to water down the consumer protections in Julia Gillard’s Future of Financial Advice legislation and then staving off a royal commission – while forgetting to mention the tough bank tax in last year’s budget – the Coalition will surely be regretting the closeness of their relationship.
Some Liberals may see themselves as having been used by the banks, notwithstanding the latter’s generous donations to party coffers. So, even if the Coalition retains office, it’s likely to be a lot more reluctant to be seen as a protector of big business.
A new Labor government is likely to be a lot less inhibited in adding to the regulation of business, and tightening the policing of that regulation, than it was in earlier times.
Should Malcolm Turnbull succeed in getting the big-company tax cut through the Senate, an incoming Labor is likely to reverse it (just as Tony Abbott didn’t hesitate to abolish Labor’s carbon tax and mining tax).
Many punters are convinced both sides of politics have been bought by big business, leaving the little guy with no hope of getting a fair shake from governments.
But that view’s likely to recede as both sides see the downside as well as the upside of keeping in with generous donors. This may be the best hope we’ll see of both sides agreeing to curb the election-funding arms race.
I’m expecting more customers for my argument that, in a democracy, the pollies care most about votes, not money. If they can use donations to buy advertising that attracts votes, fine. But when their association with donors starts to cost them votes, they re-do their calculus.
The abuse of union power during the 1960s and ‘70s – when daily life was regularly disrupted by strikes, and having to walk to work was all too common – left a distaste in voters’ mouths that lingered for decades after strike activity fell to negligible levels.
This gave the Libs a powerful stick to beat over Labor’s head. Linking Labor with the unions was always a vote winner. Every incoming Coalition government – Fraser, Howard, Abbott – has established royal commissions into union misbehaviour in the hope of smearing Labor.
But the anti-union card has lost much of its power as the era of union disruption recedes into history. The concerted efforts to discredit Julia Gillard didn’t amount to much electorally, nor this government’s attempt to bring down Bill Shorten.
From here on, however, the boot will be on the other foot. It’s big business that’s on the nose – being seen to have abused its power – and it is being linked with big business that’s now likely to cost votes.
All this change in the political and policy ground rules just from one royal commission, which may or may not lead to prosecutions of bank wrongdoers?
No, not just that. This inquiry’s revelations come on top of the banks’ longstanding unpopularity with the public and the long stream of highly publicised banking misbehaviour running back a decade to the aftermath of the global financial crisis.
And the bad story for banks, fund managers and investment advisers piles on top of continuing sagas over the mistreatment of franchisees and a seeming epidemic of illegal underpayment of wages to young people and those on temporary visas.
That’s not to mention the way fly-by-operators rorted the Vocational Education and Training experiment, ripping off taxpayers and naive young people alike, nor the mysterious way the profits of the three companies dominating the national electricity market at every level have blossomed at the same time retail electricity prices have doubled.
Times have become a lot more hostile for business, and only a Pollyanna would expect them to start getting better rather continue getting worse. Should weak wage growth continue, that will be another factor contributing to voter disaffection.
Why has even the Turnbull government slapped a big new tax on the banks, tried to dictate to the private owner of Liddell power station and now, we’re told, plans to greatly increase the petroleum and gas resource rent tax?
Take a wild guess.
Ross Gittins is the Herald’s economics editor.
This article first appeared in Fairfax publications