28 October 2010

Joe Hockey and the banks

Joe Hockey was Minister for Financial Services and Regulation from 1998 to 2001. He put in place much of the ongoing CLERP reform process and did much of the preparation for what became the Financial Sector Reform Act 2002, key legislation that managed corporate Australia through a boom and maintained it through the rocky times recently. He took on an untidy boardroom brawl within AMP, fingering then-chairman Ian Burgess for his inept approach at managing both people and money. Burgess, a prominent and long-serving company director, went straight to then-Prime Minister Howard and whinged about the young whipper-snapper but Hockey was right and to his credit, Howard stood by Hockey.

Cut forward to now, and Hockey is a senior member of the Coalition in Federal Parliament. Howard, Costello and others with greater experience in corporate and prudential regulation have moved on. In fact, with the possible exception of Turnbull I can't see anyone in the Federal Parliamentary Coalition parties who has half as much experience in this area as Hockey. Looking at the Press Gallery, I can see plenty there who would have been all over the story MINISTER CRITICISES AMP SHOCK.

For all that, the journosphere consensus is that Hockey is just bagging the banks because that's what pollies in opposition do, in response to this week's polls and last week's focus groups. This is unfair to Hockey, but he's big enough to cop that. What's worse is that it's unfair to the debate on whether our financial system is well regulated. Hockey's proposals clearly don't work from the perspective of making disengaged voters sit up and take notice; but maybe they weren't intended that way, and (based on his record) we have no reason to assume they constitute idle kite-flying on his part. It's possible that they embody ideas he's been thinking about for a long time, and they deserve consideration by others who have done the hard yards without being self-interested.

Speaking of self-interest, these three did themselves no favours in light of Hockey's proposals:
  • Abbott was weak not to stand by Hockey yesterday. I wish more TV outlets had showed Abbott opening and closing his mouth like a landed fish in response to media questions on a matter that is clearly too hard for him to understand. I'm so glad he's not Prime Minister;
  • Swan too looks weak in clinging to the status quo, while 'calling for restraint'. He's the third Labor Treasurer from Queensland: the conservatives brought down Theodore (and in doing so intimidated Lyons into abandoning Labor) and they later brought down Hayden, whom Swan advised; reformers both. Swan, with his reforms behind him having stayed in the saddle during the wild ride of the GFC, has no stomach for reform and is hoping just to create FUD and muddy the waters. He is a lot like John Howard as Malcolm Fraser's Treasurer; and
  • Michael Smith, CEO of ANZ, reminded me a lot of Burgess with his pompous and flatulent response to Hockey. He wouldn't know populism if it shot him in the leg. Rather than 'report the controversy', Smith's comments belong in the realm of 'he would say that, wouldn't he'. The journosphere should have asked Smith about the public that money that pumped up his results announcements, his share price (Disclosure: I'm an ANZ shareholder) and his reputation as a manager during tough times. If Swan quotes Smith in support of an attack of his own against Hockey, Swan will look be craven.
We media consumers, we taxpayers, we voters are not helped by a lack of focus on the issues under discussion - because unlike a lot of Canberra argy-bargy, there are real issues under discussion here. Tony Jones has got too much populism on board from Q and A to the point where his performance on Lateline is starting to suffer, as you can see from this. Maybe Hockey's nine points would do the country a power of good, or maybe they're a crock from a lazy mind desperate to be taken seriously; it's hard to tell and the media aren't doing their job of helping us decide either way.


  1. Thanks for this post on a crucial issue that the media has covered in appalling fashion.

    I agree " journosphere consensus is that Hockey is just bagging" and even worse, his speech is frankly misrepresented as an "attack on the banks" or the furphy that he wants to take over monetary policy from the RBA.

    It's bizarre that the media is so willing to repeat Labor's "economic Hansonism" charge when it is so inappropriate for this policy and so fitting for "Stop the Boats" etc. And forget them applying common sense to whatever comes out of bank CEOs' mouths. I can see the media forcing the Liberals to stop trying to agitate for this crucial debate, and reverting to cheap lines.

    If you actually want to understand a little more about this, there are a few very basic links on my blog (link in name). Peter Martin and Ian Verrender have done some reasonable explaining, and Bernard Keane is worth reading. And you can read Hockey's speech itself. I disagree with his suggestion of extending AAA rating to RMBS's, as this has been pointed out to be essentially starting an Australian Freddie Mac. The media should be discussing this and facilitating debate. They should be ashamed of themselves (with exceptions).

  2. Had read Hockey's speech, shoulda linked to it, and Verrender and Martin are always worth reading. Keane hasn't made his mind up whether or not Hockey is just plain dumb and needs to work out to what extent he just wants to challenge conventional wisdom in Canberra.