The Abbott and Turnbull governments will be remembered for their Royal Commissions, both those they inherited from Julia Gillard, into Institutional Responses to Child Sexual Abuse, but also their own into Trade Union Governance and Corruption and now into Banking and the Financial Services Industry.
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The rule seems to be that Governments only appoint a Royal Commission when they know the likely outcome or when the topic can’t possibly hurt it more than the Opposition. But this hardly applies when you are forced by the Parliament to appoint a Royal Commission against your wishes as the Turnbull government has been on this occasion.
It was Labor, the Greens and some independently-minded Nationals backbenchers who have best predicted these appalling revelations. They have been proven in the long run to be right.
Why then did the government resist the pleas for a Royal Commission for so long? There are three possible explanations, which are not mutually exclusive.
First, perhaps it truly believed its own arguments that other means to investigate and regulate the banks were preferable, perhaps misled by misinformation from their trusted friends in the banks themselves. Maybe they were just too trusting.
Secondly, perhaps they were so much in the pockets of the big end of town, many of whose major boardroom players mix regularly with the PM and Treasurer in Sydney, that they failed to exercise any independent judgement. Maybe they were puppets.
Thirdly, perhaps in the way of modern party politics they were unwilling to give the under-resourced Opposition and Greens any moral or political credit at all for having a good idea. Maybe they opposed for the sake of it, victims of their own over-confidence and arrogance.
Whatever the explanation(s), the news from this Royal Commission for the Turnbull government is as bad as it gets and likely to become even worse.
Another major set of trusted institutions has now bitten the dust. This time it is a string of banks and financial institutions, including insurance companies, which have been revealed as self-serving criminal law-breakers.
The revelations are two-fold. Just as in the case of those institutions with responsibility for the welfare of children, like churches, the revelations are of misdemeanours and criminal actions by employees, serious enough in themselves, as well as cover-ups, inaction and/or lies at the highest levels, which are even more serious.
The comparisons are striking with the Sexual Abuse Royal Commission. Nothing can be worse than the abuse of children, but there are aspects of these revelations in the financial sector which may mean they have greater political impact.
The victims are more numerous and even more widespread. They number in the hundreds of thousands and all of them are voters.
The crimes are generally more contemporary and more of the perpetrators are currently holding office compared to those in institutions responsible for historical sexual abuse.
The community no longer expects moral leadership from business, unfortunately. Still more heads should roll and there will be many resignations and sackings in the financial sectors. The more there are the greater the possibility that attention will be diverted away from the government.
The biggest difference this time is that this is a hot party-political issue pitting the government against the Opposition, whereas there is no obvious political advantage emerging from the Sex Abuse Royal Commission.
In the short to medium term the government will not live down its role in resisting this Royal Commission. The worse that future revelations turn out to be, the worse it will be politically for the government, which will be on the defensive on this and related issues until the next election.
What can the government do to improve its situation apart from muddying the water and spreading the blame to other political players? Two types of responses are already becoming evident.
One is to express outrage at the revelations and to take an especially hard line with the guilty parties. Banking and financial institution leadership and senior management, as well as failed government regulators, can now expect no mercy. The Treasurer has already begun to talk up increased penalties and possible jail sentences for these crimes. Ministerial language will harden and become more aggressive in tone as time goes on despite some calls from some friends of the industries against over-reaction.
A second approach would be to admit its mistake and to apologise. The immediate model here, admittedly on a far less significant issue, has been Peter Beattie’s apology for his responsibility for the weaknesses of the Commonwealth Games Closing Ceremony. Beattie has always had a reputation for being a master of apologies and it is an example worth following.
But unlike Barnaby Joyce, Deputy PM at the time, the Treasurer has been unwilling so far to go down this path. Joyce, freed up by no longer holding an executive government position, has admitted he was wrong.
Scott Morrison and Kelly O’Dwyer, on the other hand, have refused to do so when given that opportunity, instead preferring to allege that Bill Shorten was only ever playing populist games. While that tactic may fudge responsibility somewhat, coming clean with a quick apology would be welcomed.
Malcolm Turnbull must exercise greater leadership than the tentative steps he has initially taken. Already behind in the polls, he cannot afford to be caught up in the mire of this Royal Commission. It would be ironic if it ensured his downfall given that that was just what the Abbott government hoped the Trade Union Governance and Corruption Royal Commission would do to Shorten and the Labor Party.
John Warhurst is an Emeritus Professor of Political Science at the Australian National University
