Power and its wicked ways
The People vs The Banks
By Michael Roddan. MUP, 342pp, $34.95
Blackout: How Is Energy-Rich Australia Running Out Of Electricity?
By Matthew Warren. Affirm Press, 270pp, $29.99
by ROSS FITZGERALD
As we head into this weekend’s federal election, few issues push the political buttons harder than banking and electricity. Both hit us where we live. As such, Michael Roddan’s The People vs The Banks and Matthew Warren’s Blackout are timely books.
On December 14, 2017, Malcolm Turnbull’s Coalition government reluctantly established the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Its recommendations, released in February, take us through the looking glass. The commission, chaired by former High Court justice Kenneth Hayne, effectively put the financial sector on trial. Hayne exposed, for all of us to see, its utter excess, as well as what often amounted to systematic malfeasance.
This happened despite the strident opposition of then federal treasurer Scott Morrison. Indeed, few expected the findings of the royal commission. This certainly applied to Roddan, who has written a powerful page-turning book on the topic.
A journalist at ‘The Australian’, Roddan previously worked at the now-defunct ‘Business Spectator’ with Robert Gottliebsen and Alan Kohler. The latter usefully describes The People vs The Banks as “a cautionary account of how a service industry forgot how to serve”.
As Roddan makes clear, in researching and writing this book he was helped by the work of senior members of the Australian Securities & Investments Commission. He also was helped by the Productivity Commission’s studies on the financial sector.
Roddan acknowledges the role of solicitors and barristers working on the royal commission and of the consumer and legal groups that “painstakingly assembled the relevant case studies and who continue to lobby for better outcomes”. He praises the witnesses who told their stories at the royal commission. “The nation is indebted to them all.”
Analysing the misconduct in the financial sector, especially by our four biggest players, Roddan underscores what happened when “profit (was) put before punters”. This resulted in financial institutions rewarding bad behaviour and in senior executives and other participants often assuming they were above the law.
Roddan may sometimes overreach with his conclusions but it is hard to disagree with him that, as a direct result of the royal commission, “the day of reckoning for liars and thieves in pin-striped suits (had) finally arrived”.
As a consequence, more than a dozen key personnel across the financial services sector have lost their jobs and, more important, personal accountability may well become a new and most welcome feature of our banking and financial system.
While Hayne has been criticised for opting against the wholesale structural separation of banks and wealth management businesses, and for opting against the abolition of the main regulatory frameworks that guide the system, he was acutely conscious of the economic costs had he recommended doing so.
Indeed when the Turnbull government drew up the terms of reference for the royal commission, as Rodden points out, “it specifically asked [Hayne] to be mindful of the economic impacts of any recommendation he made”.
In this fine book Roddan deals effectively with the increasingly pervasive power of our superannuation industry. As he argues, if we can’t “legislate modest, sensible changes to policy affecting the industry fund sector, then it will be everyday Australians who end up paying for it”.
Several key individuals in the major financial organisations who spoke frankly with the author are remembered, if not by name. “There are so many good people in those organisations who seek to only do what is best, but who are mostly invisible to the public.” Let’s hope Hayne’s recommendations manage to produce, and then maintain, a much-needed seismic change in the culture, governance and practices of our banking, superannuation and financial services industries.
Another blind spot for Australian governments has been the huge changes in how we power our country. As Warren points out in Blackout, public debate has been reduced to two diametrically opposed narratives: “coal-fired, climate change indifference versus an impossibly utopian renewable energy future”.
Warren, an economics and environment journalist, has worked on both sides of the power debate. Indeed, he has been criticised both for being too pro-coal and too pro-renewables.
His book is an illuminating synthesis of 15 years of his professional life. It includes interviews with participants from all sides of the energy industry. It is primarily a story of the electricity crisis in Australia.
In telling this important tale Warren, to my mind, has succeeded in his stated aim of “explaining how electricity works in Australia, what the impact of climate change will be on this crucial industry, and what we need to do about it”.
The key question he asks is: “How is it possible that energy-rich Australia is running out of electricity?” It’s a question that whoever occupies the Lodge will need to answer.
Blackout is a compelling analysis of how and why, especially in the past decade, our power prices have risen and our fragile grid has been stretched to breaking point during summers.
Warren not only charts what he terms “the disintegration of Australia’s energy security”, but at the same time plots the path to a better and, pardon the pun, brighter future.
Without spilling the beans about his sensible suggestions for a fully functioning electricity system, readers’ attention should be drawn to his powerful, and somewhat optimistic, final chapter.
It is only fair to point out that, for more than a decade, Warren has been at the forefront of actively lobbying for a workable and long-lasting national climate and electricity plan. Whether this crucial quest succeeds is a matter of urgency for all Australians.
At the end of his book, Warren says he thinks it’s possible to “systematically reorganise our electricity grid and our economy”. If he’s right, and if we can also systematically sort out the banks, many of us may live happily ever after.
Ross Fitzgerald is emeritus professor of history and politics at Griffith University.
‘The Weekend Australian’, May 18-19, 2019, review, Books p 20.