How lobbyists and banks shape Australia’s rules

Powerful industries are quietly hijacking Australia’s regulators, making consumers and the public interest pay the price, writes Dr Kim Sawyer.

There’s an issue in Australia that no one is talking about, perhaps because the interests don’t want us to talk about it.

this problem editor captureWhere those who need to be regulated have taken over the regulators. Regulatory capture cannot be measured like inflation but is arguably more costly. It is a measure of the capture of politicians and regulators that there are 15 paid lobbyists for every politician in Parliament House on a given day. Many are unaware of the cost.

Regulatory capture became a problem following deregulation. Economist George Stigler noted that the request for regulation was motivated by public interest; but this interest is difficult to define. Justice Hayne inside Royal Commission on Banking He touched on the risk of getting caught in banking, citing the Australian Securities and Investments Commission (ASIC) must separate the practice from day-to-day transactions with the people it regulates. This did not happen.

Regulatory capture depends on culture. Organizers are more likely to adopt the positions of people they consider to be in their group. Paid lobbyists are in-groups; They are the puppet masters, the politicians are the puppets.

Visit the Houses of Parliament on any given day and you will understand; Look at the diaries of the ministers and you will understand; Write to the Prime Minister or any minister; The AI response tells you what you need to know. Voters are second-class citizens, maybe not even that.

Consider examples. Senate report, Quality of Governance in Australian Higher Education ProvidersHe underlined that the senior management of the universities had captured the regulators.

Report states:

According to the Australia Institute, Australian university Vice-Chancellors “are among the highest-paid people in the world”; their salaries have more than quadrupled since 1985, when they were partially regulated by the former Academic Salaries Tribunal, from $300,000 per year to $1.3 million in 2023 (both figures adjusted for inflation to 2024 dollars).

A report by NTEU showed it holds the top spot in 2023. [five] Vice Rector salaries are as follows:

University of Canberra – $1.785 million;

Monash University – $1.565 million;

University of Melbourne – $1.447 million;

University of New South Wales – $1.322 million; And

Flinders University – $1.315 million.

In total, 21 vice chancellors earn more than $1 million. Australian Institute It found that in 1985 the average vice chancellor at an elite research-intensive university was paid 3.1 times more than an early-career lecturer. But by 2022, vice-chancellors were being paid more than seven times the salary of university lecturers and many times more than the maximum student aid. Vice-chancellors are in a league of their own.

Regulatory catch-up was costly in the COVID pandemic. In the first year of the pandemic, a national testing strategy was needed that included both PCR tests for viral RNA and serology tests for antibodies and antigens (RAT tests).

However, this testing strategy did not emerge. Private pathology companies were receiving monopolistic rents. They demanded that the government increase the allowance for each PCR test from $24.40 to $100 and opposed mass testing. RAT tests were available; They were available, but it took two years for them to be authorized. Pathology companies persuaded the Government and regulators to use only PCR tests. They made billions of dollars in abnormal profits.

The area where regulatory catch-up is most costly for Australians is banking. lobbying Australian Banking Association It was so effective that bank customers became big losers. Banks lobbied both the Morrison and Albanian governments against the new practice. creditor’s approvalThe customer sees the name on the accounts to which the creditor transfers his money. Recommended by the Australian Competition and Consumer Commission (ACCC) in 2020 and 2022; It reduced fraud by 81% in the Netherlands and 35% in the UK, and became mandatory in the UK in March 2020.

Creditor confirmation is now available to all banks at a cost of only $100 million when the banks’ total profits exceed $40 billion. But it could have been done five years ago. Creditor non-approval has cost Australians at least $5 billion in fraudulent losses.

Banks also lobbied the Government to deny compensation to victims for fraud losses. By contrast, in 2020 a conservative UK government introduced a voluntary scheme under which banks would pay compensation to victims of fraud, provided the victims were not grossly negligent.

The program becomes mandatory in 2024. As a result, in the first nine months of 2025, 88% of money lost to authorized instant payment fraud was refunded to victims, with 82% of claims closed within five business days and 98% within 35 business days. Only 3% of requests were rejected because the customer did not pay sufficient attention to the transaction or request.

In Australia, most scam victims are paid nothing. For example, in the second half of 2023, there were 17 victims with losses exceeding $1 million. They were not given any refund. The average refund in Australia is less than 10% and many victims have to wait more than two years for their claims to be resolved. From where?

There are several reasons for this. The UK put customers first; Australian customers placed last. Which? It is a UK consumer association with the authority to act on behalf of consumers by lodging super complaints under an act of Parliament. Financial Conduct Authority.

Which in September 2016? He filed super complaints against banks that routinely refused to compensate victims who were defrauded into transferring money into fraudsters’ accounts. Which? He said banks need to take more responsibility for this type of fraud, as they already refund customers who lose money through fraudulent account activity or scams involving debit or credit cards. As a result, the United Kingdom adopted a conditional repayment scheme.

The second reason is regulatory capture. Freedom of Information (FOI) documents have revealed that the Treasury opposes compensation for fraud victims and opposes the UK model. The FOI explained that when asked whether the Treasury had recommended the UK model, they would have replied that the Treasury had never recommended the UK model.

Banks have captured not only the Treasury, but also the regulators AUSTRIAASIC and the Australian Financial Complaints Authority (AFCA). In the UK, 88 per cent are refunded within five days, while in Australia the 10% rate is typically not refunded within two years, a measure of how banks are catching up with regulations on Australian financial services.

We need independent regulators but politicians are too captive to listen.