Home / Uncategorized / Murray factor threatens support for financial system inquiry

(Pictured: David Murray)

Comment by Greg Bright

Widespread disquiet within the broad superannuation and funds management industry over David Murray’s appointment to chair the Inquiry into the Financial System threatens to spoil the process and question the findings before it even begins.

At the moment, the disappointment is being expressed primarily through the usual grumbling mechanisms of urging industry bodies to lobby the Government for an independent or, at least, representative board of inquiry. And a different, younger chair. Formal submissions so far have been confined to the terms of reference.

One interesting suggestion, which is being pursued, is for industry participants to set up their own parallel inquiry. This may not hold much weight with the Government but it would certainly generate media coverage and call to account the proposed Murray board.

To be fair, a lot of the criticism of Murray is personal. He is not well liked. There are several reasons for this:

> While chief executive of the Commonwealth Bank he presided over a shift in culture to maximize short-medium-term profits at the cost of traditional relationship banking. Corporate clients in particular developed a mistrust of him.

> While chair of the Future Fund, after having his notice to resign accepted, he seemed to spend the last several months of his tenure in self-promotion and his own future job seeking.

> He is seen as insular and elitest. For instance, again while chairing the Future Fund, he would not travel with fellow Sydney-based guardians to the Melbourne meetings, preferring his own car and driver from the airport, even when the others had travelled on the same plane. He was seen as generous with his own expenses. David Gonski, the current chair, canned the guardians’ previous group overseas trips.

> He is not a good delegator, nor a motivator of others. Despite allowing the building of a large professional management team at the Future Fund, he insisted on presiding over individual investment decisions. This is something which even much smaller super fund chairs rarely, if ever, do. And it is despite the fact that the Future Fund cannot make direct investments – it has to invest through outsourced professional managers. He was a micro manager. It annoyed some, too, that he had no experience as an investor.

But, at the big-picture level, the main problem seen as having Murray as chair of this inquiry, being billed as the most important for Australia since the Wallis Inquiry of the 1990s, is that he is an old-school banker. He is 65. As one senior industry person unkindly said last week: “Murray is about 65 going on 90”. The view is he is unlikely to do any more than represent a previous generation of bankers and is highly unlikely to question the current system of dominance by the big four banks of both credit supply and funds management distribution.

Where are the Young Turks to provide a fresh view of the financial system and possibly set Australia up to lead the world with an open and genuinely competitive banking, retirement savings and funds management industry?

We don’t yet know the full committee make-up for the inquiry, nor the final terms of reference, which are scheduled to be published before Christmas. An interim report from the Inquiry Committee has been requested by the Government for September next year and a final report just two months later. It’s a tight timeframe.

The draft terms of reference, according to a statement, are being designed to be “broad in scope, reflecting the Government’s commitment to hold a ‘root and branch’ examination of the financial system”. Submissions on the terms closed last Thursday.