The state and capital: lessons from the first Australian banking royal commission and its aftermath

ABSTRACT

This paper explores the critical theorisation of royal commissions. It does so by examining the conduct and aftermath of a pivotal Australian executive enquiry into banking following the Great Depression. While generally accepting the critical theorisation of royal commissions as serving to ‘legitimate political subjection’, this paper argues that the current theorisation of royal commissions requires a more nuanced understanding of the State and capital, particularly in light of the role played by the Australian legislature in the wake of the first banking royal commission. From such a perspective, it is possible to see that progressive legal and political change is possible through the royal commission process but that such change is contingent upon particular political and constitutional formations within the Australian State.

KEYWORDS:

• Theorisation of royal commissions
• banking royal commission
• financial regulation
• banking
• bank nationalisation
• High Court of Australia
• Ben Chifley

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Ashforth (1990a), p 17.

2 Burton and Carlen (1979); Ashforth (1990a), p 17; Stoler (2009); Scraton and Chadwick (1987).

3 Ignatieff (1985), pp 75–105.

4 This involved UK academic, Phil Scraton, organising a local community to lobby the State to hold a ‘people’s panel’ or alternative investigation into the Hillsborough stadium collapse, resulting in a raft of criminal prosecutions against police and others, following the failure by an official State commission to recommend laying any charges. See Scraton (2016).

5 Use of the term, ‘capital’, in this paper is explained on p. 6.

6 This much is prescribed by the Australian Constitution (Commonwealth of Australia Constitution Act 1900 (UK)), s 61.

7 Prerogative powers are those associated with the most fundamental decisions or powers of a nation state, for example the power to declare war, raise armies and taxes and, more recently, border protection: Attorney-General v Schmidt (1961) HCA 61; Ruddock & Ors v Vadarlis & Ors [2001] FCA 1329; The Queen on the Application of Louis Olivier Bancoult v. The Secretary of State for Foreign and Commonwealth Affairs CO/93/2004 (High Court of England and Wales, 11 May 2006).

8 Burton and Carlen (1979).

9 Burton and Carlen (1979).

10 Scraton and Chadwick (1987).

11 Ashforth (1990a).

12 Stoler (2009).

13 Stoler (2009), p 213.

14 See, for instance, Burton and Carlen (1979), pp. 35–36. Burton and Carlen develop an extremely lengthy and sophisticated theory of the State (pp. 34–52) but it is premised upon a rigid form of structuralism that affords no agency to State institutions (‘apparatuses’), nor change in the State over time.

15 Gramsci (2007), Notebook 6, p 64, 81.

16 Gramsci (2007), Notebook 6, pp. 56–57.

17  Marx (1990), Ch 33.

18 Marx (1990), Ch 24.

19 Marx (1992), p 490.

20 Harvey (2017), pp 203–205.

21 Ashforth (1990a), p 17.

22 Stoler (2009), p 143; Burton and Carlen (1979).

23 Engels (1993), p. 10.

24 Burton and Carlen (1979), p. 8.

25 Ashforth (1990b).

26 Ashforth (1990b).

27 Burton and Carlen (1979).

28 Scraton and Chadwick (1987).

29 Burton and Carlen (1979).

30 Scraton and Chadwick (1987).

31 Scraton and Chadwick (1987).

32 Scraton and Chadwick (1987).

33 The approach taken by Scraton is outlined in Hillsborough: The Report of the Hillsborough Independent Panel, House of Commons (UK), 2012; see also, Scraton (2016).

34 Royal Commission into Family Violence: Summary and Recommendations (Vic), Victorian Government Printer, 2016; Royal Commission into Institutional Responses to Child Sexual Abuse: Final Report (Cth), Australian Government Printer, 2018; Report of the Royal Commission and Board of Inquiry into the Protection and Detention of Children in the Northern Territory, Department of the Attorney-General of the Northern Territory, 2017.

35 Ashforth (1990a); Stoler (2009).

36 Royal Commission into Trade Union Governance and Corruption: Final Report, Australian Government Printer, 2015.

37 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry: Interim Report, Australian Government Printer, 2018.

38 ‘Big four bank chairmen back inquiry to end “political uncertainty”’, Australian Financial Review: https://www.afr.com/companies/financial-services/big-four-bank-chairman-back-inquiry-to-end-political-uncertainty-20171130-gzvla6, 30 November 2017.

39 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry: Interim Report, Australian Government Printer, 2018.

40 Australian Senate Economic References Committee Report on Competition Within the Australian Banking Sector, May 2011, Selwyn Cornish, Submission 9; Committee Hansard, 13 December 2010, pp. 7–37.

41 Cowen (1965), pp 25–26.

42 Ellis (1963), pp 205–206, 216.

43 Cowen (1965), p 21.

44 These were the terms in which UAP leader, Joseph Lyons, described Latham’s political outlook: cited in Cowen, (1965), p 20.

45 Brett (2007).

46 Eather and Cottle (2013), p 172.

47 Including the mobilisation of militant right-wing political organisations such as the Sane Democracy League, with links to the Old Guard and the New Guard: Eather and Cottle (2013), pp 163–164.

48 Sutherlin (1980), pp 29–50.

49 Millmow (2010), pp 193–223.

50 Millmow (2010), pp 193–223.

51 Millmow (2010), pp 193–223. See also, Cain (1988).

52 Final Report of the Royal Commission into the Monetary and Banking Systems in Australia (Government Printer, Canberra, 1937), pp 223–283.

53 Final Report of the Royal Commission into the Monetary and Banking Systems in Australia (Government Printer, Canberra, 1937), pp 223–283.

54 Final Report of the Royal Commission into the Monetary and Banking Systems in Australia (Government Printer, Canberra, 1937), pp 262–268.

55 Final Report of the Royal Commission into the Monetary and Banking Systems in Australia (Government Printer, Canberra, 1937), p 264.

56 Final Report of the Royal Commission into the Monetary and Banking Systems in Australia (Government Printer, Canberra, 1937), pp 267–268.

57 ‘Discrimination’ against the States and, more precisely, the banks of the States was the key reason given by the High Court in rejecting the first iteration of the Banking Act 1947 in Melbourne Corporation v Commonwealth (‘Melbourne Corporation Case’) (1947) 74 CLR 31.

58 Eather and Cottle (2013), p 176.

59 See, for instance, Andrews v Howell (1941) 65 CLR 255, in particular Dixon J at 278; a sentiment reiterated by Williams J in Australian Communist Party v Commonwealth (1951) 83 CLR 1, 225; Chetty (2016).

60 Prior to the 1941 election, consensus between the conservative Menzies and Fadden Governments and the banks was reached along similar lines to those prescribed by the Curtin and Chifley Wartime Banking regulations: Eather and Cottle (2013), p 176.

61 Eather and Cottle (2013), p 176.

62 Amalgamated Society of Engineers v Adelaide Steamship Company (1920) 28 CLR 129; Eather and Cottle (2013), p 176.

63 Day (2015), p 486.

64 MacIntyre (2015), p 431.

65 Bank of New South Wales v Commonwealth (1948) 76 CLR 1.

66 MacIntyre (2015), p 433.

67 Marr (1980), pp 63–64.

68 Wheeler (2015), pp174–175.

69 Wheeler (2015), p 178.

70 Dixon J in the Bank Nationalisation Case (1948) at [46].

71 See the majority decisions of Rich, Starke, Dixon and Williams JJ.

72 McTiernan qualified his decision by finding that certain powers of compulsory acquisition conferred on nominee or Commonwealth appointed directors were invalid at [394], [398].

73 See the decisions of Latham CJ and McTiernan J in the Bank Nationalisation Case.

74 Marr (1980), p 69.

75 Commonwealth v Bank of New South Wales [1950] AC 235 (Privy Council). On a trivial note, during the 37 day hearing of the appeal, Evatt’s opening address took 14 days, during which two of their Lordships, Lord Uthwatt and Lord du Parcq, unexpectedly died: Williams et al (2018), p 1267.

76 Rowse (2002), pp 82–86, 144–152, 181–184.

Additional information

Notes on contributors

Eugene Schofield-Georgeson

Dr Eugene Schofield-Georgeson is a lecturer at the University of Technology Sydney (UTS) Law School.