Coalition reboots controversial inquiry into Australian banks’ climate policies

The federal resources minister, Keith Pitt, has broadened the terms of reference for a controversial inquiry into the climate policies of banks and insurers, writing to the joint standing committee on trade and investment growth asking that it now investigate finance for all export industries.

Amid public tensions between Nationals and Liberals about Scott Morrison’s positive but non-committal signalling on a net zero emissions target by 2050, sources have told Guardian Australia Pitt is attempting to “strengthen” and reboot an inquiry that stalled at the end of last year.

The inquiry stalled after the joint standing committee – in a rare rebuke – deferred making a decision about whether to proceed with Pitt’s original ministerial referral because some in the government did not favour conducting what they saw as a witch-hunt against banks managing carbon risk.

Pitt’s original remit was for the committee to grill financial regulators the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, as well as the banks, over plans to pull back on lending or insuring mining projects because of climate change.

A public commitment from ANZ last year to halt lending to its largest customers unless the businesses could demonstrate carbon transition plans triggered consternation from Nationals. The agriculture minister, David Littleproud, called for a boycott of the bank and the deputy prime minister, Michael McCormack, declared the bank’s plan “virtue signalling” that would hurt farmers.

Pitt’s original instructions for the joint standing committee to probe lending and insurance practices followed the ANZ fracas. The committee is chaired by his Queensland Nationals colleague George Christensen.

Pitt achieved public backing for the proposed inquiry from the treasurer, Josh Frydenberg.

But a number of other backbench Liberals, irritated by Nationals naysaying on climate policy, pushed back publicly, pointing out that managing environmental risks formed a significant component of responsible financial institutions appropriately managing their economic risks.

The Victorian Liberal Katie Allen, who has been outspoken about the need for a transition to a low emissions future, sits on the committee and was understood to have concerns about the original remit.

But after the committee issued the implicit rebuke to Pitt by deferring the decision about whether to proceed with the minister’s original instructions last December things got testy.

The resources minister issued his colleagues with a public ultimatum. Pitt told Guardian Australia late last December: “I’ve made a referral … and the committee is yet to decide whether or not to proceed.

“As a minister of the crown, I expect the committee to do its job.”

While the brinkmanship played out in public, behind the scenes, Allen was known to be seeking a broadening of the terms of reference for the inquiry.

Colleagues say her preference was the committee examine the funding and insurance of all Australia’s trade exports in the wake of the Covid-19 crisis – which is broadly where Pitt’s amended instructions to the committee have ultimately landed.

The committee will determine whether and how it proceeds when it meets next week when federal parliament is scheduled to return.