• Dennis Gentilin

Truth Begets Trust

On the 8th March 2019 I was invited to present at a public sector forum organised by the Chartered Accountants of Australian and New Zealand to mark the launch of their publication "The Future of Trust". An edited version of my speech appears below.


Thank you to Chartered Accountants Australia and NZ for inviting me to speak today on this very important issue.


To suggest that trust is a hot topic at the moment is an understatement. There are a plethora of measures showing that there is a lack of it and even more people claiming to know what to do about the deficit. I will try to resist becoming yet another commentator professing to know how to address the trust deficit today. Suffice to say, there are no simple solutions. Those who claim to know the answers have obviously not thought deeply enough about the issues.


What I would like to do today is speak about the relationship between truth and trust. Because as complicated as the construct of trust might be, a lack of trust is always coupled with a lack of truth. They are bedfellows. A lack of truth abets a lack of trust. Addressing trust deficits requires more truth. It is truth that begets trust.


Let’s begin by looking at the big picture. The seismic political shifts we have witnessed in Western democracies over the past 3-5 years that have resulted in the rise of populist leaders. These are ultimately caused by a lack of truth and trust.


If we look to the U.S. as arguably the most vivid example, the U.S. Census Bureau reported that the median U.S. household earned just over $61,000 USD in 2017.[1] This means that the middle class has experienced stagnant wage growth for 18 years, as the last time U.S. median household income was at or above this level was in 1999.


In addition, research from economist Raj Chetty and his colleagues has shown that the percentage of people earning more than their parents fell from 90% for children born in the 1940s to 50% for children born in the 1980s.[2] The promise of intergenerational income mobility is no longer a reality for half the population. So much for the “American dream”.


And of course we must recognise that lack of opportunity and unemployment don’t just impact on economic fortunes. As much as we might begrudge work, it provides us with so much more than a pay cheque. It is an avenue through which people obtain a sense of purpose and a feeling that they are making a contribution.


In short, people can’t trust the system. It is no longer working for them. It leaves them at a distinct disadvantage relative to the generations that came before them. And it robs them of their dignity and ability to contribute.


There have of course been numerous reasons proposed for this outcome. Globalisation, technology, open borders and the list goes on. But regardless of the causes, ultimately people will point to those who sit on top of the system to assign responsibility for their declining fortunes. For this reason, there has been a backlash against the political elite in recent elections.


In many ways this is totally understandable. With campaign slogans like “Forward” (Barack Obama in 2012) and “A Safer World and a More Hopeful America” (George W Bush in 2004), it is easy to see why people believe they have been misled. They have been sold a furphy. There has been a lack of truth. Their response has been to elect populist outsiders who claim to be the “voice of the people”. “Only they”, the populists claim, can solve the current problems.


But here’s a question worth asking: Won’t a cheap slogan like “Make America Great Again” ring just as hollow as those that came before it? The most likely outcome is that it will. And arguably the biggest reason for this is the lack of truth. One of the most concerning trends in the current moment is the assault on truth. Whether it be from social media or the President of the U.S. himself, the public arena is flooded with mistruth. This is not a solid foundation upon which one can build trust.


Of course, a public arena flooded with mistruth plays into the hands of an authoritarian leader. The existence of so much falsehood makes it difficult for people to distinguish between fact and fiction. And when this occurs the authoritarian leader has complete authority – you can’t speak truth to power when there is no common understanding of what the truth is. Don’t expect the President to address the assault on truth anytime soon.

And as mentioned, social media has a large role to play in the erosion of truth (and by extension, trust).


Prior to social media newspaper editors acted as gatekeepers and purveyors of truth. This is not to suggest they always got it right, but at least we knew the sources of information and could assign responsibility when the facts were wrong. Nowadays anyone with an internet connection can put an opinion in the public square. And what’s more, with the right technology, it is possible to make this opinion go “viral”.


One of the strengths of democracy is that it enables competing opinions and the associated tensions that accompanies the battle of ideas to exist. For truth to flourish, we need competing opinions. We need these opinions to be debated. And most importantly we need these opinions to be debated in a civil manner. The old adage of a public square where people gather to debate competing opinions is healthy for a democracy. It is healthy for truth.


Social media is the complete antithesis of the public square. It provides a platform upon which mistruth can go “viral”. But more concerning is that it significantly compromises the quality of the public debate. It is far easier to engage in ad hominem attacks and be vitriolic on social media than it is when debating someone face to face in the public square.


The result is that the quality of our public discourse and debate suffers and it is far more difficult for truth to emerge from the morass of competing opinions. As our former Deputy Prime Minister The Honourable John Anderson says, “You can not get good public policy out of a bad public debate.” If Western democracy is to regain its footing, there are several challenges we must face into. Although not insurmountable, they are significant.


Although Australia is not immune from these trends it has thus far escaped the worst of the populist insurgencies that have gripped Western democracies. One possible reason for this is that we managed to avoid an economic downturn in the aftermath of the Global Financial Crisis. In addition, although income growth in Australia has been weak across the socioeconomic divide in the years following the crisis, inequality has not significantly changed.[3]


This is not to suggest we should rest on our laurels and be complacent. The plethora of measures of trust that I referred to in my opening comments don’t paint a pretty picture.

Our political class has delivered a leadership revolving door, numerous examples of improper conduct and a policy vacuum. And although a populist figure has not raised to gain prominence in Australian politics, there are fractures appearing in our major parties and the emergence of extreme views.


But it is not just our political class experiencing a precipitous fall in trust. Our managerial class has delivered the revelations from the financial services royal commission. And what’s more, the financial services royal commission is not the only inquiry investigating poor behaviour in our institutions. It was preceded by the royal commission into institutional responses to child sexual abuse and is being followed by the royal commission into aged care.


These Royal Commissions should be welcomed. The primary reason for this is that above all else, royal commissions are exercises in discovering and revealing the truth. They unearth the truth when it has been hidden. It is only once this is done that we can begin the process of rebuilding trust.


In the opening paragraph of my submission to the financial services royal commission, I stated the following:


“The bedrock of the financial services industry is trust. And although trust is a complex construct, it is ultimately affirmed by a series of stories we tell ourselves. For example:

  • 'If I take out an insurance contract with an institution, they will be there for me during my time of need.’

  • 'Employees within the financial services industry are honourable people who have my best interests at heart.’

  • ‘If employees within the financial services industry behave in a self-serving or illegal manner, they will be held accountable.’

For trust to be sustained, we need to believe these stories. Unfortunately, the evidence of widespread misconduct that has been examined at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (hereafter Royal Commission) suggests that these stories are losing credibility."


Essentially what I was saying is that there is a lack of truth. For trust to exist the stories I referred to (and many others) must be self-evident. They must be true. But through their actions institutions within the banking and finance industry demonstrated that this was not the case. If all a royal commission succeeds in doing is unearthing the truth then they are valuable exercises.


This, for me, was one of the stand out observations during the hearings of the financial services royal commission. Participants in the industry had managed to rationalise and justify behaviour that was not truthful. It was only when this was exposed in a public forum that some of them came to the realisation that their conduct was not aligned to community expectations.


In his final report, Commissioner Hayne has pressed on financial institutions to be more truthful and for regulators to hold them accountable when they are not. One way he is doing this is by making the lofty statements that appear in codes of conduct enforceable. As he states in his own inimitable way on page 12 of the final report:


“Industry codes are expressed as promises made by industry participants. If industry codes are to be more than public relations puffs, the promises made must be made seriously. If they are made seriously (and those bound by the codes say that they are), the promises that are set out in the code, and are intended to govern the particular relations between the provider and the acquirer of a financial product or financial service, must be kept.”


It is my view that institutions can easily find the truth if they ask the right questions of their employees. And in some cases, employees will make the truth known despite their employers not wanting it exposed. We call these people “whistleblowers.”


Having formerly been named as a “whistleblower”, I was a touch disappointed that whistleblowing did not rate a mention in the financial services royal commission. If truth telling is so important to building trust, then why shouldn’t the ultimate truth tellers be given an opportunity to tell their stories? Don’t get me wrong, I understand that not every whistleblower has pure motives. At times whistleblowers make vexatious claims and are not motivated by the truth.


However in the main, whistleblowers care about their institution. They care about the truth. And they expose the truth because they know that’s what’s best for the institution. They are treated poorly when the institution finds the truth difficult to embrace. It is little wonder that poor outcomes for whistleblowers occur in industries with low levels of trust. When trust is high, the truth does not present a problem. It is welcomed.


As some of you may be aware federal parliament recently passed legislation that increases protection for whistleblowers. The Treasury Laws Amendment (Enhancing Whistleblower Protections) Bill 2018 was passed by the lower house on the 19th February. It broadens the types of disclosures that qualify for protection and who a whistleblower can make a disclosure to.


This is a fantastic step in the right direction as previous legislation was patchwork and wanting. It will hopefully encourage those harbouring the truth to come forward knowing that they will be protected when doing so. More importantly it should force institutions to create the conditions that welcome whistleblowing, thus allowing the truth to be surfaced. Although many institutions will find this process difficult, embracing it will ultimately build trust.


“Truth begets trust.” It is a simple statement but it does not simplify what is a complex topic. As I said in my introduction, those who believe there are easy answers to the challenge of building trust have not thought about the topic deeply enough. And although being more truthful will lead to higher trust, being more truthful is far easier said than done. This is especially the case for institutions that have spent years obfuscating or manipulating the truth. In these cases, surfacing the truth can be a painful exercise. But one that is necessary if trust is the ultimate goal.


Thank you.

[1] Long, H., & Stein, J. (2018, September). Middle-class income rose above $61,000 for the first time last year, U.S. Census Bureau says. The Washington Post. Retrieved from: https://www.washingtonpost.com/business/2018/09/12/middle-class-income-hit-an-all-time-high-last-year-us-census-says


[2] Chetty, R., Grusky, D., Hell, M., Hendren, N., Manduca, R., & Narang, J. (2016). The fading American dream: Trends in the absolute income mobility since 1940. National Bureau of Economic Research Working Paper 22910. Retrieved from: https://www.nber.org/papers/w22910


[3] Committee for Economic Development Australia. (2018, April). How unequal? Insights on inequality. Retrieved from: https://ceda.com.au/CEDA/media/General/Publication/PDFs/CEDA-How-unequal-Insights-on-inequality-April-2018-FINAL_WEB.pdf

© 2018 by Dennis Gentilin