Mike Smith, the CEO of the ANZ Bank has fumed about Liberal-National shadow treasurer Joe Hockey’s recent populist rhetoric against the four big banks that increasingly dominate the Australian economy.
“The Liberals’ economic credentials have been hijacked by out-there proposals”, Smith said in the October 29 Sydney Morning Herald.
“Mr Hockey seems to be on some kind of personal vendetta. It would appear he has been taking economics lessons from Hugo Chavez.”
Has Hockey been taking lessons from Venezuela’s socialist president?
Sadly, no. Hockey talked strong on the profit-gouging banks but his proposals were weak.
ANZ Bank has just announced a profit of $4.5 billion, Commonwealth Bank $6.1 billion, and NAB $4.5 billion. Westpac will announce its profit on November 3, but its half-yearly profit was $2.9 billion.
Hockey retreated from his boldest proposal to regulate bank interest rates, and has proposed a tame nine-point plan.
It includes a parliamentary inquiry into the banking system, greater powers of scrutiny for the Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission, and an investigation to see if a system of Australia Post deposits could provide more competition to the big four banks.
The Liberal-Nationals are never going to implement these modest proposals, but the Gillard Labor government should be condemned for its dishonest response on October 26 that this is a “return to Hansonite economics”.
It was Labor PM Julia Gillard who resurrected Hansonism during the last federal election campaign with her shameful dog-whistle politics on asylum seekers.
Now Gillard Labor defends the greedy banks in an attempt to posture as more economically conservative than the Liberal-National opposition.
The banking system needs to be investigated and the truth about their exploitative and socially and environmentally destructive behaviour needs to be made public.
However, the track record of official inquiries in Australia is that they sweep things under the carpet.
In March, the Australia Institute published A Licence to Print Money: Bank Profits in Australia by David Richardson, which found, before the release of this year’s record profit figures, that “the big four banks alone make underlying profits of around $35 billion before tax, of which some $20 billion per annum is likely to reflect the banks’ exploitation of their monopoly over the Australian payments system”.
“The monopoly profits of the big four banks”, said Richardson, “are equal to almost half of the GST and more than the fuel excise and their effect is to act like a large tax burden on everyone who uses the Australian payments system.”
We can see from Smith’s imperious outrage that he is not used to having his bank’s right to make fat profits questioned, let alone challenged.
But that is precisely what needs to be done. We need to “do a Chavez” on the big four banks.
For a start, how about a real, no loopholes, super-profit tax on the banks as well as on the profit-gouging big mining companies?
Then, let’s tear away the veil of private property and see what the bank monopolies are doing in social terms. The banks take society’s collective savings and invest them on all manner of exploitative, environment-destroying, and speculative activities.
The big four banks were as guilty as the rest of the world’s banks of joining the festival of speculative greed that led to the still unresolved global financial crisis.
Richardson said the four big Australian banks built up at least $13 billion in bad debt in the process. But they did not go to the wall, in part, because at the height of the GFC the Rudd Labor government gave the banks a $700 billion public guarantee on their deposits for three years. This reduced the risk of runs and lowered the cost of bank borrowings from overseas.
The big four banks used this period to increase their domination of the finance sector to 97.5%.
We, the public, are paying for this ridiculous and unsustainable concentration of corporate power. The public should be recognised as the real owners of the banks and the public should be able to democratically decide how the banks invest according to social and environmental need.
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