Greens leader Richard Di Natale has backed calls for a new “people’s bank” to challenge the power of the Big Four mega-banks. He told the National Press Club on March 15: “The time has come for a people's bank, one that injects real competition into the banking sector.”
Senator Di Natale drew on the example of the state-owned KiwiBank in New Zealand, run by the NZ Post Office. A similar operation in Australia would boost competition, push down fees, help young buyers enter the property market and deter “unscrupulous behaviour”, he said.
Professor John Quiggin, from the University of Queensland, said there is “an obvious case for a low-cost, public bank that only sells simple products like savings accounts and home loans.
“If you look at a lot of the [current] bank misconduct, a large element is precisely due to the mixture between their deposit taking institution and then attempting to provide a whole range of financial services of dubious value.”
The Australian Financial Review reported on March 15, “More than 20 years after the federal government fully privatised the Commonwealth Bank, the Greens — and the Socialist Alliance — want a ‘people’s bank’ to challenge the dominance of the Big Four banks.”
The Socialist Alliance sees such a “people’s bank” as an important step towards nationalising the Big Four under workers’ and community control.
Socialist Alliance says it is necessary to “place the massive assets they possess under public ownership, to be used for the good of the community”, through building public works and funding public health, education, transport and environmental protection.
The idea of a people's bank in Australia goes back to the creation of the publicly-owned Commonwealth Bank in 1911. Labor Prime Minister Andrew Fisher famously said it would be “a bank belonging to the people and directly managed by the people's own agents”, with the aim “not to make profits, but to ensure safety and security to depositors”.
In practice, the Commonwealth Bank developed over time to become a corporatised entity, with its own bureaucratic methods aligned with big business interests, until it was finally sold off to private investors by the Hawke-Keating Labor government in the early 1990s.
Any new people’s bank would need to be controlled by a publicly-elected board, and run in collaboration with workers’ representatives, in order to reflect the interests of the community, not the 1%.
As Quiggin wrote in 2001: “Among the policies for which the [Bob] Hawke-[Paul] Keating government is remembered, two of the most prominent were privatisation and financial deregulation. The combination of these two policies was symbolised by the conversion of the Commonwealth Bank from the ‘people’s bank’ to a private organisation devoted to maximising returns to its shareholders and managers, and free of any social or community obligations.
“The political damage associated with privatisation was immense. Not only was the sale of ‘icons’ like the Commonwealth Bank regarded with immense hostility, even in conservative sections of the electorate, but these actions, taken in breach of the most explicit promises, destroyed Labor’s credibility in arguing against the sale of Telstra in the 1996 election campaign.”
Meanwhile, the pressure for a royal commission, or commission of inquiry, into the banking sector has grown ever stronger, as revelations about the scandals engulfing the big banks and their insurance arms escalate.
Even the Sydney Morning Herald editorialised on March 28: “Turnbull’s refusal to institute an initiative supported by three in four voters, a banking royal commission, is a bad look.
“It exposes the government to claims it is way too susceptible to the siren song of the banking lobby, which has good reason to resist a royal commission. To the average taxpayer it appears the government wants to protect its mates in the big-money-making finance industry so that it can get on with the business of making money without too many scruples.
“Voters’ taxes back a government loan guarantee that equates to a $4 billion subsidy to the banking sector, helping entrench the oligopoly power of the Commonwealth Bank, Westpac, ANZ and the NAB.
“On the evidence, that subsidy is helping support a banking culture rife with wrongdoing in which customers are treated poorly or unethically, mistakes are kept under wraps and bad behaviour is excused as long as no one finds out and profits keep flowing.”
Most recently, the Senate crossbench has indicated support for a Greens bill to establish a commission of inquiry into the banks, with Nationals Senator John Williams saying he will cross the floor to vote for it. The Greens proposal seems likely to pass through the Senate.
It would then go to the House of Representatives, where maverick Liberal National MP George Christensen has suggested he might support such a proposal, which would then require only one more Coalition MP to vote for it in order to pass.
Turnbull faces a dilemma because establishing a royal commission into the banks, which would be controlled by the government, might be the lesser evil for them than a commission of inquiry, which would have similar powers of investigation, and might be set up by the opposition parties and independents.
Whichever way it goes in parliament, the community is demanding radical change in the banking sector. While a commission of inquiry or a royal commission would be a major step forward, allowing for full public exposure of the crimes of the Big Four, the establishment of a new “people’s bank” would be an even more important advance on the road to the full socialisation of the financial sector.