COMMONWEALTH Bank chief Ralph Norris must be crazy-brave. As our political leaders compete to show themselves tough on banks, he has invited them to do their worst.
The decision by Australia’s biggest home lender to raise its interest margin by 0.2 percentage points on top of the Reserve Bank’s 0.25 percentage point rise gives Wayne Swan and Joe Hockey the perfect excuse for reforms to make the big four banks face real competition.
Norris has bet that, in the end, their bank-bashing will be mostly talk, little action. And he is probably right.
The big four are now a firm oligopoly, controlling 87 per cent of housing loans. Since the mid-90s, our competition regulators have allowed them to gobble up their main rivals, and the global financial crisis saw off the rest.
Joe Hockey’s nine-point plan has some good elements – such as a new financial system inquiry – but let’s be frank: their impact would be marginal.
There’s only one way to create serious competition to such a strong cartel: do what Prime Minister Andrew Fisher did in 1911, when he set up the Commonwealth Bank as a government-owned competitor.
Our politicians won’t do that.
Andrew Wilkie …
ANDREW WILKIE PUTS BANKS ON NOTICE
Independent Member for Denison Andrew Wilkie today condemned the Commonwealth Bank’s decision to almost double the Reserve Bank’s 25-basis-point rate rise and put further pressure on stretched household budgets.
“The Commonwealth Bank’s behaviour is totally unacceptable and out of step with the public interest,’’ Mr Wilkie said.
“Banks have a social obligation to balance the need to make profits with the need to do the right thing by the community.
“If they keep behaving this way, they will have no one to blame but themselves if the Government moves to rein them in.
“The banks can’t cry poor when they are posting billion-dollar increases in profits and paying their executives multi-million-dollar salaries.
“These are the same banks the Australian taxpayers helped weather the Global Financial Crisis and it’s now their turn to return the favour.’’
Mr Wilkie said the rate hike would hit Tasmanians hard.
“Tasmanians are already struggling to pay higher bills for power, water and rates and now they will have to dig even deeper to meet their mortgage repayments,’’ he said.
“They are right to be angry at the bank’s profit grab.’’
First published: 2010-11-04 06:49 AM
