On August 29th, The Australian newspaper reported that a government-owned bank, created out of Australia Post, may be back on the Labor government’s agenda. This move is seen as a response to the recent closures of numerous bank branches in regional Australia. If this report is accurate, I applaud the Government for this welcome development.
Years of regulation have not succeeded in forcing the banks to act with honesty, decency, and compassion. Additional regulation is not the answer, as large banks typically have access to superior legal resources compared to the Government. The answer lies in establishing a People’s Bank that can provide competition to the Big Four banks oligopoly, or more accurately, the cartel.
A People’s Bank could rewrite their Banking Code of Practice, restoring protections that successive Liberal Governments have removed—such as face-to-face banking, cash transactions and a guarantee of banking services to prevent the problem of political de-banking. People’s Banks worldwide have proven their ability to be secure and profitable, and to hold commercial banks accountable, as outlined in my speech.
Transcript
The Australian newspaper reported on 29 August that ‘a government owned bank created out of Australia Post is understood to be back on the Labor government’s agenda’ and that it is ‘seen as a response to the closure of numerous bank branches in regional Australia’. I hope this report is well founded, and, if it is, I applaud the government for this welcome development.
Years of regulation have failed to force the banks to behave with honesty, decency and compassion. More regulation is not the answer. Big banks will always have better lawyers than the government. The answer is a people’s bank offering competition to the big four bank oligopoly—or, more accurately, cartel. As someone who participated in the inquiry into bank closures in regional Australia, I attest that there is a desperate need for a public bank to revolutionise Australia’s banking system, the way the original Commonwealth Bank did, which the Fisher Labor government established in 1912.
Today the big four cartel controls 80 per cent of the market and dominates banking. They’re acting together to remove face-to-face banking, which doesn’t stop customers from needing face-to-face services. It just forces customers to travel further. It’s not just in the regions; it’s as difficult for the elderly in the city to travel to the next suburb for their banking as it is for a regional customer to travel to the next town.
We saw numerous instances of the banks’ dishonesty when closing branches, and we’re seeing it again right now with ANZ’s closure of its Katoomba branch. The ANZ treated Katoomba as a regional branch until it promised to not close the regional branches as a condition of its merger with Suncorp Bank. Lo and behold, suddenly ANZ claims Katoomba is not a regional branch so is proceeding to close it. The big four have concentrated close to 70 per cent of their lending into residential and investor mortgages, with more money fuelling the increase in house prices, while neglecting small business lending and regional communities.
All four are aggressively pushing customers away from cash and into digital banking and transacting so they can surveil and harvest your data and collect fees on all non-cash transactions. They now gouge Australians out of more than $4 billion per year in transaction fees and surcharges. In short, the big four serve only themselves and use their oligopoly power over a captive market to exploit their customers.
There’s a dire need for a public bank that can set standards of service and break up the banking cartel. A post office bank is the perfect way to do it, operating under a modified banking code of practice to restore protections to customers that successive Liberal-National governments have removed and guaranteeing cash and banking services, face-to-face banking in a branch, best interests of the customer and protections against politicisation of banking.
The Commonwealth Bank originally started in post offices in 1912, from which it provided banking services to all parts of Australia, even remote areas. It raised loans for the government at one-tenth the cost of the private banks. In the panic of 1914, it protected deposits in all the banks. It supported Australia’s agricultural production in World War I and funded the emergency purchase of a fleet of ships in the war, which became Australia’s first national shipping line. It made development loans to local councils all across Australia for crucial infrastructure, and it made affordable housing loans to returned soldiers. It accomplished all of this in its first decade, before its political enemies reduced its ability to compete with the private banks, until later when another Labor government unleashed it again in World War II.
Public and post banks are very successful around the world. The Japan Post Bank is one of the world’s biggest banks and was the secret to Japan’s postwar economic miracle, funding their government’s investments in infrastructure and industries. France’s post bank, La Banque Postale, started in 2006 and is already Europe’s 18th biggest bank and the biggest lender to local councils in France. Kiwibank started as a post bank in 2002, quickly growing into New Zealand’s fifth largest bank and the only bank that can compete with New Zealand’s big four banks, which Australia’s big four banks own. Its first achievement was injecting competition which stopped all branch closures in New Zealand for seven years. In the global financial crisis, Kiwibank was the only bank to increase lending while the private banks all reduced lending. Listen to this: the Bank of North Dakota, not a postal bank but a brilliant state owned bank, supported North Dakota’s public finances and its farmers for more than a century, making a profit in every year of operation. In the 2008 financial crisis, North Dakota was the only United States state to stay out of crisis.
I applaud the news that the government is in talks with Australia Post on this solution, and I urge the government to have the vision to create a powerful bank that can once again serve the people of Australia.
