Mike Smith, the CEO of the ANZ Bank is fuming 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. Mr Hockey seems to be on some kind of personal vendetta. It would appear he has been taking economics lessons from Hugo Chavez,” Smith was quoted in October 29 Sydney Morning Herald.
Hockey taking lessons from Venezuela’s socialist President Hugo Chavez?
Alas not. While Hockey has been rhetorically extravagant on the profit-gouging banks (ANZ Bank announced a 53% rise in cash profit to $5.1 billion, Commonwealth Bank $6.1 billion, NAB $4.5 billion and Westpac has yet to announce its profit) he has been timid in proposals to tackle the profit-gouging banks.
Hockey has retreated from his boldest proposal, which was to regulate bank interest rates, and now proposes a tame nine-point plan which includes a parliamentary inqury into the banking system, more scrutiny powers over the banks for the Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission, and an investigation into whether a system 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 that this is a “return to Hansonite economics”. It was Labor PM Julia Gillard who did a Lazarus for 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 greedy, exploitative and socially and environmentally destructive behaviour needs to be made public. However, the real record of official inquiries in Australia is that they have functions to sweep things under the carpet.
In March this year, the Australia Institute published a report 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”, wrote 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 the the puce-faced imperious outrage of ANZ CEO Mike Smith that he is not used to having his banks right to make fat profits questioned, let alone challenged.
But that is precisely 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 expose what the bank monopolies are doing in social terms. The banks appropriate society’s collective savings and invest them on all manners of exploitative, environment-destroying, and yes, speculative activities. The big four banks were are guilty as the rest of the world’s banks of joing the orgy of speculative greed that led to the still unresolved Global Financial Crisis.
Richardson reported that the four big Australian banks built up at least $13 billion dollars of 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 price of whole bank borrowings from overseas.
The big four banks used this period to increase their control to more than 90% of all lending by financial institutions in Australia!
We, the public, are paying for this ridiculous and unsustainable concentration of corporate power, so the public should be recognised as the real the owners of the banks and the publlic should democratically make the future transforming investment decisions according to social and environmental need.
If you want to read the truth about the big banks and the other corporate plunderers and really learn about attempts by Venezuela’s socialist Chavez government to challenge corporate dictatorship then you need to support Green Left Weekly. This project stays alive with the help of an annual Fighting Fund drive for $300,000 – (a week and a half’s pay for ANZ CEO Smith, who was paid $10.9 million this year*). Our supporters have raised $179,190 so far this year so we have quite a way to go by the end of the year.
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* Commonwealth Bank CEO Ralph Norris had a total remuneration of $16.2 million this year (a 75% pay rise), Westpac CEO Gail Kelly ($10.6 million) and NAB has yet to announce how much its CEO Cameron Clyne is paid this year (he got a modest, by bank CEO standrads, $5.2 million last year).