Nationalise the greedy banks to save the future

Graph by Steve Keen in "Bank profits are a sign of economic sickness not health" in Debtwatch blog.


The last of the big four banks in Australia to announce its profits this year was Westpac – and it had the biggest profit, a whopping $6.3 billion and 84% increase from last year.

The Commonwealth Bank made the second biggest profit this year, $6.1 billion (up 42% on last year), and it was also the first bank to announce that it would increase the interest it charges for home mortgages by more than the latest Reserve Bank interest rate rise.

The ANZ made $5 billion (up 53%) and NAB $4.6 billion (up 63%), making a total big four bank profit of $23 billion. The huge rise in bank profits rankles ordinary folk who are struggling to deal with rising costs. An ACTU study released on October 19 revealed that “living costs for working households have risen by 4.5% — well above the overall Consumer Price Index and the rate of pay rises enjoyed by most Australian workers in the past year”.

The same study also found that corporate profits increased “27.5% in the past year – more than ten times the rate of wages for private sector employees which have risen by just 2.7%”. But the big four banks’ profit increase was twice as big!

And to add insult to injury, these four banks have rewarded their CEOs with ridiculously high packages.  Commonwealth Bank’s CEO Ralph Norris got $16.2 million, Westpac CEO Gail Kelly $10.6 million, ANZ CEO Mike Smith $10.9 million and NAB CEO Cameron Clyne $5.2 million.

The lowest paid of the four big bank CEOs was paid more than 140 times that of more than half of Australian households which (according to the latest Australian Bureau of Statistics estimate) had annual incomes of less than $37,000 a year and more than 240 times that of the 30% of Australian households surviving on incomes of less than $23,000 a year.

It is not surprising that the Liberal-National opposition has been tempted to do a bit of posturing against the banks. Under pressure, Labor Treasurer Wayne Swan has promised yet unspecified “further wave of reforms to make our banking system more competitive and more responsive”.

Shadow treasurer Joe Hockey has raised a  series of cautious proposals to increase public scrutiny of the banks and to  increase competition to the big four banks. The most dramatic of Hockey’s proposals would be to turn Australia Post into a sort of state-owned bank that could offer ordinary Australians an alternative place to deposit their savings.

But even if this measure was implemented, it will not be easy to wind back the big four banks control of more than 90% of all lending by financial institutions in Australia, simply through competition. It should be remembered that the big four banks gained their domination through a process of out-competing smaller banks and other financial institutions and gobbling them up, that was sped up by the deregulation of the finance sector which began under the Hawke Labor government in the 1980s. Under capitalism, competition leads naturally to greater concentration of ownership and market domination. And the objective of each competing capitalist enterprise, in engaging in such competition, is to increase its profits.

The obscene inequalities that have arisen through this process are just one issue. The bigger problem is that these giant banks — unashamedly running on the principle of insatiable profit greed — are directing the collective savings of our society (and the corporate borrowings the public may one day be expected to “socialise”) in a totally irresponsible way. Instead of directing these funds to the urgently-needed transition to renewable energy, to public transport, health, housing and education, it is being directed to expanding the dirty coal and other fossil fuel industries, to enriching mining magnates, and to destructive speculative ventures.

Our society cannot afford to have such future-shaping (and potentially future-destroying) decisions carried out on the basis of what makes the big four banks the most profit. This is why, as socialists, we say: nationalise the banks and run them, democractically, in the community interest.

This may sound extreme, but just two years ago governments in several major capitalist ecomies rushed to temporarily nationalise banks to save the capitalist system from itself.  These governments are now making their ordinary citizens pay for the bailout of capitalism through a brutal program of austerity. If banks can be nationalised to save capitalism from itself, surely they can be nationalised to ensure our collective survival?

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