- by Marcus Browning
- The Guardian
- Issue #2051
Image: Gino Crescoli – Pixabay.
When the Reserve Bank of Australia (RBA) handed down yet another interest rate rise last week, it was crippling for ordinary working people, small business, and small farmers, but not for the banks. With record profits ANZ, Commonwealth Bank, NAB and Westpac were laughing. Their profit outcomes are a direct result of unregulated monopoly price gouging and heightened exploitation of their workforces. Now they stand to make even larger profits.
The banks continue to act with impunity, having nothing to fear from all the hot air in Canberra. Their PR consultants are constantly at work devising means of restoring their public image.
The Big Four consolidated their monopoly position during financial crises with the help of government deposits and other guarantee systems. The relatively smaller banks such as Members Equity (set up by industry superannuation funds), the building societies, and credit unions hardly pose a threat to them. The media almost talk as though they do not exist.
The Big Four deny lack of competition or collusion. They just happen to follow each other making identical decisions. If the Commonwealth Bank goes first, upping its mortgage rates by more than the RBA increase, the others will no doubt follow, but in the current political climate may take a little longer than usual.
The average Australian is paying thousands in bank fees every year. On every front bank customers face exorbitant fees, most of which involve a simple, automatic electronic recording or notification.
Trying to find cheaper deals is a minefield. Special lower interest rate offers for credit cards last six months. Card fees, late payment penalties and so on are buried in very small, grey print. Swapping mortgages is a nightmare – the delving yet again into your personal affairs, exit fees, hidden penalties for late payments, and different types of loans.
BANK WORKERS ABUSED
Bank workers are on the receiving end of angry customers – long queues, long waiting times on the phone, difficulties in rectifying bank errors, whopping fees and penalties. Thousands of bank jobs have gone offshore. Bank staff are under pressure to sell debt with pay increases tied to how many new credit cards or other forms of debt they sell. Their health suffers under pressure to sell debt products even when people don’t want or need them and may not be able to afford them.
The Finance Sector Union has a Better Banking Charter calling on the government to stop banks offshoring jobs and linking pay to sale of debt products. The Charter also calls for bank interest rates to reflect RBA rate changes, and for banks to demonstrate a direct link between fees and customer service.
The Banking Amendment (Delivering Essential Financial Services for the Community) Bill of 2010 included provisions for minimising or removing fees from basic services, capping the level of mortgage exit fees, and introducing a variable rate mortgage product (“Fair Price Mortgages”) that would only permit genuine changes to the lender’s cost of funds to be passed on to customers.
The Communist Party of Australia, as a first step, is calling on the Australian government to establish a People’s Bank, a government guaranteed public bank based on a strong and democratic social charter that operates in the interests of the people and the economy. This would immediately introduce real competition and put pressure on the Big Four to slash fees and improve service.
Re-regulation of the financial sector is long overdue. The government should regulate interest rates, fees, and capital flows, and confine banks to banking with the many highly speculative practices that are not central to banking outlawed. It is also time for a super profits tax on banks.
A government that caves in to the mining corporations on the environment and a super profits tax is not about to stand up to the banks. Nor is the Opposition which also does the bidding of the big end of town.
It requires a government of a new type closely linked the people’s mass movements governing in the interests of the people.