The Commonwealth Bank’s move to almost double the interest rate increase announced by the Reserve Bank has understandably caused outrage across society. This is straight-out profiteering. Banks have lifted interest rates seven times since October 2009.
Senior Treasury official Jim Murphy effectively accused the banks of lying about their costs. And they are. The cost of the banks borrowing money is back to pre-crisis levels.
But last week, suggestions from the Liberals that the government should crack down on the banks by regulating interest rates drew a horrified response from Julia Gillard. She denounced the idea as “a strain of economic Hansonism” which put the entire “post-1983 reform consensus” at threat.
Of course, Joe Hockey and the Liberals made it clear they weren’t really suggesting anything of the sort. At the top of his list is a proposal to increase competition in the banking sector by giving the competition watchdog more powers to investigate—wow!
But Gillard’s response demonstrated just how much Labor is tied to big business’s agenda. Bank profits are out of control—yet Gillard is more concerned about defending neo-liberalism than doing anything about the greedy bank bosses.
Labor’s embrace of neo-liberal policies since the 1980s has meant boosting corporate profits at the expense of workers’ living standards. And the banks’ obscene profits are one of the clearest examples.
The global economic crisis has seen the big four banks, the Commonwealth, NAB, ANZ and Westpac establish an even stronger monopoly in the lending market. RAMS, Wizard and Aussie Home Loans were all been taken over. The banks now control 83 per cent of lending. In October NAB announced a profit of $4.22 billion, up 63 per cent and ANZ’s profit was $4.5 billion, a 53 per cent increase.
During the economic crisis, the Australian government, like governments around the world, stepped in to guarantee deposits and bail out the banks. As it happened none of the big Australian banks collapsed—but they now know the government would rescue them if it had to.
So the banks are in a privileged position—yet the government has let them run rampant.
The government should simply ban them from increasing interest rates above the official Reserve Bank rate. At the very least it should take back some of the banks billion dollar profits through a banking super profits tax. The total profits of the big four banks are expected to reach $20 billion this year.
Better yet would be nationalising the banks. Banking is an essential service. If the government was running the banks, it could pass on the billions in savings by cutting interest costs on workers’ mortgages. It could also prioritise lending to create jobs.
Twenty billion dollars a year is half what Beyond Zero Emissions says is needed to shift the whole economy to renewable energy.
Treasurer Wayne Swan has responded to the Commonwealth Bank with rhetoric that is just as empty as Hockey’s. Swan says Labor will introduce reforms, “to keep the big banks honest…what we will do is make the system more competitive.”
Building the fight
This is a prime example of why the Labor left faction leader, Senator Doug Cameron, has described members of Labor’s parliamentary caucus as, “having a political lobotomy.” And why he says Labor is losing ground to The Greens on social policy and climate change. But where is the left?
Meanwhile, The Greens are also having trouble finding their political feet. Brown was so keen to be seen to be a parliamentary player he talked up Hockey’s bank reforms and asked Hockey for a meeting.
The Greens have maintained a single-minded obsession with parliamentary tactics, toning down proposals in an attempt to win Liberal or independent support.
The Greens pushed for a parliamentary debate over why Australia has troops in Afghanistan. But rather than go on the offensive about the corrupt Karzai government propped up by the West and why we need to demand Gillard gets our troops out (see here), The Greens’ main proposition is for parliament to debate any future war before troops are committed.
Over refugees, the legislation they want to put to parliament over children in detention is no more ambitious than enshrining Gillard’s own limited children out announcement into law (see here).
This approach will not inspire anyone to mobilise to fight for these changes. The Greens’ parliamentary fascination risks becoming a repeat of the Democrats’ “keeping the bastards honest”.
Julia Gillard’s conservative stance over issues like refugees, same-sex marriage, Afghanistan and the banks is no surprise. The need to build a genuine left opposition outside of parliament has never been clearer.
If The Greens are going to help build the movements to win real social change they will also need to look outside parliament, not to winning votes inside it.