Excellent ABC Radio interview this morning on excessive market power in banking with Josh Fear of the Australia Institute. Josh makes a number of strong points about the power of the Big 4 banks to generate ‘super-normal’ profits. Specifically, they use movements in their cost of funding as an excuse to lift interest rates and fees when RBA analysis confirms that since the GFC increased funding costs have lagged interest rate rises.
A particular suggestion Josh mentioned was previously raised by Per Capita in our Memo to the Prime Minister – the use of existing government infrastructure to provide low-cost savings and transaction accounts. In today’s Fairfax papers, Elizabeth Knight, Katharine Murphy and Eric Johnston canvass a related idea of some merit, that Australia Post network could offer banking services, as the postal service does in New Zealand.
One point on which I’d disagree with Josh is his description of the current state of banking as a failure of market competition. I’d argue the opposite – that we need greater competition in banking to provide the public with more choice and ease of switching between banking providers.
No comments:
Post a Comment