22 January 2025
Vol. 27 No. 2

Treasurer Jim Chalmers and Australian Banking Association CEO Anna Bligh in 2022: the government’s polices always put the banks first. Photo: X

It is inevitably worse ahead of an election, but it is always there: Australian politicians talking out of both sides of their mouths. Trying to keep the banks happy while assuring the people they are serving them. They create a
world of pain for themselves by doing so, but solving the problem would mean taking a policy pathway that is too terrifying to even consider—one that has been put outside the reach of their minds by the rantings of the media, bank lobbies and think tanks, and the tongue lashings they themselves delivered when they were in Opposition. It would mean reviving institutions that put Australian citizens back in charge, starting with a national People’s Bank. That would remove the banks and their threats from the equation, properly relegating them to the status of any private corporation, stripping them of the power to dictate terms to government. Without bank control, the major parties would have to compete among the population for votes over actual policy.

The government’s cash consultation puts their twofacedness in the spotlight. Under the headline announcement of protecting cash use in the economy—which it was forced to address under popular pressure—the government appears to be preparing to undermine cash. From close scrutiny of the consultation paper, there are major problems, by design or otherwise. Businesses would be mandated to accept cash, BUT, due to the exemption of small businesses (98 per cent of all Australian business), just 2 per cent of businesses would be subject to the mandate!

The cash consultation was on a list of items reported in the 16 December 2024 Australian Financial Review by financial reporters James Eyers and Lucas Baird, along with proposals for a bank levy to protect banking services and removal of surcharges from debit cards. The story led with the Commonwealth Bank’s attempt in early December to charge a $3 fee for over-the-counter withdrawals. Claiming he hadn’t known about the decision, CBA CEO Matt Comyn was not happy, the article reported, but his biggest complaint was that the saga “threatened to blow up the bank’s relationship with the federal government, which he had spent years cultivating”. It could “fracture his tight-knit relationship with the treasurer”!

The cosy relationship between the government and banks was on display again when Treasurer Chalmers announced the membership of the Reserve Bank’s new Monetary Policy Board, recommendation #8 of the RBA Review. The new appointments include Renee Fry-McKibbin, one of the three RBA Review panellists. An academic who has also worked at the European Central Bank, IMF, Bank of England, Reserve Bank of New Zealand and Atlanta Federal Reserve, Fry-McKibbin and her team pushed the government to forfeit its power to overrule RBA decisions and to remove the RBA’s power to determine the lending policy of banks in its #1 recommendation—which was defeated in parliament thanks to us. Then there is Marnie Baker, a banker who was CEO and managing director of Bendigo Bank and Deputy Chair of the Australian Banking Association (ABA), 2018-24. According to the Australian’s “Margin Call” column in July 2024, ABA CEO Anna Bligh has Financial Services Minister Stephen Jones “wrapped tightly around her finger”, with Bligh “all but” writing his speeches. A 1 August AFR “Rear Window” column compared their virtually word-for-word pronouncements. Having Bligh’s 2IC at the RBA is very useful for the banks.

But the tide is turning. More politicians are realising they have to take on the banks to win re-election. MPs who attended the hearings of the bank branch closure inquiry widely support a postal bank solution. Labor declared last year that a postal bank is back on its agenda and leading figures on the Liberal side are now making similar noises. A new bipartisan consensus that throws overboard the discredited neoliberal model is possible, especially if the two major parties get competitive over the bank!

In this week’s issue:

• Howard and Costello created Australia’s housing affordability crisis, but were too cowardly to fix it
• Another victim of the USA’s obsessive anti-China strategy
• Labor pays corporate cronies to promote Sinophobia in the Pacific
• Are one in five Australians really antisemitic?
• Overcoming the geopolitical divide: The forces determining US-China relations and the world economy
• If Biden channelled Truman, does Trump emulate Roosevelt?
• Donald Trump seeks meeting with Xi Jinping
• Time to halt Kiev’s flouting of basic freedoms and the ‘rule of law’
• The win-win public post office bank solution is undeniable!
• A balanced account of terrorism in Israel

ALMANAC – Beating Wall Street at its own game: The Bank of North Dakota model

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