Again a " People's Bank " !

Sometimes the Greens have some wacky ideas but at a time when we are having a Royal Commission to delve into the outright thuggery that is so pervasive in the Australian banking system they have raised an issue that deserves serious consideration.   They suggest using the Reserve Bank of Australia to give some much needed competition to the " big four " banks that dominate the money trade in Australia.

Back in 1947 Ben Chifley's Labor government staked its hold on government on a plan to nationalize the array of private banks that served this nation - and lost.   The voters just didn't like the idea of a single bank stifling competition and rejected it as a form of creeping socialism.

We remember the era that followed as a time when banking in Australia was stable and very ethical.  The government owned the Commonwealth bank and it was the trend setter.  It was the biggest bank and every post office in every state served as a branch of its savings bank, giving the widest universal access to ordinary people.

Those were the days when Commonwealth bank people visited schools and handed out complimentary money boxes to students, and lectured them on the merits of saving money.  Contrast that today, when the banks refuse to even count the change that children manage to save.  We now live in a very different world.

Those ethical banking days came to an end in 1996 when we were told that the government had no business running banks.   The mighty Commonwealth bank was to be privatised, creating a rush to buy shares that rapidly rose in value.   The bank that set the standards for the entire banking industry was now tasked with making profits for its new owners.  It was like a cop throwing away his sheriffs badge and joining the outlaw gang.  Banking condensed - until the Commonwealth became one of the " big four bandit banks " !

That outcome is what we are investigating with this Royal Commission.  The banks are being forced to cringe as they admit the deceit and malpractice they have inflicted on their customers.  They have sold worthless insurance policies and given financial advice that has lost many people their retirement money.  They have gouged fees and issued fines that amount to extortion in relation to what such services cost the banks, and all of this has escaped the notice of the various banking oversight bureaus.

Restoring the Reserve bank of Australia as the government owned " people's bank " has a lot of merit. The fees that this people's bank chooses to implement sets a level that the other banks either follow - or find that they lose customers.  The other banks would no longer set interest rates to suit themselves. That " people's bank " could set the tone for first home mortgages to get home ownership moving again.

No doubt the outcome of this Royal Commission will be to try and regulate bank practices but we have seen the failure of the oversight institutions to keep abreast of rapid banking changes.  The sure way to guarantee ethical standards is to create a competitor against which the private banks will be judged.  That was exactly what the old Commonwealth bank managed to do during the decades that it dominated the Australian banking industry !