BY SUE BOLAND
Shock! Horror! Media magnate Rupert Murdoch's hired mouthpieces at the Australian have accused the Coalition government and the Labor Party of turning on big business, in particular the banks.
While the Murdoch family doesn't own any banks, it does own an international media empire, so Rupert Murdoch is concerned about any indications that governments or alternative governing parties may be considering introducing even minor regulations regarding the operations of big business.
The March 29 Australian declared on its front page that "Big business is being portrayed as the villain in Australian public life by both John Howard and Kim Beazley as they wage a high-stakes campaign for the votes of 'battlers' and small business."
Business Council of Australia president John Schubert wrote in the March 30 Australian that: "It is clear the battle has been joined and our political leaders have agreed on a common enemy — that amorphous group 'big business'."
"Clearly", Schubert added, "pollsters have identified big business as an easy target. Hence, the attempts by both political parties to paint the other as acting at the behest of the 'big end of town'."
What exactly has worked Rupert Murdoch, his chief journalists and the Business Council of Australia into a lather? Well, nothing much at all.
The increasingly unpopular prime minister criticised the banks for profiteering from credit card interchange fees and indicated support for decision of the Australian Competition and Consumer Commission (ACCC) to call on the Reserve Bank to take over the setting of credit card interchange fees.
However, of more concern to big business was the ALP's recent announcement of its banking policy. As the ALP is a government-in-waiting, its policies do matter to big business. While this policy would result in increased regulation of the bank industry, it doesn't involve the sort of change that should cause angst for the big corporations, even for the banks.
The big capitalists like Murdoch know that the Liberal, National and Labor parties are all defenders of big business. Their concern is that if the major parties get into the habit of criticising the "big end of town" in order to rebuild electoral popularity, then the public will begin to expect the introduction of regulations which will limit big business profiteering.
Of all the big corporations, it is the banks which are most on the nose. People on welfare, workers, farmers and small business owners all have to deal with banks because they provide an essential service. The removal of this essential service from numerous country towns and city suburbs through the closure of bank branches has done more than anything else to convince people that privatisation is all about profits and not about the "efficient" delivery of essential services.
Highway robbery-style bank fees and the destruction of banking services have caused so much anger that it would be difficult for the ALP to win government without addressing this issue.
ALP policy
On March 26, the ALP released its banking policy just a few hours before the Australian Bankers Association released its own plan of action to address community concerns.
The ABA's plan of action was rushed out in this pre-election period in a bid to convince the major parties that they need not respond to community anger by regulating the banking industry. Banks could respond to community concern by regulating themselves.
Included in the ABA's plan is the introduction of "safety net" bank accounts for people who have a health care card, a seniors card or the pensioner concession card. These accounts would not attract an account-keeping fee, would have six free non-deposit transactions a month, and no minimum monthly balance. The plan also extends the notice period for the closure of bank branches in rural areas from six weeks to three months.
"Labor's Plan for Better Banking" is remarkably similar to the ABA's plan of action, indicating that the ALP framed its policy to be acceptable to the banks. However, the ABA has condemned the ALP policy because it involves an element of re-regulation.
The basis of the ALP's bank policy is the development of a Social Charter of Community Obligations for banks. The policy states that if banks refuse to voluntarily agree to an acceptable social charter then a Labor government would impose a social charter through legislation.
According to the policy statement, Labor wants a social charter with the banks to include:
* A basic bank account which enables fee-free banking for social security recipients.
* A "no-frills" bank account offering minimal-fee banking for everyone.
* The provision of "greater fee information" at the time of an ATM transaction.
* Making credit available to all by expanding no interest loan schemes.
* The ACCC to monitor bank fees and charges.
* Restore banking services (but not necessarily bank branches) to local communities which have lost them.
* A protocol guaranteeing that banks provide six months notice of branch closures.
* The creation of a Financial Services Advisory Board to monitor and review the banks' record in meeting their social obligations as defined in the charter.
Ironic
It is ironic that the ALP is talking about a limited re-regulation of banking when it was the Hawke Labor government which carried through the deregulation of the banking system by removing controls on bank lending and allowing competition from foreign banks. Then, in 1995, the Keating Labor government sold off the remainder of the Commonwealth Bank.
While the ALP's new banking policy might sound good, and while it would be a small advance on the current situation, much of it is worded in such a way that its various components are subject to negotiation with the banks and are not guarantees of implementation. An example is the suggestion that a "no-frills" account could provide for 20 free transactions a month, but it is not guaranteed.
ACCC monitoring of bank fees is also unlikely to result in any significant reduction of bank fees and is unlikely to restrict the banks' ability to increase their fees. The ACCC also monitors the price of petrol, but that has failed to stop outrageous profiteering by the oil companies or the continuing hike in fuel excise tax. It was public pressure and not the ACCC which forced the government to back down on the automatic indexation of fuel excise.
While the policy's proposal that banks provide six months notice of branch closures might enable people to swap their bank accounts to another bank, it does not give communities the right to veto the closing down of an essential service.
Also, some features of the policy are misleading. For example, most people would interpret the phrase "restoring banking services to communities which have lost them" to mean the re-opening of bank branches. However, in radio interviews, Labor leader Kim Beazley has indicated that "restoring banking services" is unlikely to mean the re-establishment of bank branches, and is more likely to mean access to banking through post offices, rural transaction centres, banking deals with supermarket chains and community banks.
However, having access to withdrawing money through outlets such as post offices, supermarkets and rural transaction centres does not solve the central problem of bank branch closures. If the bank has made an error in your account which is complicated to fix, try sorting it out via the telephone and the computer. It is almost impossible to convince the bank that it has made the mistake and needs to fix it. It is much easier to sort out these sorts of difficulties with bank staff in person in a branch rather than over the phone or the internet.
The much-trumpeted rural transaction centres initiated by the government simply provide access to phone and internet banking rather than an actual banking service, so you won't be able to access your money here.
Need for nationalisation
Community banks are only a very limited solution. You can't use a community bank when you are outside your community. Because a community bank operates as a profit-making concern, it will be subject to competitive pressures from other banks but without the economies of scale available to the big four banks. As a profit-making outfit, a community bank will inevitably put profits ahead of the interests of the local community whenever these clash.
While the ALP's banking policy would be a slight improvement, it doesn't resolve the two most pressing issues regarding banking: branch closures and fees.
To ensure that bank branches exist in areas where they are needed, even if they are not profitable, and to ensure that banking services are affordable for all, they have to be regarded as an essential service.
The ALP's banking policy does note that banking services are an essential service, but it fails to then advocate the only policy which can ensure universal access to this essential service, and that is to remove the profit motive from the equation by nationalising the banking industry and merging all of the banks into one single publicly controlled bank with a charter requiring it to provide essential banking services to the entire community.
So long as banking services are provided by privately owned corporations competing to reap the biggest profits, banks will continue charging high fees and closing branches.
Even if an ALP government was able to regulate the banking industry and force banks to provide a fee-free bank account for people on social security, banks will simply increase charges elsewhere, probably on credit cards.
Tens of thousands of people on low incomes rely on credit cards just to survive from week to week, but the banks rarely lower interest rates on credit cards when the Reserve Bank lowers the aooficial interest rate.
It's well past time to bite the bullet and call for the nationalisation and the universal provision of this essential service. The daily actions by the big banks confirm the need to take such seemingly drastic action. The ALP's policy amounts to tinkering around the edges without doing anything serious to guarantee access to banking services.