The more things change...

Today I write of the proposal that Australia Post provides a range of banking and financial services at post offices nation-wide [1]. This initiative results from two facts: the gluttonous major banks threaten to lift mortgage interest rates above the Reserve Bank’s official rate increases [2], and Australia Post’s revenue and profit are falling [3]. I recall writing on this topic before, so I searched Farmdoc’s Blog. I found two posts on this theme – and they’re remarkably similar to each other. That I posted one in July 2008 [4] and the other in July 2009 [5] is a reason for me to go easy on myself for this repetition. I’ve no idea if the post office bank idea will fly. If it does, it’ll definitely be competition for the current banks. And it may curb their avarice and socially destructive excesses [6]. However it’d undoubtedly be corporate, with the attendant negative connotations of corporatism. Though corporations are staffed by humans, they lack humanity. For example the large Aussie telcos are resisting a government push for them to take action to reduce mobile phone ‘bill shock’ [7]. Regarding the post office bank proposal, my 2-cent bet is that it’ll happen. If so, we’ll return to how it was when I was a lad and post offices were agents for the (then) government-owned Commonwealth Bank. Oh the more things change, the more they stay the same. Ho hum.

farmdoc's blog post number 458

As a kid I loved riding on merry-go-rounds. Going up and down on a big white horse as the carousel turned, each time I passed my parents I’d wave excitedly. In my mind that image is wired to the phrase ‘what goes around comes around’ – whose origin’s apparently unclear. But never mind. The Commonwealth Bank of Australia [CBA] was founded in 1911 by the Commonwealth Bank Act introduced by the then Labor government which favoured nationalised banks. Its first branch opened in July 1912, by 1913 it had branches in all six States, and it came to be affectionately called the ‘people’s bank’. In the 1920s the CBA began issuing Australian bank notes, and from 1920 to 1960 it was the nation’s central bank. In the early 1990 election campaign the Labor Party attacked the coalition’s proposal to privatise the CBA. Then, in a spectacular act of hypocrisy and reversal of Labor ideology, later that year Bob Hawke’s government decided to partially privatise the bank. The CBA listed on the Australian Stock Exchange in 1991, and full privatisation occurred in 1996. It’s now one of the ‘big four’ Australian banks, with NAB, ANZ and Westpac. With the CBA no longer a ‘people’s bank’ owned by and beholden to the government, all ‘big four’ banks have been running financial riot, to the public’s major detriment. Now six influential economists have called for the government to create a new ‘people’s bank’. The carousel’s come around. Ho hum.

farmdoc's blog post number 89

In 1991 the first tranche of the Commonwealth Bank of Australia [CBA] was sold, starting a massive sell-off to the private sector of longstanding and cherished public assets. Established in 1911 the CBA, the second largest of Australia’s banks, was once nicknamed the People’s Bank. But not since full privatisation in 1996. Last Friday the CBA announced that due to the continued increasing cost of funds, it was raising its loan interest rates though the Reserve Bank of Australia last raised the official rate on 5 March 2008. Other major banks have raised their loan rates in the past few days, too. It’s obvious they place the interests of their shareholders above those of their customers. Do they care that the latest interest hike is hurting their customers? No. They ignore the effect of rising petrol, food, utilities etc, and gouge as much and as fast as possible; more so since the increasing credit cost has hit non-bank mortgage lenders. I reckon that if the government still owned the CBA, its rates would not be rising so fast, and the private banks would stay in line. But we’ll never know. By the way, the CBA’s profit in the second half of 1997? A mere A$2.4b. And the Prime Minister in 1991? One R J L Hawke – of the ALP: the People’s Party.