IT’S time for a national debate about government financial support to four of Australia’s most profitable banks, South West Credit says.
South West Credit Union chief executive officer David Brown made the comment when welcoming a new national publicity campaign by the Customer Owned Banking Association (COBA) that criticises the government bailing out the big four banks in a crisis because they are “too big to fail”.
The TV campaign asks why billions of dollars in subsidies are given to Australia’s big four banks, supported by the Australian taxpayer.
Mr Brown said that with an interim report into Australia’s financial system just weeks away, it was time for a national debate about how to achieve “a stronger, fairer banking system — one that stops delivering unfair advantages and subsidies to the big four”.
“Our community needs to understand the Financial System Inquiry (FSI) is not just another government inquiry. It will have a real impact on the future of their banking services,” he said.
The campaign — launched on television, radio, online and in print — uses four large skyscraper buildings growing bigger to highlight the reduction of competition and choice for banking consumers.
South West Credit said a report released earlier this year by Morgij Analytics estimated the subsidy to be worth $2.5 billion.
“We welcome this constructive debate about the future of our banking system, where consumers come first and a more competitive system emerges,” Mr Brown said.
“Customer-owned banking organisations like South West Credit Union have taken a leading role in advocating for a better system and level playing field and we are right behind this campaign,” he said.
The Australian Bankers’ Association (ABA), whose members include Australia’s four major banks, responded to COBA’s claims by saying it believed the Australian financial services sector was “very competitive and Australian banks do welcome competition”.
However, ABA chief executive Steven Munchenberg said Australian consumers also “welcomed the strength and stability of Australian banks, particularly during the global financial crisis (GFC)”.
In 2008 in the midst of the GFC, the federal government guaranteed deposits in approved deposit institutions including Australian banks, building societies and credit unions to bring some security to Australian financial markets.
The ABA has called for the FSI to ensure that any changes to government policy or regulation for Australia’s financial system build on its strengths and “not undermine a system that currently works well”.