Wednesday, February 28, 2024

The Big Banks’ “postcode discrimination” was the canary in the coal mine all along: Katter

Recent stories

The Hon. Robbie Katter, Katter’s Australian Party Leader and Member for Traeger (Qld), Media Release, 16 January 2024

Katter’s Australian Party Leader and Member for Traeger, Robbie Katter, said he is heartened by calls for the dilution of private corporate control over the provision of essential “public” services but that action could have been taken years ago had regional Queenslanders been listened to.

With reference the opinion piece by Associate Professor Paul Williams in last week’s Courier Mail where it was speculated that “public-owned” may become this decade’s “new black,” Mr Katter said regional Australians have been demanding greater market intervention by government in key sectors of the economy for decades to arrest declining service levels and the growing cost of living in regional Queensland.

Mr Katter has long said a “fifth pillar” in the banking sector was needed to curtail the market power of the so-called Big Four, which have consolidated their grip on home-lending with combined profits of over $41 billion last year—a record—according to RBA figures. The once publicly-owned Commonwealth Bank accounts for a quarter of all bank profits.

“Corporate concentration across all sectors is the norm in most towns, with virtually no competition in airlines, supermarkets and telcos.

“For decades banks peddled the idea that their economic interest and those of the community went hand in hand.

“The presence of a local manager who could be relied upon to help you pull a calf from a creek or pitch in at a sausage sizzle was intended to solidify the image that banks somehow had a social mandate.

“With branches disappearing from the main street of every other country town, the myth is now well and truly busted, and regional Queenslanders were the first to feel the brunt of that,” he said.

Figures from the banking watch dog, the Australian Prudential Regulation Authority (APRA), show a 37 per cent decline in the number of banking institutions offering face-to-face services between 2017 and 2023 nationally. In Queensland, branch numbers declined from 1,203 in 2017 to 779 as of June 2023, a drop of 35 per cent in six years.

Mr Katter said the loss of local branches in many small towns was a direct result of banks seeking more secure profits elsewhere.

“The growth in house prices in the main cities are cash cows for the banks, who no longer need to have much of a loan book in small towns to make money.

“This leads to blatant postcode discrimination. In the North West it’s nothing to pay a deposit of 70 per cent on a house,” he said.

Mr Katter said the APRA’s prudential standards have consolidated the power of the Big Four, as they have the means to meet the compliance costs more easily than smaller competitors.

“The guidelines are there to protect the interest of shareholders in the bank.

“The banks themselves say the guidelines hamstring them from doing their job properly,” he said.

Mr Katter said a more effective way to regulate the banks’ behaviour was the introduction of a new player with a government-backed guarantee, which could “lead by example,” forcing the major banks to adapt their levels of service, profit expectations and risk tolerance to remain competitive.

Mr Katter said Australia could look to New Zealand where in the early 2000s the national cabinet signed off on the conversion of the national postal carrier into a government-owned bank, called KiwiBank.

“KiwiBank was set up because they only had the Big Four Australian banks there and they were essentially acting as the lord and masters of the banking industry in New Zealand.

“Australia’s geographic disparities create a compelling reason why we need to look at injecting a new player into the banking system,” Mr Katter said.

Mr Katter said following the New Zealand model by encouraging Australia Post to enter the Australian banking sector by providing it with a banking license would the first step toward installing a substantial competitor to the major banks, forcing them to lift their levels of service.

“By making a banking license available to Australia Post, the national parcel carrier could offer basic deposit, credit card and mortgage facilities to begin with, injecting some competition into the sector riding on the back of their existing branch network of almost 4,500 outlets,” he said.

KEEP IN TOUCH

Sign up to the Australian Rural & Regional News newsletters

Manage your subscription

We don’t spam! Read our privacy policy for more info.