Victorian Senate Group K: Reforming Banks

I have been informed by a friend of mine that I have to like the Bank Reform Party, because said friend has been teaching voice production to one of its founders and candidates, and he thinks that their policies are very sensible.  I actually find it hard to get incredibly excited about banks – I have stated in many, many places that I don’t really understand economics, but it is always mildly interesting to have a connection to a political party.  Especially a really tenuous one, actually.

The Bank Reform Party is “a new, non-aligned political party seeking to reform and increase the competitiveness of the Australian economy.”

They are so new that they actually have two websites – the pre-AEC-registration website here, and the official one listed above.  This caused me some concern initially – after all the fun and games during our recent council election with people pretending to be from parties that they were not, I was a bit worried that one of the sites was trolling the other, but they seem to be the same people with the same policies.  Anyway, I’m mentioning this only to note that I am writing up the policies of this party based on the newer of the two websites, so that if it turns out that one of the sites is an elaborate hoax after all, you will know where I got the information from.

The Bank Reform Party’s group voting ticket is quite an interesting one.  It seems to be generally preferencing small parties with a tendency towards self-determination – Motoring Enthusiasts, Building Australia, HEMP, the Stable Population Party and Senator Online.  I’m a little disappointed to notice that the first semi-major party they preference is One Nation, and they then head down through a bunch of other small parties until they reach Family First and the Sex Party (two parties I never expected to see quite that close together on a ticket).  The big parties are all at the very bottom of the ticket, with Labor first, followed by the Liberals and the Nationals, and ending with the Greens.

I’m beginning to get an inkling that student of my friend or not, I’m not going to get on terribly well with this mob.

Let’s have a look at their website…

While there is no policy page per se, they have three pages which usefully set out ‘Our Vision’, ‘What’s Wrong?’ and ‘Let’s Fix It!’ (Can we fix it? Yes we can!!  It’s Bob the Banker!)

Essentially, the Bank Reform Party feels that the four big banks have gobbled up all their competition, and are using what is effectively a four-way monopoly (a tetrapoly?) to charge customers whatever they like:

How it happened is quite simple. Along came the Global Financial Crisis in 2007 and the Australian Government underwrote our big four banks, meaning the taxpayers agreed to bail them out if things got tough.

None of us want to see our banks fail, but unfortunately there was an unintended consequences; with taxpayer guarantees against failure the Big Four got higher credit ratings and, in turn, cheaper funds.

But this didn’t extend to the smaller banks, or the non-banking lenders, who prior to the GFC were providing much needed competition to keep the Big Four on their toes.

So, thanks to the taxpayer guarantee that gave a competitive edge to the Big Four, the competition was taken out.

Our banks have been handed a competitive bonanza, underwritten by all of us, the Australian taxpayers. And how have they rewarded us? They could have provided Australians with lower-cost loans and other products but have decided to focus on making a profit for themselves.

The answer? More genuine competition.

Actually – and please remember that I really know almost nothing about matters financial – this sounds pretty reasonable to me.

While the Bank Reform Party starts with a focus on banks, they are also concerned about supermarket and fuel cartels.  On their Vision page, we are told that they are:

…committed to seeing our banks remain strong, but not at the expense of the Australian economy and the Australian people who need increased and authentic banking competition. This extends to the supermarket and fuel sectors.

Our banks and big corporations have a duty of care to all Australians.

These key sectors, which are the cornerstones of the Australian economy, need better regulation to be more competitive, fairer, and more accountable to ALL of us.

This is quite interesting to me, because they also talk about ‘cutting red tape’ which is usually code for small government / less regulation, but that’s clearly not the case here.

Getting down to the nitty gritty – and I feel as though I’m copy-pasting half their website here, but the thing is, there isn’t much of it, and what there is is to the point, their initial plans are to:

• Examine dismantling the “Four Pillars” policy and seek to introduce more competition.
• Examine greater support for genuine non-bank lenders to increase competition further.
• Enforce new and tougher anti-predatory lending practices.
• Enforce greater transparency on fees and charges.
• Dismantle the “apparatus of unfairness”; the unconscionable nexus between the banks and administrators, receivers, valuers and lawyers.
• Review the “one way street” imbalance between the massive and onerous obligations banks place on borrowers, with the virtually non-existent obligations placed on the bank.
• Legislate a cap on excessive bank bonuses and executive salaries.

OK, so I may not like their ticket preferences, but I have to say, these sound like very sane policies, and I’d actually be in favour of all of them.  I have to say, having seen the people who have been preferencing this mob, I wasn’t expecting that!

There isn’t much more to their website than this, but that’s OK.  This is clearly a very new party who are still trying to figure out their vision.  They clearly have some quite specific and well-thought-out policies on how to fix the banks, then they know that they want to go after fuel and supermarket cartels next, but haven’t really figured out the details, and further down the track, they kind of know that they don’t like red tape and excessive bureaucracy (I like their vision for ‘a more human Tax Office’), but they definitely haven’t thought through how to make it all work without undermining the other stuff yet.  And that’s OK – you have to start somewhere, and having a clear vision of the first step is sometimes enough to get you going.

I’ll be very interested to see how The Bank Reform Party develops over time, and I’ll definitely be watching to see how it goes in the coming election.  It has a lot of potential, and might one day evolve into something very good indeed.