It's an excellent speech
Once regarded as the party of business, the Liberal Party yesterday took its biggest step towards redefining itself as a party representing consumers and small businesses ripped off by banks.
Launching a nine-point plan to reign in the power of the banks which he said was endangering the financial system Shadow Treasurer Joe Hockey assured an audience at a business conference his views were shared by the Shadow Cabinet.
"Don't believe everything hear," he said. "This is a debate we have to have. We have seen an almost irrevocable reduction in competition in some areas of banking. The smaller banks are finding it hard to get funding. The foreign banks that were once aggressive are in intensive care."
The new manifesto positions Mr Hockey as firmly to the left of Treasurer Wayne Swan when it comes to regulating banks. It would give the Prudential Regulation Authority the power to investigate whether banks are taking risks that endanger taxpayers, allow the Competition Commission to investigate collusive price signalling and establish a new inquiry to update the work of the landmark Wallis inquiry into the financial system in the 1990s...
"Wallis was predicated on the efficient markets hypothesis, which has proven to be an imperfect assumption. The crisis taught us that financial markets can fail and liquidity can disappear. Entire banking systems can collapse. It would be a mistake to attribute Australia‘s good fortune in skirting the worst of the crisis purely to policymaking skill."
So many financial institutions had disappeared or been taken over by the big banks that the four major banks had "largely become the Australian financial system".
"Aspirations to grow more rapidly than that system therefore seem challenging."
Labor responded by suggesting this was a new-found conversion, circulating a list of quotes from Mr Hockey a decade ago that appeared to say the opposite.
Assistant Treasurer Bill Shorten said Mr Hockey's comments had themselves "put pressure on interest rates".
Published in today's Age
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