Wednesday, July 15, 2009

Haul the banks before the Senate?

Australia's banks face the prospect of a Senate inquiry into their behaviour unless the Rudd government agrees to set up an independent inquiry into the financial system along the lines proposed by six public policy economists.

The last such inquiry, chaired by business figure Stan Wallis reported in 1997.

Greens leader Bob Brown said the financial system had changed in since then with the banks lifting their share of new loans to 89.4 per cent from 85 per cent in just the last year.

"If the government fails to act will move to establish a Senate Inquiry into Australia's banking system when the Senate resumes in August," he said. "At a time when we need robust diversity in financial systems, we instead are seeing a concentration in favour of banks...

...and especially the big four banks which are benefiting the most from the Rudd Government's guarantee."

Independent Senator Nick Xenophon said he would support a move for a Senate inquiry in August and said it might even be necessary even if the government did set up a new independent inquiry along the lines proposed.

"It would need good terms of reference and a representative panel. I would want a consumer organisation such as Choice on the panel," he said.

A member of the original 1990s Wallis Inquiry Ian Harper has suggested that the former Reserve Bank Governor Ian Macfarlane would be a suitable figure to head the inquiry.

The Coalition wouldn't be drawn on the idea of a Senate inquiry but strongly supports the idea of a new independent inquiry. "Wallis is a long time ago now, and we've had very big changes both domestically and internationally," said Leader Malcolm Turnbull last week.

Family First Senator Steve Fielding was uncertain about a Senate inquiry saying that 37 inquiries into petrol prices over two decades hadn't brought prices down. He said he would prefer direct action to prohibit exorbitant penalty fees and to force banks to justify their interest rate moves.

Published in today's Age