Twice a month we will be publishing extracts from DISSENT magazine. For those not familiar with the publication, DISSENT magazine is committed to thoughtful and critical discussion of public affairs including social and economic policy, education, politics, science and the environment, cultural matters, media and the arts.
DISSENT is not aligned to any political party or groups, but it reflects the Editors' views which dissent from the prevailing orthodoxy that the welfare state should be cut back in favour of economic efficiency and unfettered individual liberty.
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DISSENT offers a subscription service and their publication is moving from paper to electronic format in 2013. More information about the magazine and past issues can be found on their website.
The following excerpt is from Issue number 35, Autumn/Winter 2011 by Dr Richard Denniss. Richard is executive director of The Australia Institute, a Canberra based think tank. The article is titled ‘Tackling the Banks’.
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He concludes:
Australia’s banks are among the most profitable in the world. These profits are growing much faster than the rate of growth of the economy and have been fuelled by rising fees, rising interest rate margins and the banks’ ability to reduce costs. In the perfectly competitive market of the economic textbooks new entrants would come flooding into the market and prices and profits would fall.
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The Gilliard Government has committed to reigning in the banks, so too has the Coalition and the Greens. One of the most important political questions of this parliament is whether or not the parliament is willing to unite to tackle the banks.
Regulation is a major part of the modern Australian economy. We regulate the sale of tobacco and alcohol, we force food companies to disclose the fat content of their foods, we force people to wear seatbelts, and we limit the number of commercial television stations.
The combination of new government guarantees for banks, record profits, record remuneration for bank CEOs and the outrageous decision by the banks to increase their profit margins on home loans on Melbourne Cup day 2010 has led to a community that is demanding change. So far, not much has been achieved. The government has tried to shift attention away from the size of bank profits to the definition of competition. In the long run it will do little to hold back the tide of public sentiment.
It is within the power of the Australian parliament to either regulate or tax the enormous profits of the banks down to a more reasonable level. The question is, do those who have the will to do so have the numbers?
What are your thoughts?