Although unlikely, there’s a small chance Treasurer Wayne Swan could start the new year blazing, threatening the banking sector with a super profits tax, similar to that being imposed in the mining industry.
As borrowers continue to wait to hear if the big four will pass on the Reserve Bank’s 25 point basis point cut, Andrew Stabback from Australian Banking + Finance Magazine told me on SBS World News Australia yesterday, that by not moving, Mr Swan could be tempted to make the threat, given the political weight the matter holds.
He also told me that if the banks don’t move, it could actually be a positive for the economy in the long term because it would allow their smaller competitors the chance to play catch up, slash rates and gain market share.
That’s if borrowers can be bothered going through the process of talking to their bank and switching.
The government has moved a package of reform, including the abolishment of mortgage exit fees to try to make it easier for consumers to switch loans.
Australia’s big four banks have all posted record profits recently, but those profits are being threatened by the European debt crisis which is driving up funding costs.
But even they told us over the past year, that their reliance on overseas credit was falling, as more and more Australians save. In fact, I do believe Australians are saving at the highest rate in 30 years.
Banks now have to balance their corporate obligations to their shareholders with their moral obligations as a part of society.
If there’s so much discontent from both the public and the banks, then maybe the banks aren’t doing enough to simply explain their funding costs to their customers so that everyone understands.