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Do you back a “basic bank”?

A group of influential economists is calling on the government to set up a “bank of the people”, so the public can deposit money with Australia Post and have it managed by the Future Fund.

Is establishing a basic bank a brilliant way of breaking up the Big Four monopoly, or is it just bs?

An open letter to the Prime Minister and Treasurer is signed by economists who have advised both sides of politics, including Christopher Joye, chairman of John Howard’s 2003 Home Ownership Task Force, and Nicholas Gruen, chairman of the Government 2.0 Task Force for the Finance Minister.

The economists raise concerns at how the banks are using their privileged access to government guarantees, saying they are “rushing offshore” to expand.

Since the financial crisis began, the Big Four have increased their share of the mortgage market from 80 to 92 per cent and have taken over second-tier banks including St George and BankWest.

The so-called people’s bank would be similar to New Zealand’s successful Kiwibank, which was itself set up to break the dominance of the Australian-owned majors.

Do we really need such an institution in Australia? Does the government really need to intervene so dramatically in the banking sector? Let us know below.

Comments (5)

  1. Four large banks is a country with a smallish population isn’t that bad. The government has better things to do than run a bank. The B4 provide as good a service as any other country, although not perfect. If any country should be setting a bank like this, it’s not Australia

  2. A terrible unnecessary, over-complication of the banking market. The state of the market just isn’t that bad to warrant intervention on such a scale.

  3. North Korea runs its own banks, doesn’t it?

  4. Not a bad idea but can you then see the BIG 4 moaning about their depositor base being “whittled away” and moaning about cost of funds and putting up rates for everyone. Possibly the idea itself is more interesting as a purely political tool to get the banks to be more co-operative in general. Its the “virtual” stick that the gov has been missing.

  5. The term “Basic Bank” can raise a number of questions, least of all ‘Isn’t this what our Credit Unions and Building Societies currently provide?” And I believe they provide it well! They recieve the same depositor government guarantee the “Big Banks” recieve and primarily seek to look after the ‘every-day’ consumer, not SME’s and Corporates. They are owned by their members and make profit only to support their members needs, effectively working together in partnerships of mutual benefit. Do we need to set up a “bank for the people?” I think “the people” have enough to choose from now.


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