The Dreyfus Files - The Age
A fundamental goal of the Gillard Government is to continue building a stronger, broader and more competitive economy. The Reserve Bank's decision to lift the cash rate on Melbourne Cup Day was a signal that our economy is continuing to grow strongly coming out of the global financial crisis.
That would be cold comfort though for many Australians who, like me, understand the pressures of paying off a mortgage. That is why when the Commonwealth Bank lifted their interest rate above and beyond the Reserve Bank's cash rate – and the rest of the big four big banks ultimately followed – there was community outrage; most people couldn't understand why the banks' margins needed to grow at the expense of their mortgage repayments.
And rightly so. The decision by the big four banks to go further than the Reserve Bank was nothing short of unconscionable. At a time when the big banks are making very strong profits, there was no reasonable basis for this course of action.
If you're a customer who holds a mortgage with one of the big banks, I hope you have explored the option of changing lenders. It can be annoying and might feel difficult to change, but there are options – and it can work out cheaper.
Credit unions and building societies are an excellent alternative to the big banks. They are subject to the same tough supervision as banks, and deposits held with them are protected in exactly the same way.
Around 4.5 million Australians are already getting great deals from our mutual credit unions and building societies, and independent analysis by InfoChoice has shown that borrowers could save more than $30,000 over the life of their loan by switching.
While credit unions and building societies are a great alternative to the big banks, this government recognises that we need increased competition in the banking industry. That's why Treasurer Wayne Swan has been in discussions for months with our independent consumer and banking regulators, drawing up reforms that will give consumers greater choice and fairer terms in banking.
This is in stark contrast with the approach of the opposition's treasury spokesman, which is to huff and puff with reckless plans that would compromise the independence of the Reserve Bank and get rid of the bank guarantees which helped support our banking industry in times of uncertainty.
While further controls on price signalling behaviour are rightly in the government's sights, ill-conceived legislation proposed by Joe Hockey this week shows that rushing out change in this complex area will not produce good outcomes. A raft of commentators and analysts saw through the Opposition's proposal, describing it as unenforceable.
The government's reforms will be announced next month. They will be the result of a measured and methodical period of consultation and work behind the scenes to deliver sustainable reforms, giving more choice to consumers while maintaining the security of our banking system – two goals Joe Hockey seems to have forgotten in his hurry to make a media splash.
