Bank on Julia Gillard's inaction

IF you had to decide whether Julia Gillard's Government was utterly incompetent or merely totally inadequate, the wiser choice would be to plump for abject incompetence.

The gutlessly limp stand of her Labor Government on bank interest rates highlights this. Just last week, Opposition treasury spokesman Joe Hockey was given a pizzling by Treasurer Wayne Swan and his Labor-leaning acolytes in the Canberra Press Gallery when Hockey put forward nine modest points that might serve to introduce a modicum of real competition between the Big Four banks and help ease the squeeze on consumers. The amiable Hockey (has anyone ever seen this fellow thin-lipped, white-faced angry?) suggested the ACCC be given power to investigate collusive price signalling ( oligopolistic behaviour), which is exactly what ACCC boss Graeme Samuel had been calling for. He also mused that financial regulator APRA be encouraged to investigate whether the major banks were taking unnecessary risks in trying to maximise short-term returns in conflict with the needs of those who underwrite the banking system, the taxpayers. He called for more transparency on profits and returns on equity to determine whether taxpayers were effectively subsidising super-normal returns and recommended that a proposal put forward by former bank boss David Murray to open up Australia Post's 3800 branches as distribution channels for smaller lenders be explored. Finally, he suggested it was time for another review of the financial system to pick up where the past reforms of the Campbell Committee and Wallis Review had brought us. Nothing radical, but the banks went on the attack, as did their friends in federal Labor, Gillard and Swan. That was last week. But when banks raised mortgage rates on the back of the RBA's Melbourne Cup Day interest rate rise, Swan picked up the phone to call the Big Four to express his annoyance, before he flew out of the country. Yesterday, Gillard joined him in expressing her outrage but she was hesitant about suggesting anything that might approximate action. "Patient, careful, methodical work" was needed she said, without disclosing what her Government had actually been doing to address the issue or what it might do in the future. Gillard looked as angry as custard and inaction remains the order of the day. According to Swan, the Gillard Government has been thinking about interest rates for some time, but whether that means a day, a week, a month or a year, does not really matter. This is a Government which has demonstrated its utter incompetence with every project it has launched and nothing should be expected of its empty utterances. Hockey plans to introduce a Private Member's Bill which would give the ACCC the greater powers sought by its boss when Parliament resumes the week after next. This will again test the Labor Government and more particularly the treacherous independents, Rob Oakeshott and Tony Windsor who handed Labor power. What the Gillard Government has again been demonstrated is its hatred of competition, be it in banking or communications, where it is constructing the largest monopoly of our times in the guise of the Not Bloody Needed internet rollout. Even the Greens were swifter than Labor to recognise anger in the community from the Big Four banks' opportunistic grasping rate rises. The Opposition is in tune with the public on the issue. It has identified $50 billion in cuts to government expenditure over four years that would go a long way to reducing upward pressure on interest rates. As Hockey said: "Running an enormous budget deficit of $41 billion when the economy is running at close to full capacity is economic vandalism. It has left the RBA with no choice but to lift interest rates again to counter the risk of higher inflation in the medium term." Over the past year, the cost of such essentials such as electricity has risen 12 per cent; water and sewerage 12 per cent; childcare 7 per cent; hospital and medical services 7 per cent and education 5 per cent. These increases in essential goods and services have put further strain on already stretched household budgets. Gillard and Swan should get out of their white cars and ask real people about the effects of government spending on their interest rates and the impact of inflation on their daily lives before Parliament resumes. Lowering the cost-of-living pressure on ordinary Australians was another Labor election promise, and like the rest, it has been broken. The Big Banks' mortgage hike is a special Christmas bonus kick in the teeth, doubly insulting as the Big Banks cried for and were given protection by Labor from the fallout of the fiscal crisis, underwritten by Australian taxpayers. Hockey has wrong-footed Labor on this issue.