A coalition of influential economists and thought leaders has petitioned the Prime Minister to set up an enquiry into Australia’s financial system.
The six economists, plus a number of other academics from the Melbourne Business School, Monash University and former ACCC commissioner John Quiggin, have suggested the government create a ‘basic bank’ that allows Australians to deposit money via Australia Post and have it managed by the Future Fund, the Sydney Morning Herald reported.
According to an open letter delivered to the office of Treasurer Wayne Swan late yesterday afternoon, the coalition’s key thrust is for the government to break the dominance of the Australian majors.
They believe a ‘basic bank’ would take the power away from the banks and put it back in the hands of the community – similar to when there was more competition from second-order banks and non-bank lenders.
Since the financial crisis began, the big four banks have increased their share of the mortgage market from 80 per cent to 92 per cent and taken over non-bank lenders such as RAMS.
The banks have come under attack in recent months for not passing on the full cuts made by the Reserve Bank to mortgage holders.
Yesterday, the RBA held strong on its official cash rate, leaving the rate unchanged at 3 per cent.