Could Australia Post Be Australia’s “Peoples Bank?”
Posted February 11th, 2010 and last modified November 17th, 2011
Australia Post may expand into being the People's Bank.
With speculations ripe about a possibility of the Australian government’s re-entry into the business of retail banking via Australia Post, much has been said about the topic already. At the beginning of February some reports stated that the government had already commissioned a study of having a publicly owned People’s Bank in Australia.
The Oligarchy
We call them “The Big Four.” Four large, Australian banks who appear to have the Australian people by the throat. An apparent lack of competition among the banking industry is producing an unhealthy system of too much profit for the banks.
Proposed by economists is a means of regulating that profit, building in some accountability, and forcing some competition.
The Motivation
Australians are sick of being beaten down by the big banks, plain and simple. Interest rates continue to climb, and Australians are tired of going broke while wealthy bank owners line their pockets in cash.
In a letter put forth by Australian economists, they state: “Should citizens who feel unsure and unqualified to shop wisely in our financial markets be able to access basic savings, payments, and wealth management products that have been vouchsafed by governments as being safe and professionally managed (eg, why can’t Australians invest with the Future Fund)? In this regard, is there a role for a publicly-owned entity, akin to KiwiBank in New Zealand, to offer essential services in Australia’s finance sector that leverage off unique government infrastructure (eg, Australia Post, the tax system, and the government bond market)?”
The Model
The notion is primarily based on the model provided by New Zealand’s Kiwibank. Kiwibank is owned by the New Zealand Post, which is owned by the New Zealand government.
However, the idea of government-run banks is not unique to our part of the world. Japan and France also have state-run postal service-based banks.
The concept has its appeal – the nation’s postal outlets become bank branches. A bank launched and operated on the premise that it is in opposition to the money-hungry, foreign-owned, corporately-run big banks that mark the Australian countryside.
Would it Work?
In their article, People’s Bank Idea is Folly, the Institute of Public Affairs backs their stance with the following:
- If we want to prevent foreign bank ownership, we should simply ban foreign banks
- The Australian public would be affected by cross-pricing issues, such as higher-priced stamps for lower-rate mortgages
- Government has a long history of financial mess-ups, bail-outs, and the like
- A government-run bank would be influenced by political pressure
In their article, Why We Need a People’s Bank Now, ninemsn provides a solid list of reasons for moving ahead with the Aussie bank suggestion made by economists:
- Banking is more essential service than business
- Australia Post has a reach far extending that of the big banks, with 3200 outlets already in place
- Australia Post has already been dipping its toes into the financial world by entering the insurance market
- The government’s lack of control over the current banking sector
Business Day presented an article called Time for People’s Bank May Have Arrived, where they go into the logistics of such an idea:
- As the result of large-scale branch closures, numerous smaller communities are left with one or no banks, and as such would benefit from their postal outlet offering financial services
- In other instances of trying to implement “people-style” banks, the majority of those small independents were eventually swallowed up by the majors
- Ultimately, “The hurdles facing a People’s Bank may be too high for even it to overcome.”
You Decide
Should governments be involved in the provision of such services to their people?
Is banking what you would consider and “essential” service?
Would government involvement actually force interest rates and big bank profits lower?
Do you want a “People’s Bank” for Australia?
Image source: peoplebank.com.au
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