“Banks’ profits are not excessive, especially when you compare them to other companies. Bank revenue appears large for the simple reason that the banking sector is large. The task of transforming savings into investment now constitutes the largest business sector in Australia, even larger than mining and manufacturing. When viewed against the size of its asset base, bank revenue is reasonably low.
Mortgage Ezy CEO, Garry Driscoll, says this sounds like ‘spin’ to him, but says he generally sympathises with the ABA’s stance.
“I would agree that if the banks were not making a reasonable profit this would impact on their share price, which would have a knock-on effect for the average Australian’s superannuation funds. I am fundamentally opposed to increasing taxes, as that simply discourages people and companies from generating wealth.”
Driscoll says he has no issue with charging banks for the guarantee, as long as it’s made available to other banks and lenders.
“However, based on Wayne Swans track record, if he thinks it’s a bad idea then it may have some merit!”
Münchenberg says another impact of the Greens’ policy would entail banks needing to pass on higher costs to consumers, because of the ‘need to maintain profitability – and Driscoll agrees.
“The only way to enhance competition is to provide alternative funding for the non-banks and the smaller banks. This is not a hand-out that would cost the taxpayer, but something along the lines of the Canadian model, where the government actually makes a long-term stainable profit.”
Bandt, however, says the argument that increased costs will be passed on to consumers doesn’t hold ground.