Australia’s banks must pass on in full any cut to official interest rates by the Reserve Bank this week or they may need to face not only a community backlash but the prospect of greater regulation.
ACTU President Ged Kearney said Australians already had a right to feel cynical about the big banks’ self-interests, after two of the largest four lenders began the new year by announcing more job cuts totaling hundreds of jobs.
“Having recorded booming profits and rewarded their CEOs with generous pay rises, Australia’s big banks are not struggling,” Ms Kearney said. “It is crocodile tears for them to be crying poor and even to be contemplating refusing to pass on an interest rate cut at the same time as they are hurting so many workers’ livelihoods.
“Should they carry out this threat, they deserve to feel the full weight of a community backlash.
“Last year alone, all four big banks slashed a combined 3300 jobs and ANZ and Westpac now plan to cut another 730 jobs between them.
“These are huge numbers but every single one of them represents somebody’s mother, father, brother, sister, son, or daughter and it is likely that many of them have to somehow pay a mortgage and meet other financial commitments.
“For these workers, a failure by the banks to pass on any interest rate cut by the Reserve Bank will be another blow by the banks that have already ensured tough times ahead for them.
“The national accounts last year showed that profits as a share of national income were at a record levels, while wages’ share fell and remains at its lowest for more than 40 years.
“If the banks cannot behave in a socially responsible manner, it may be time to consider stronger government regulation to drive greater competition, improved consumer protections and more sustainable corporate behaviour in the banking sector.
“Banks should be required to reflect the interest rate movements set by the Reserve Bank and to fully justify any variation. They should also be required to demonstrate a direct link between their fees and charges. Banking is an essential service and the interests of consumers are not being properly protected.
“Australia’s finance sector is growing and the Australian economy is far better placed to ride out the economic storms hitting Europe than just about any other in the world right now.
“But every time a worker loses a job, there is one less person who is able to invest in the nation’s economy. Banks have a central responsibility in maintaining Australia’s economy that goes beyond their narrow self-interest.
“The also have a community responsibility to ensure that Australians, battling increased costs of living and higher house prices than just about ever before, can afford to pay their mortgages.”
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