Chasing the Norm

Australian academic and blogger on politics, international relations, and culture

A new (publicly owned) Bank?

Crikey has the scoop today that the Rudd government is considering allowing/pushing Australia post to expand its financial services into a full blown bank as a way of breaking up the stranglehold of the big four banks.

Crikey can reveal that the Rudd Government commissioned a scoping study into the establishment of a publicly-owned banking capability by Australia Post, with positive results. As Crikey detailed in August last year, Oz Post has been trying to address the long-term decline in postal volumes by encouraging mail marketing and exploiting its branch network to offer a wider range of the sort of services that still require interaction.

This already includes financial services under licence from several banks and up to 70 financial institutions in all, including business banking services from NAB and the Commonwealth. Last year, Australia Post itself began offering insurance services. About 3,300 Australia Post outlets offer external banking services now, just under three times the number of branches of the largest bank network, Westpac/St George.

While the economics have pros & cons, politically this strikes me as a very risky if not downright awful decision if followed through. Rudd already has a reputation as anti-market in the media (being a Labor MP, Stimulus spending, End of Neo-liberalism essay, keeping book tariffs etc). For a party trying to present itself as representing the future over its regressive opponents, going against the 30 year trend to privatization makes little sense. Endorsing the creation of a publicly owned bank would just about drive the economic liberals who dominate the editors/opinion leaders of the press insane and with them a chance to enshrine Labor as the default governing party for the next 20-30 years.

As I’ve argued before, many economic liberals have lost their suction to the Coalition after Howard’s departure. Rudd’s description of himself as an “economic conservative” and talk of efficiency and productivity through his investment in education lured many away. And now with Tony Abbott and Barnaby Joyce ruling the roost, the coalition isn’t the safe haven of support & re-enforcement it once was, indeed it’s looking decidedly shaky and populist.

Yet Rudd seems to have only made a half-hearted effort at recruiting them. He may talk of productivity as part of his Australia day (week) speeches, but his actions speak loudly to this skeptical and (somewhat paranoid) group. Rudds decision to not support a change in parallel imports of books despite the Productivity Commissions report is a perfect example of a policy with a relatively light cost (from a social democrat/arts supporter viewpoint) and much to gain. Indeed you could almost see the press gallery shift away from Rudd at the end of last year soon after this decision was announced (and even worse is that Rudd ‘excused’ himself in a split cabinet because one of his kids is writing a book). As an aside Bob Carr today makes the obvious point that the impending arrival of Apples badly named but oh so cool ipad makes the ALP’s decision laughable.

Establishing an aussie bank under Australia Post may appeal to many in the public superficially, but its positive political impact is likely to be small and slowly occurring, whilst re-enforcing a big government, big spending, big bureaucracy image that Abbott and the editors of the Australian are trying to pin on Rudd. This is not about the forthcoming election which is already in the bag, but a generational re-alignment of those of a liberal ideology both socially and economically who are giving Labor a fresh look they wouldn’t have considered during the 90s and most of the 2000’s. Creating a government owned Australia bank would probably scare them off, and with it a chance for Labor to establish political dominance for the next 20+ years. (Along with hopefully leading Labor to become more liberal in attitude which is why i want to see this occur along with its political benefits).