The debate about deregulation of the financial sector and the proposition by Will Bailey for a development bank, like most debates of this nature, has tended to become polarised, particularly on the side of the established banks.
Perhaps we should recall the tried and tested maxim that we allow and encourage markets to operate freely, and therefore gain the advantages of deregulation, as long as society does not incur unacceptable social costs and disadvantages. When this point arrives, governments have a responsibility, a duty, to intervene in the market to correct the situation.
Few people would argue that the deregulated banking sector in Australia, as the major banks pursue their commercial policies in their own interests, have not produced also significant and unacceptable consequences.
The banks logically choose to concentrate on the big end of finance, discouraging small customers including small business and the more expensive accounts to operate, by reduced services and discriminatory treatment.
This is their choice, but it leaves a big market of very many dissatisfied customers seeking services which could be provided by a bank oriented towards social, rather than purely commercial goals. The solution lies in either of two options:
(a) imposing realistic community service obligations on banks to provide a socially acceptable level of services (an option which governments have been unwilling to take); or
(b) to create a bank (similar to the original concept of the Commonwealth Bank) to address the unacceptable face of banking today.
It is simply extraordinary, in the face of so much need, that governments and oppositions continue to remain insensitive to this issue.
Emeritus Professor Rod Jensen,
University of Queensland,