Citizens Electoral Council of Australia

Media Release Tuesday, 17 October 2017

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://www.cecaust.com.au

All economic problems lead to national bank solution

The one policy that sends private banks into conniptions of rage is well and truly back on the agenda—government banks. There are now various proposals for public banks as solutions to crisis areas of the economy.

Australia already has one government bank—the Clean Energy Finance Corporation (CEFC), established by the Gillard government with $10 billion to invest in so-called renewable energy. It is the basis for new proposals, which, significantly, have come both from free-market Liberals and the Labor Party that turned its back on government banking in the Hawke-Keating era.

At the ALP conference in Adelaide on 14 October, federal leader Bill Shorten proposed a government manufacturing bank, called the Manufacturing Future Fund, modelled on the CEFC, to lend to manufacturers for capital investment.

In a 21 September submission to the Productivity Commission, Small Business Ombudsman Kate Carnell, a Liberal former ACT Chief Minister, suggested a government bank for small business, also modelled on the CEFC, to lend to the small businesses that the private banks are starving of credit.

Back in May Treasurer Scott Morrison mooted the idea of an Affordable Housing Finance Corporation—a government bank to fund community housing.

And in the 3 October Sydney Morning Herald the chief economist of the union-affiliated Industry Super Australia, Stephen Anthony, also suggested a public bank, to reform Australia’s banks, which he wrote “are failing to meet their public obligations to drive growth and raise community welfare” (Anthony also suggested, to solve this “long-term problem”, that the banks should be “structurally separated”, which is the principle that different types of financial services should not be mixed, best exemplified by the USA’s successful Glass-Steagall Act 1933, which separated commercial and investment banking.)

This chorus of calls for public banks represents a stunning political turnaround. Due to the neoliberal indoctrination of Australia, the concept of public banking was supposed to be well and truly dead. For most of a century before Hawke and Keating it had been the defining and dividing political issue, and the centrepiece of Labor’s economic agenda, culminating in the fierce battle over Ben Chifley’s bank nationalisation in 1949. Hawke and Keating, however, came to power determined to implement the demands of the banker-concocted Campbell Report that all public banks should be privatised. (The Campbell Report was commissioned by the previous Liberal government; Hawke later boasted how he set up the Martin Inquiry to reach the same conclusions, but so it looked like an ALP initiative—the start of their conscious betrayal of Labor’s principles.) This privatisation duly happened, leaving the field free for the gouging frenzy by private banks that has gone on ever since. The anti-government bank ideology reached its high-water mark in early 2009, when the bloviating bankers’ boy Joe Hockey pontificated in parliament that the lesson of the 2008 financial crisis was that “governments should not be involved in banking”!

Eight years later this ideology stands discredited as the widening cracks in the real economy have led people back to the public bank solution, and not just in Australia.

In the UK, the Jeremy Corbyn-led Labour Party’s central policy is a £500 billion National Investment Bank, funded by the same mechanism as central bank quantitative easing (QE), to finance public infrastructure and the economic development of the UK’s neglected industrial regions.

In the USA Donald Trump’s 2016 election platform also included a national investment bank to generate $1 trillion for desperately-needed infrastructure (initially expected to involve the scam of Public-Private Partnerships pioneered in Australia by Macquarie Bank, but Trump to his credit has now canned that idea).

One bank to fix them all—a national bank

Any form of public bank is positive progress, but Australia really needs to incorporate all of these proposed public banks into one fully-fledged national bank, modelled on the original Commonwealth Bank as it operated during WWII. A national bank would:

also be the central bank and the strict regulator of the private banks (in place of the RBA and APRA);
have the same power to create money as central bank QE, but for investment in the economy, not to prop up private banks;
lend to the Commonwealth, state and local governments for long-term infrastructure projects that raise national productivity, so important projects are no longer funded from annual budgets or overseas borrowings (which is often the excuse to delay or block them);
have divisions dedicated to lending to small, medium and large businesses in productive sectors of the economy, on favourable terms, for capital investments that increase productivity such as plant and equipment;
provide a commercial banking service for the public that offers total security for deposits, home loans at reasonable rates, and forces the private banks to again compete on fees and service (the privatisation of the Commonwealth Bank from 1991 until 1996 enabled the private banks to operate as a cartel, exploiting their customers with increasingly onerous and unjustified fees and slashing branches and staff and consequently their level of service).

In 1936-37 Ben Chifley represented Labor on the Banking Royal Commission, which declared in its findings that the government is the ultimate authority in the financial system, and the central bank should do its bidding. Future PM John Curtin declared in Labor’s 1937 campaign launch that the government must control monetary policy through the national bank, otherwise it “cannot govern, except in a secondary degree”. When Curtin and Chifley came to office in 1941 during WWII, they gave the Commonwealth Bank the powers that the Royal Commission had found it should have had, which it used to fund Australia’s amazing wartime economic mobilisation, which transformed the economy into an industrial powerhouse.

History shows that under the Commonwealth Bank, Australia’s economy prospered; without a national bank, the real economy is disintegrating. From its inception in 1988, in opposition to the Hawke-Keating-Howard neoliberal sabotage of Australia, the Citizens Electoral Council has fought for “old” Labor’s principle of a national bank, and in 1994 drafted legislation for a Commonwealth National Credit Bank that could be legislated immediately. The rapid loss of industries and productive businesses is turning the political tide on this issue—this fight can now be won!

Click here to sign the CEC’s new petition, Global crash coming—Australia needs Glass-Steagall and a national bank.

Click here for a free copy of the CEC’s New Citizen special report: “Defeat the Synarchy, Fight for a National Bank”, which documents “old” Labor’s fight for a national bank and other institutions to ensure the common good, against private financial interests directed from the City of London.

To join the fight for a national bank and to re-nationalise our privatised assets, click here to join the CEC as a member.

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