Citizens Electoral Council of Australia

Media Release Thursday, 11 August 2016

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

Nationalise CBA, Australia’s worst public rip-off

Nineteen years ago, the Howard government completed the third tranche of Paul Keating’s three-stage privatisation of the Commonwealth Bank. Howard and Keating supposedly despised each other, but they were thick as thieves when it came to the Thatcherite gutting of Australia’s economy through deregulation and privatisation.

Upon completion, the sale of the Commonwealth Bank had netted the Commonwealth government $7.8 billion. This week CBA announced it made $9.45 billion(!) in one year—more than the Government received for selling it.

This result brings CBA’s total profits in the 19 years since its sale to more than $90 billion! If you sold a business that in the next 19 years made in profit more than 10 times what you were paid for it, how would you feel?

The logic to privatisation is twisted. On the one hand free marketeers claim that governments can’t run businesses, so they will claim that the CBA’s success as a private company proves them right. On the other hand, they praise governments that privatise assets as business-like and financially competent. How financially competent is it to let go of such a profitable asset?

Profits are not the real issue though. Under public ownership, the Commonwealth Bank provided benefits to the government and community far greater than its financial profits, including:

banking services for all of Australia, including small towns and remote areas.
competition with private banks that forced them to also provide banking services to most of Australia. (Coinciding with CBA’s privatisation, all banks started shutting down their small-town and remote-area branches, which had a devastating impact on those communities.)
super-security for depositors, and ballast for the Australian financial system; throughout its history the Commonwealth Bank both guaranteed its own deposits and stood behind the deposits of the other banks, and functioned as a stable mainstay of the entire financial system. (This benefit is now lost: bank deposits are guaranteed in name only, under a scheme that banking authorities admit the government can’t back up, and CBA’s multi-trillion dollar exposure to toxic derivatives bets makes it a systemic risk to the Australian economy.)

When it was privatised, the Commonwealth was merely a valuable publicly owned trading bank; until 1959, however, when PM Robert Menzies split off the Reserve Bank, it was much more: a world-leading national bank that the government had been able to use to create public credit for Australia’s national economic development. WWII was the Commonwealth Bank’s finest hour: under the control of Labor’s John Curtin and Ben Chifley the Commonwealth Bank financed Australia’s miraculous war-time economic mobilisation, which transformed the economy from an agrarian backwater into an advanced agro-industrial power.

After Chifley, the power of the Commonwealth Bank was stripped away, and with it the public benefit the bank provided, until Keating handed this public benefit over to the private sector, for a song. Keating doesn’t like it when John Howard says so, but he only achieved his neoliberal financial deregulation, privatisations, tariff cuts etc. with Howard’s support, because they were Howard’s policies first! Howard as Treasurer had commissioned the Campbell Financial System Inquiry that in 1982 demanded reforms so extreme, among them the privatisation of all public financial institutions, that Howard’s boss PM Malcolm Fraser blocked their implementation. Keating and Hawke came along, repackaged extreme Thatcherite policies as Labor’s, and pushed them through, with Howard’s support. Remember this as Bill Shorten and the ALP claim they want a Royal Commission into the banks—so long as they continue to deify Keating and his reforms, which are responsible for unleashing the banks to gouge the community, while rejecting the need for Glass-Steagall to protect the public and economy from dangerous speculation, as Shorten does, they cannot be trusted.

It is time to renationalise the Commonwealth Bank, restore its status as the national bank, and put it to work for all Australians, issuing credit for productive investments in infrastructure and industries, the productive physical economy, from which the whole country will profit.

Click here for a free copy of the CEC 2004 New Citizen Special report, Defeat the Synarchy, Fight for a National Bank.

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