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Australia Needs a Government-Owned National Bank, a ‘People’s Bank’

Remember the Commonwealth Bank, before the Hawke/Keating ALP sold it? It was the “people’s bank”, which served the people, and was owned by the people. The centrepiece of the urgently-required reorganisation of the financial system will be the establishment of a new people’s bank, a Commonwealth Bank-style, government-owned national bank.

Whereas the Homeowners and Bank Protection Bill is an emergency protectionist measure, to erect a firewall between the imploding financial system and the people, so they keep their homes and savings, the CEC’s Commonwealth National Credit Bank Bill will facilitate the next step, which is the reconstruction of the economy, and the creation of a new financial system, in a way that furthers the common good of the people.

The policy of banking for the common good was the vision of the “old” Labor Party of King O’Malley, Frank Anstey, Jack Lang and John Curtin, which was initially realised through the 1911 establishment of the Commonwealth Bank. In its first years of operation during WWI, under the governorship of Sir Dennison Miller, the Commonwealth Bank: forced the private banks, through competition, to lower their fees; then it “saved” those same banks by averting a “run” on the private banking system; financed many important war-related measures, including the national wool clip; and financed the first great national infrastructure project, the east-west Indian-Pacific Railway.

Sadly, with the untimely death of Governor Miller in 1920, private financial interests directed Tory Prime Minister Stanley Melbourne Bruce to hand over control of the bank to private bankers, and strip it of essential powers, so that it never functioned as effectively again. Save for the brief period of WWII, when John Curtin and Ben Chifley empowered the Commonwealth Bank to regulate and direct the entire national banking system for the war effort, the function of the Commonwealth Bank was systematically eroded over the decades. It lost its reserve banking powers in 1959, which put its central banking function under private control, and was eventually reduced to a simple, government-owned savings bank, before it was privatised in three tranches between 1989 and 1996. However, even as a simple savings bank, its role was essential: it guaranteed every depositor’s savings (which guarantee was lost once it was privatised) and it kept the private banks’ fees low, by forcing them to compete. Once it was privatised in 1996, the big four banks went on a profit spree by hiking fees and slashing staff and branches, and gouging over $80 billion in profits in ten years!

Now, in this period of banking collapse and economic depression, it is time for a new national bank with all the powers to regulate and direct the national economy. The Commonwealth National Credit Bank will issue the long-term credit governments need to finance the urgently-needed new water, transport and power infrastructure necessary to get Australia’s productive industries functioning again. That credit will be at very low rates of interest, of 2-3%, and over long terms of 25-40 years, and this way, the government can do away with private, toll-funded infrastructure, and public-private partnerships (PPPs). The credit issued by the CNBC, utilised in this way, will filter through to the entire economy, and create over a million high-skilled, high-wage, productive jobs, directly and indirectly.

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The CNBC will have full reserve powers, to regulate the private banks, and issue them new credit to on-lend into the wider economy. It will also have savings bank and industry bank functions, which will again force the private banks to compete on fees and services.


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