Westpac took a turn on Friday to plead its special interest, and to call for action by the Financial System Inquiry "to consider ways that super savings could be encouraged and directed towards bank fixed income and deposit products."Westpac deputy chief executive Phil Coffey told the Committee for Economic Development of Australia that there were "aspects that disadvantage high quality bank funding," including the lack of access to what it considers an adequate flow of super savings."You have this overall framework where superannuation is the bigger savings pool [in Australia]", Coffey said.He went on to note a lack of investment of super savings in fixed interest products."You've got a banking system that says we want you to have more funding in terms of longer term fixed interest and more household deposits."Coffey suggested this model may not suit the funding needs of the Australian economy in a period of robust growth."When credit growth is slow, as it is right now, and when deposit growth is strong and wholesale markets are healthy the system still operates in a very effective way," he said."A recent PwC report attempted to quantify how bank funding models may be strained if credit growth increased ahead of deposit growth. "They highlighted very plausible scenarios when banks will be unable to meet the potential loan demand."
"We think the inquiry should also consider alternative economic scenarios and assess how the framework would work in those situations."