The most important outcome of the Senate banking competition report is its inability to find measures to make Australian banking substantially more competitive than it is already.
The
report, released on Friday, says high bank profits are a reflection of the fact that "competition is not as keen as it should be". And the increase in concentration created by bank takeovers and consumers' retreat from using non-bank lenders "has the potential for consequent undesirable impacts on competition".
But, it says, there is "no silver bullet" available to address the sector's competitive shortcomings.
And the report fails to identify substantial defects in current banking regulation. Though the Senate economics committee published a long list of potential "tweaks" to regulation in the report, many of them were disputed by the two ALP senators on the committee.
The committee called its inquiry late last year, after banks raised home loan rates by more than the most recent official rate rises. The same round of rises caused a storm of political reaction, with Opposition treasury spokesman Joe Hockey among the loudest critics. Hockey claimed at the time that Treasurer Wayne Swan should "punish the banks" for these rises.
Three of the committee's six members are from the Coalition. Nevertheless, the committee found that the rises had been a legitimate response to higher funding costs.
Veteran ABC journalist Barrie Cassidy yesterday suggested to Hockey,
on ABC television, that this finding was "an embarrassment to politicians everywhere".
Hockey replied, "I don't accept that the banks didn't have capacity to cut slack to their customers."
The finding didn't deter consumer advocacy group Choice either. Despite acknowledging that the inquiry was "detailed",
it nevertheless claimed it was now time to "apply some scrutiny and see if their arguments [on rate rises] really hold water."
The Government produced its own bank reform package late last year. That, plus the ALP minority members' rejection of many of the majority recommendations, means the Government is unlikely to adopt much of the report.
After being ambushed last year by the Coalition's assault on the banks, Treasurer Swan returned the favour on Friday. He reacted to the report's release by accusing Liberals of thinking that "families should be locked into their mortgages". And, he said, they also "think it's understandable that the big banks jacked up their mortgage rates beyond official Reserve Bank movements."