Earlier this week at a book launch, Joe Hockey lamented “it’s very difficult to get debates going in Australia about substantive issues and maintain a debate to allow people to be properly informed during the course of the debate and not to expect that it’s all about the next headline or the next news cycle.”
Indeed.
This morning Hockey lamented on Twitter about a journalist writing that he’d put out his nine-point plan on banking regulation after the banks had lifted rates. The miscreant was The Australian’s Andrew Burrell. Hockey, of course, showing considerable political acuity, put his plan out before the RBA lifted rates and the banking cartel, having publicly colluded about lifting rates by more than the RBA hike, responded. Indeed, Hockey has been talking about some of these issues since 2009.
It’s a small but I think telling example of Hockey’s complaint — not that different to that of the Prime Minister — about the difficulty of sustaining a complex debate in the media cycle.
By now, the debate over banking regulation has mostly shifted into the sort of space where the mainstream media are comfortable — about personalities. Ralph Norris, who admittedly has gone out of his way to p-ss off pretty much everyone in the country, has become the villain de jour, with a supporting turn from truculent Pom Mike Smith at ANZ. Bank CEO remuneration has played directly into this obsession with personalities rather than issues — the only relevance of remuneration to the debate over banking regulation is (as Kevin Rudd pointed out once in what seems like an eternity ago) the extent to which it encourages risk-taking.
But the media are happier at that level, focusing on individuals they can demonise as overpaid, out-of-touch fat cats. The CEOs of the banking cartel may indeed be overpaid and out-of-touch, but that isn’t relevant to how we regulate banks.
The Greens, having leapt into the banking space with a bill focusing on loans with capped mortgage rate rises and ATM fees, haven’t helped, encouraging the view that the debate is about simplistic issues such as residential mortgages and fee-gouging.
Since the media coverage has devolved into straight bank-bashing, it’s not that hard for journalists to see the debate entirely through that prism, forgetting that several people, including Hockey, have been talking about this for a long time.
To its credit, the Fin Review has provided some quality input into the proper debate — although, of course, that’s exactly what the country’s financial daily should be doing. Yesterday it ran a piece by Ian Harper and others at Access Economics arguing for securitisation as the key to restoring banking competition. There’s a lot of support for building on the lifeline of the government’s $16 billion support for the RMBS market by guaranteeing AAA-rated securities, and Hockey flagged the idea himself last year. It’s not unanimous, though. David Llewellyn -Smith ripped into Harper and co in his blog today, offering a history lesson and calling for securitisation not to be revived but finished off.
These are complex issues that the mainstream media isn’t going to devote a lot of time to outside the business pages. Nonetheless, the debate that Hockey rightly launched is in danger of being entirely replaced with a facile focus on banking personalities and the apparent conviction that residential mortgages are the beginning and end of the matter. And then the media will move onto something else, as it always does, leaving us with the same systemic banking problems as before.
CEO salaries are the main game.
Our banks have been well regulated and well supervised.
There are no entry barriers to competition.
Banking competition is strong for both loans and deposits.
Shareholders are experiencing fair returns for risking their capital, not so-called “super profits”.
When shareholders’ votes on the remuneration reports are binding, we’ll fix the problem of the overpaid CEO.
Even Joe can see “the shortcomings” for debate in this country – so what’s next on his “hit list”? “Media Ownership Laws”?
Dr Harvey M Tarvydas
Excellent piece BK, you’ve said it all.
Dr Harvey M Tarvydas
Speaking of rotund and awesomely cute pollies jumping in with no expertise to fix up the nations banking businesses influence on the economy’s future while taking care of the effect on personal lives and small business reminds me of President Reagan unexpectedly dictating a socio-business policy to banks in the US and harnessing Harvard University’s prestigious School of Business to monitor and report on the idea’s progress and achievements as it delivered a brilliant influence on the American Nation showing an intelligent insightful and decent instincts side of this President.
Dr Harvey M Tarvydas
That was one sentence.