It’s not just energy companies that should be forced to pay back windfall gains to taxpayers
Such proposals will elicit ferocious, well rehearsed and well-financed resistance, with changes portrayed as undermining confidence in banks and the financial system as well as creating unwanted instability and economic damage.
Banks will argue that such measures threaten the supply of credit for the economy or will cause falls in house prices. Precipitate action, it will be claimed, may damage international perceptions of banks, which play an important role in channelling foreign funding to cover Australia’s financing needs and jeopardise operation of monetary policy.
Lobbying efforts will exploit the fact that many people and businesses are both clients of and investors in the banks, which constitute more than 30% of the Australian stock market. Stringent regulations, it will be asserted, would harm bank share prices as well as reduce profitability and dividends, affecting about 14 million Australians. Banks will be depicted as major employers and taxpayers.In truth, such “sky-will-fall-in” arguments are specious.
Australia requires a diverse, competitive and cost effective financial sector providing a secure payments system, a safe repository of savings, appropriately priced funding and simple and effective risk-management instruments. The present arrangements may not deliver these outcomes for all Australians.
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