Footnotes

Summary and recommendations

[1]        Department of the Treasury, Submission 102, p 1.

Chapter 1 - Introduction

[1]        The Senate Economics Legislation Committee did not make a substantive report on the bill due to the calling of the 2010 federal election soon after the bill was referred.

[2]        Mr John Minz, Chief Executive Officer, Heritage Building Society, Proof Committee Hansard, 4 March 2011, p 15.

Chapter 2 - Background - the Australian banking market

[1]        Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 25.

[2]        Senate Economics References Committee, Report on bank mergers, September 2009, p 4.

[3]        Examples include 'merchant banks' such as Tricontinental, Nugan Hand, and Rothwells; Pyramid Building Society (in the period before building societies were supervised by APRA), and finance companies such as FCA. Senate Economics References Committee, Report on bank mergers, September 2009, p 3.

[4]        Mr Nicholas Hossack, Australian Bankers' Association, cited in Senate Economics References Committee, Report on bank mergers, September 2009, p 3.

[5]        Reserve Bank of Australia, Submission 41, p 1.

[6]        Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 25.

[7]        Mr Nick Stace, Chief Executive Officer, Choice, Committee Hansard, 14 December 2010, p 27.

[8]        Associate Professor Steve Keen, Submission 63; Mr Andrew Selby Smith, Submission 65; Mr George Ivanov, Submission 124.

[9]        The main sources for this section are House of Representatives Standing Committee on Finance and Public Administration (1991), Butlin (1953) and Butlin, Hall and White (1971).

[10]      It still resonates with at least one submitter: Mr Andrew Oliver recalls 'I remember my Nana telling me her father was almost ruined by bank failures in Australia in the 1890’s'; Submission 1, p 2.

[11]      Butlin (1961, p 280).

[12]      Mr Selwyn Cornish, Committee Hansard, 13 December 2010, p 118.

[13]      A suggestion made at this time to establish a parliamentary committee on banking was not implemented.

[14]      Mr Peter Mair, Submission 2, p 6.

[15]      Dr Carolyn Currie, Submission 114, p 2.

[16]      Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Proof Committee Hansard, 14 December 2010, p 103.

[17]      To keep the trees legible, some small savings banks and building societies, and acquisitions outside Australia, have been omitted.

[18]      Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 88.

[19]      Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 15.

[20]      Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 14 December 2010, pp 89-90.

[21]      Mr David Liddy, Bank of Queensland, Committee Hansard, 9 February 2011, p 14.

[22]      Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 1. In early 2011 the major banks are rated AA, Suncorp is rated A and the other regional banks are rated BBB.

[23]      Mr James McPhee, Chief Executive Officer, Members Equity Bank, Committee Hansard, 25 January 2011, pp 106-7.

[24]      Murphy (2010, p 47).

Chapter 3 - Past reviews and calls for a new review

[1]        Associate Professor Selwyn Cornish, Submission 9; Committee Hansard, 13 December 2010, p 112. Mr Cornish has written extensively on the development of economic policy in Australia and is currently working for the Reserve Bank on its official history from 1975 to 2000. He has written a shorter history of the Bank in Cornish (2010).

[2]        Sir Harold served as Governor of the Reserve Bank from 1975 to 1982.

[3]        Associate Professor Selwyn Cornish, Committee Hansard, 13 December 2010, p 112.

[4]        Associate Professor Selwyn Cornish, Committee Hansard, 13 December 2010, p 114.

[5]        Mr Mervin Reed, Submission 5, p 14.

[6]        Professor Tom Valentine, Committee Hansard, 25 January 2011, p 66.

[7]        Mr Peter Strong, Executive Officer, Council of Small Business Organisations of Australia, Committee Hansard, 15 December 2010, p 10.

[8]        Cited by Mrs Barbara and Mr Richard Wright, Submission 18, p 1.  Lord Acton is probably best known for his dictum that 'power corrupts and absolute power corrupts absolutely'.

[9]        Mr David Richardson, Australia Institute, Committee Hansard, 15 December 2010, p 32.

[10]      Parliament of Tasmania, Monetary System: Report of Select Committee, 1935.

[11]      Its full name was Royal Commission appointed to inquire into the Monetary and Banking Systems at present in operation in Australia, and to report whether any, and if so what, alterations are desirable in the interests of the people of Australia as a whole, and the manner in which any such alterations should be effected.  

[12]      Chapter One of Sutherlin (1980) discusses this in more detail.

[13]      The other members were Edwin Nixon, an accountant who had also served on the Royal Commission on Taxation; Richard Mills, Professor of Economics at the University of Sydney (who according to Groenewegen (1986) and Sutherlin (1980, p 47) was responsible for much of the drafting); Henry Pitt, Director of Finance at the Victorian Treasury; and Joseph Abbott, president of the Graziers' Association of New South Wales. The secretary was W Harris, a Treasury accountant, and the staff economist was John Phillips, a student of Mills then with the Retail Traders Association who went on to become the Reserve Bank's second governor. The Government sounded out some overseas experts about being on the commission but could not find someone they regarded as suitable who was willing to participate; Sutherlin (1980, pp 32‑35). Phillips reflected much later that 'the Royal Commission's major impact was the education of Ben Chifley'; Sutherlin (1980, p 278).

[14]      Hearings were advertised and 'all who intimated their desire to appear before the Commission were given an opportunity to appear'; Royal Commission into Monetary and Banking Systems, Report, p 5.

[15]      Royal Commission into Monetary and Banking Systems, Report, p 201. Mr Chifley dissented, preferring a 'system from which the profit motive is absent'; p 263.

[16]      Royal Commission into Monetary and Banking Systems, Report, pp 248-251. State banks and savings banks established under state law could also call themselves 'banks'.

[17]      Royal Commission into Monetary and Banking Systems, Report, p 247.

[18]      Royal Commission into Monetary and Banking Systems, Report, pp 238-246.

[19]      Royal Commission into Monetary and Banking Systems, Report, p 247. Mr Chifley recommended legislation limiting bank profits to the lower of 5 per cent on shareholders' funds or 8 per cent on paid capital; p 268.

[20]      Royal Commission into Monetary and Banking Systems, Report, p 238.

[21]      Royal Commission into Monetary and Banking Systems, Report, p 224.

[22]      The Economist, 16 October 1937, cited in Sutherlin (1980, pp 3, 177). See the fifth chapter of her thesis for more deatil on the reaction from the media, the banks and acdemics.

[23]      Sutherlin (1980, pp 237-256).

[24]      Dr Evan Jones, Submission 81, p 15.

[25]      Report of the Committee of Economic Inquiry, Volume 1, p 272.

[26]      Associate Professor Selwyn Cornish, Committee Hansard, 13 December 2010, p 113.

[27]      Dr Evan Jones, Submission 81, p 15.

[28]      Dr Evan Jones, Submission 81, p 15.

[29]      Committee of Inquiry into the Australian Financial System, pp 531 and 538.

[30]      Committee of Inquiry into the Australian Financial System, p 533.

[31]      Committee of Inquiry into the Australian Financial System, p 537.

[32]      Committee of Inquiry into the Australian Financial System, p 540. 

[33]      Mr Richard Beetham from Treasury, Mr Des Cleary from the Reserve Bank and Professor Keith Hancock from Flinders University.

[34]      Australian Financial System Review Group, Report, pp 361-362.

[35]      Australian Financial System Review Group, Report, p 53.

[36]      As the Group puts it, 'The perception of the banking industry as oligopolistic must be modified, to some degree, by acknowledging the competition provided by State banks'; Report, p 53.

[37]      Australian Financial System Review Group, Report, p 54.

[38]      Australian Financial System Review Group, Report, p 51.

[39]      Australian Financial System Review Group, Report, pp 52-53.

[40]      Associate Professor Selwyn Cornish, Committee Hansard, 13 December 2010, p 113.

[41]      Dr Evan Jones, Submission 81, p 15.

[42]      A summary of the report's conclusions on banking and deregulation is given in Martin and Hawkins (1992).

[43]      House of Representatives Standing Committee on Finance and Public Administration (1991, p 117).

[44]      House of Representatives Standing Committee on Finance and Public Administration (1991, p 127).

[45]      The Trade Practices Commission was the forerunner to the Australian Competition and Consumer Commission.

[46]      House of Representatives Standing Committee on Finance and Public Administration (1991, p 128).

[47]      House of Representatives Standing Committee on Finance and Public Administration (1991, pp 136-142).

[48]      Dr Evan Jones, Submission 81, p 16.

[49]      House of Representatives Standing Committee on Banking, Finance and Public Administration (1992, pp 1-2).

[50]      House of Representatives Standing Committee on Banking, Finance and Public Administration (1992, p 2).

[51]      House of Representatives Standing Committee on Banking, Finance and Public Administration (1992, p 116).

[52]      Financial System Inquiry Final Report, p 177.

[53]      Professor Stephen King, Committee Hansard, 21 January 2011, p 105.

[54]      Financial System Inquiry Final Report, p 455.

[55]      Financial System Inquiry Final Report, pp 425 and 428.

[56]      Financial System Inquiry Final Report, p 401.

[57]      Mr Lindsay Johnston, Submission 97, p 14.

[58]      Dr Evan Jones, Submission 80, p 17.

[59]      House of Representatives Standing Committee on Economics, Finance and Public Administration, Home Loan Lending, September 2007, p 49.

[60]      House of Representatives Standing Committee on Economics, Competition in the banking and non-banking sectors, November 2008, p 21.

[61]      Competition in the banking and non-banking sectors, November 2008, p 24.

[62]      Competition in the banking and non-banking sectors, November 2008, p 39.

[63]      Competition in the banking and non-banking sectors, November 2008, p 52.

[64]      Competition in the banking and non-banking sectors, November 2008, p 56.

[65]      Competition in the banking and non-banking sectors, November 2008, p 56.

[66]      Competition in the banking and non-banking sectors, November 2008, p 74.

[67]      Competition in the banking and non-banking sectors, November 2008, p 86.

[68]      Competition in the banking and non-banking sectors, November 2008, p 98.

[69]      Senate Economics References Committee, Report on Bank Mergers, September 2009, pp 53‑54.

[70]      Senate Economics References Committee, Report on Bank Mergers, pp 56 and 60.

[71]      Senate Economics References Committee, Government measures to address confidence concerns in the financial sector – The Financial Claims Scheme and the Guarantee Scheme for Large Deposits and Wholesale Funding, September 2009, p 19.

[72]      Senate Economics References Committee, Government measures, September 2009, p 34.

[73]      Senate Economics References Committee, Government measures, September 2009, p viii.

[74]      Senate Economics Legislation Committee, Banking Amendment (Keeping Banks Accountable) Bill 2009, November 2009, p 17.

[75]      Senate Economics Legislation Committee, Banking Amendment, November 2009, p 10.

[76]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 56.

[77]      Senate Economics References Committee, Access of Small Business to Finance, pp 60 and 68.

[78]      Associate Professor Selwyn Cornish, Submission 9, p 3.

[79]      Joshua Gans, Nicholas Gruen, Christopher Joye, Stephen King, John Quiggin and Sam Wylie, Submission 103a.

[80]      Dr Tom Valentine, Submission 14, p 5.

[81]      'Ren', Submission 19, p 1. Similar calls were made by Dr Brett Edgerton, Submission 20, p 2; Mr Terence Holmes, Submission 3, p 2; Mr Andrew Thomas, Submission 73, p 17; and Mr Lindsay Johnston, Submission 97, p 12.

[82]      WA Small Enterprise Network, Submission 68, p 3.

[83]      Banking and Finance Consumers Support Association, Submission 112, p 25.

[84]      Professor Stephen King, Committee Hansard, 21 January 2011, p 103.

[85]      Chamber of Commerce and Industry Queensland, Submission 43, p 16.

[86]      Westpac, Submission 72, p 39. See also Australian Bankers' Association, Submission 76, p 43.

[87]      Professor John Quiggin, Proof Committee Hansard, 4 March 2011, p 48.

[88]      Finance Sector Union, Submission 80, p 1.

[89]      Mr Selwyn Cornish, Committee Hansard, 13 December 2010, p 112.

[90]      Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 133.

[91]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 62.

[92]      Associate Professor Selwyn Cornish, Committee Hansard, 13 December 2010, p 119.

[93]      Associate Professor Selwyn Cornish, Submission 9, p 3.

[94]      A Pocket Full of Change: Banking and Deregulation, p 35.

[95]      Australian Chamber of Commerce and Industry, Submission 37, pp v-vi.

[96]      Master Builders' Association, Submission 38, p 6.

[97]      Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 15.

[98]      'Incoming Government Brief'', pp 2-3 and 36. Available on Treasury website at http://www.treasury.gov.au/documents/1875/PDF/01_Overview.pdf.

Chapter 4 - Assessing competition in the Australian banking market

[1]        Treasury, Submission 102, p 1.

[2]        Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 47.

[3]        Senate Economics References Committee, Report on Bank Mergers, September 2009, pp 5-6.

[4]        Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 25.

[5]        Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 58.

[6]        See, for example, the Australian Bankers' Association, Submission 76, p 5.

[7]        Treasury, Submission 102, p 22.

[8]        NSW Business Chamber, Submission 84, p 5.

[9]        Professor Tom Valentine, Committee Hansard, 25 January 2011, p 61. See also National Australia Bank, Submission 91, p 3.

[10]      Mr Peter Strong, Executive Director, Council of Small Business Organisations of Australia, Committee Hansard, 15 December 2010, p 12.

[11]      The measure is sometimes calculated using percentages rather than proportions, in which case possible values range from 0 to 10,000. Professor Sathye's Submission 28 is an example.

[12]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 33. See also his Submission 28, pp 7 and 17.

[13]      Mr Brian Cassidy, Chief Executive Officer, ACCC, Committee Hansard, 25 January 2011, p 51.

[14]      Mr Andrew Canion, Manager, Western Australian Small Enterprises Network, Committee Hansard, 21 January 2011, p 110.

[15]      With the exception of the Commonwealth Bank (only established in 1912), the increases in their market share are more than accounted for by their acquisitions; Senate Economics References Committee, Report on bank mergers, September 2009, p 5.

[16]      This conclusion is also reached by House of Representatives Standing Committee on Economics (2008, p 26).

[17]      Senate Economics References Committee, Report on Bank Mergers, September 2009, p 7. There are challenges in comparing the profitability of Australian banks with those overseas. As Martin and Hawkins (1991, p 3) comment; 'the structure of banking, economic conditions, the extent of off-balance sheet activity, the tax system, the importance of international operations, the regulatory regime and the mix of household and corporate lending varies greatly, as do accounting practices'.

[18]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, pp 26-27.

[19]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 60.

[20]      United Kingdom Independent Commission on Banking, Issues Paper: Call for Evidence, September 2010, p 22; cited by Abacus, Submission 53, p 7.

[21]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 1.

[22]      Mr Nicholas Palmer, Submission 22, p 4.

[23]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Responses to questions on notice, no 7, 20 January 2011, p 1.

[24]      National Australia Bank, Responses to questions on notice, no 11, 31 January 2011, p 1.

[25]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 1.

[26]      ANZ Bank, Responses to questions on notice, no 11, 31 January 2011, p 1.

[27]      UK House of Commons Treasury Committee, Competition and Choice in Retail Banking, March 2011, p 23. The issue of banks being 'too big to fail' is discussed in Chapter 11.

[28]      Professor Tom Valentine, Proof Committee Hansard, 25 January 2011, p 60.

[29]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 33.

[30]      The Bank for International Settlements (2010, p 77) show that the financial sector's share of total value added has also increased in other advanced economies but the increase in Australia has been unusually large.

[31]      Mr Ian Macfarlane, then Governor of the Reserve Bank, House of Representatives Standing Committee on Economics, Finance and Public Administration Hansard, 17 June 1999, p 77.

[32]      Mr Peter Higgins, Submission 17, p 4.

[33]      Mr Michael O'Connor, Submission 125, p 1.

[34]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 60.

[35]      Australian Bankers' Association,  Submission 76, p 21.

[36]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 39.

[37]      The Committee's attention was drawn to this chart by Mr Nick Behrens, General Manager, Policy, Chamber of Commerce and Industry Queensland, Proof Committee Hansard, 4 March 2011, p 61.

[38]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 9.

[39]      Reserve Bank of Australia. Financial Stability Review, March 2011, p 22.

[40]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 11.

[41]      Mr Jonathan Mott, Bank Analyst, UBS Securities Australia, Committee Hansard, 14 December 2010, p 144.

[42]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 59.

[43]      Mr George Ivanov, Submission 124, p 2.

[44]      ANZ Bank claims that banking is risky as banks are highly-geared organisations; Responses to questions on notice, no 11, 31 January 2011, p 2.

[45]      Master Builders' Australia, Submission 38, p 6.

[46]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 34.

[47]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 61.

[48]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Proof Committee Hansard, 9 March 2011, p 11.

[49]      Australian Bankers' Association, Submission 76, p 26.

[50]      Then Treasury Secretary Dr Ken Henry (2011, p 21).

[51]      See Australian Bankers' Association, Submission 76, p 16 and ANZ Bank, Submission 94, p 15.

[52]      Australian Chamber of Commerce and Industry, Submission 37, p iii.

[53]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 52.

[54]      Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 14 December 2010, p 94.

[55]      Australian Prudential Regulation Authority, Responses to questions on notice, no 6, 31 January 2011, p 1.

[56]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 1.

[57]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 2.

[58]      Then Treasury Secretary Dr Ken Henry (2011, pp 21-22).

[59]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 2. See also Henry (2011, p 22).

[60]      ANZ Bank, Responses to questions on notice, no 11, 31 January 2011, p 2.

[61]      Mr David Craig, Chief Financial Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 55.

[62]      Reserve Bank of Australia, Submission 41, p 22.

[63]      Fujitsu Consulting, Australian Bank Fee Survey 2009, p. 6.

[64]      Chris Connolly, Director, Financial Services Policy Centre, University of New South Wales, 'Do the Poor Pay More?', 2005.

[65]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Proof Committee Hansard, 13 December 2010, p 56.

[66]      Consumer Action Law Centre, Submission 87, p 22.

[67]      ASIC Consultation Paper, no 135.  ASIC has already issued Regulatory Guide 220 on mortgage exit fees, discussed further in Chapter 7.

[68]      Professor Milind Sathye, Submission 28, p 11.

[69]      Mr Peter Mair, Submission 2, p 8.

[70]      Mr Peter Mair, Submission 2a, p 2.

[71]      Mr Suryan Chandrasegaran, Submission 4, p 3.

[72]      Mr Murray Withers, Submission 99, p 1.

[73]      Mr Mervin Reed, Submission 5, p 3.

[74]      Mr Christopher Hamilton, Chief Executive Officer, APCA, Committee Hansard, 21 January 2011, p 33.

[75]      Mr Jost Stollmann, Chief Executive Officer, Tyro Payments, Committee Hansard, 21 January 2011, p 39.

[76]      Aussie, Submission 39, p 3.

[77]      Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 81.

[78]      Australia Institute, Submission 46, p 3.

[79]      Australia Institute, Submission 46, p 4.

[80]      Fear et al (2010, p 21).

[81]      HSBC, Submission 107, p 6.

[82]      Bendigo and Adelaide Bank, Submission 58, p 2.

[83]      Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 19.

[84]      Mr David Liddy, Bank of Queensland, Committee Hansard, 9 February 2011, p 15.

[85]      Veda Advantage, Submission 50, p 3. A similar argument is put by HSBC, Submission 107, p 5 and Abacus, Submission 53, p 31.

[86]      Chamber of Commerce and Industry Queensland, Submission 43, pp 3 and 16.

[87]      Fear et al (2010, p iv).

[88]      Finance Brokers' Association of Australia, Submission 133, p 3.

[89]      Mrs Kay Robinson, Submission 119, p 3.

[90]      Associate Professor Selwyn Cornish, Committee Hansard, 13 December 2010, p 116.

[91]      The Governor later explained that the increase in competition for domestic deposits is related to the increased cost of raising wholesale funding offshore; Committee Hansard, 13 December 2010, p 10.

[92]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 2.

[93]      Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 117.

[94]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, pp 9-10.

[95]      Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 65.

[96]      Ms Gail Kelly, Westpac, Committee Hansard, 21 January 2011, p 81.

[97]      Ms Gail Kelly, Westpac, Committee Hansard, 21 January 2011, p 80.

[98]      Ms Gail Kelly, Westpac, Committee Hansard, 21 January 2011, p 80.

[99]      Ms Gail Kelly, Westpac, Committee Hansard, 21 January 2011, p 86.

[100]    Credit Union Australia, Tabled document, no. 8, 25 January 2011. 

[101]    The Hon. Wayne Swan MP, 'Proposed acquisition of St George Bank Limited by Westpac Banking Corporation', Media release, 23 October 2008. See also Senate Economics References Committee, Report on Bank Mergers, September 2009, pp 57-60.

[102]    Abacus, Submission 53, p 7.

[103]    Credit Union Australia, Submission 85, p 7.

[104]    Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 56.

[105]    Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 78.

[106]    Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Proof Committee Hansard, 15 December 2010, p 78.

Chapter 5 - Home loan interest rates

[1]        Similar charts appear in Submissions 7, 8, 59 and 88.

[2]        A survey of Queensland business found that 90 per cent did not believe increases in interest rates above the change in the official interest rate were justified; Chamber of Commerce and Industry Queensland, Submission 43, pp 8 and 16. Small business finance is discussed further in the following chapter.

[3]        Mr Michael O'Connor, Submission 125, p 2.

[4]        Cited in Finance Sector Union, Submission 80, p 7.

[5]        Professor Milind Sathye, Responses to questions on notice, p 3.

[6]        Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 15.

[7]        Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 51.

[8]        Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 133.

[9]        Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Responses to questions on notice, no 7, 20 January 2011, p 1. He adds 'the irony in all this is that the non-bank lenders...no longer exist because they didn't manage their liquidity through borrowing across a range of short and long term maturities'.

[10]      Mr Alan Stokes, Submission 48, p 1.

[11]      For example, Mr David Craig, Chief Financial Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 46.

[12]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 5.

[13]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 61.

[14]      Professor Tom Valentine, Submission 14, p 1.

[15]      Australian Bankers' Association, Submission 76, pp 3 and 11.

[16]      Reserve Bank of Australia, Statement on Monetary Policy, February 2011, p 46.

[17]      Then Treasury Secretary Dr Ken Henry (2011, p 17).

[18]      Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 118.

[19]      Mr David Craig, Chief Financial Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 47.

[20]      Australian Bankers' Association, Submission 76, p 86.

[21]      Reserve Bank of Australia, Financial Stability Review, March 2011, p 28.

[22]      Commonwealth Bank of Australia, Submission 88, p 5.

[23]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 6.

[24]      APRA, Responses to questions on notice, no 10, 31 January 2011, p 3.

[25]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 87.

[26]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 61. Similar comments were made by Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 47; and Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 120.

[27]      Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 72.

[28]      The reader will have to imagine the accompanying hand gestures.

[29]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 15.

[30]      For example, the Commonwealth Bank say they have a more conservative funding mix than the industry average; Responses to questions on notice, no 8, 28 January 2011, p 1.

[31]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 6.

[32]      Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 87.

[33]      Professor Milind Sathye, Responses to questions on notice, no 4, 14 January 2011.

[34]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 5. The RBA's response is endorsed by APRA; Responses to questions on notice, no 10, 31 January 2011, p 3.

[35]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 39.

[36]      Mr Jim Murphy, Department of the Treasury, Committee Hansard, 13 December 2010, p 45.

[37]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Proof Committee Hansard, 13 December 2010, p 13.

[38]      Grenville (1995) and Lowe (1995) describe the monetary transmission mechanism in more detail.

[39]      Henry (2011, p 24).

[40]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 2.

[41]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 53.

[42]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 2.

[43]      Mr Glenn Stevens, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 10.

[44]      They range up to around 90 basis points.

[45]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 3.

[46]      Mr Christopher Zinn, Director, Communications, Choice, Committee Hansard, 14 December 2010, p 34.

[47]      Reserve Bank of Australia, Submission 41, p 15.

[48]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 3.

[49]      Australian Bankers' Association, Submission 76, p 31.

[50]      Professor Milind Sathye, Submission 1 to Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, (hereafter 'basic banking inquiry'), p 7.

[51]      Senate Economics Legislation Committee, Banking Amendment (Keeping Banks Accountable) Bill 2009, November 2009, p. 17.

[52]      Professor Kevin Davis, Proof Committee Hansard, 25 January 2011, p 57.

[53]      Mr Peter Higgins, Submission 17, p 1.

[54]      Professor Kevin Davis, Submission 8, p 2. Some data are provided in APRA, Responses to questions on notice, no 6, 31 January 2011, p 5.

[55]      Reserve Bank of Australia, Submission 41, p 17.

[56]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 2.

[57]      Ellis (2006) cited in Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, pp 4-5.

[58]      Professor Kevin Davis, Committee Hansard, 25 January 2011, pp 68-69.

[59]      Professor Kevin Davis, Committee Hansard, 25 January 2011, p 58.

[60]      Senator Bob Brown, Senate Hansard, 15 June 2010, p. 30.

[61]      Reserve Bank of Australia, Submission 41, p 17.

[62]      Professor Kevin Davis, Submission 8, p 5.

[63]      Australian Bankers' Association, Submission 76, p 45.

[64]      Queensland Teachers Credit Union, Submission 122, p 4.

[65]      Queensland Teachers Credit Union, Submission 122, p 4.

[66]      ANZ Bank, Responses to questions on notice, no 11, 31 January 2011, p 2.

[67]      APRA, Responses to questions on notice, no 6, 31 January 2011, p 2.

Chapter 6 - Small business finance

[1]        Mr Richard Holyman, Deputy President and Mr Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry, Committee Hansard, 15 December 2010, pp 108 and 113.

[2]        CPA Australia, Submission 82, p 3.

[3]        Mr Nick Behrens, General Manager, Policy, Chamber of Commerce and Industry Queensland, Proof Committee Hansard, 4 March 2011, p 60.

[4]        Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 37.

[5]        Finance Brokers' Association of Australia, Submission 133, p 5.

[6]        Mr Greg Evans, Director of Economics and Industry Policy, Australian Chamber of Commerce and Industry, Joint Committee on Corporations and Financial Services Hansard, 2 March 2011, p 10.

[7]        This is consistent with the observation that while bank business loans of less than $2 million slowed during the GFC, there was a fall in the amount of larger business loans outstanding; Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 8.

[8]        Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 1.

[9]        Reserve Bank of Australia, Financial Stability Review, March 2011, p 27.

[10]      CPA Australia, Submission 82, p 9.

[11]      Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 88.

[12]      WA Small Enterprise Network, Submission 68, p 8.

[13]      Australian Bankers' Association, Submission 76, p 39.

[14]      Mr Micah Green, Economist, New South Wales Business Chamber, Committee Hansard, 21 January 2011, p 56.

[15]      Mr Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry, Committee Hansard, 15 December 2010, p 111. CPA Australia provide further information and show this is a higher proportion by international standards; Submission 82, p 5.

[16]      Chamber of Commerce and Industry Queensland, Submission 43, p 9.

[17]      National Association of Retail Grocers of Australia, Submission 54, p 2.

[18]      Mr Andrew Canion, Manager, Western Australian Small Enterprises Network, Committee Hansard, 21 January 2011, p 115.

[19]      Council of Small Business of Australia, Submission 90, p 3.

[20]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, pp 53-54 and 67. A similar argument was made by Mr Peter Hanlon, Group Executive, People and Transformation, Westpac, Proof Committee Hansard, 21 January 2011, p 87.

[21]      A longer run version of this chart is given in Westpac, Responses to questions on notice, no 16,  7 March 2011, p 3.

[22]      Mr Graeme Johnson, General Manager, Supervisory Support Services, APRA, cited in Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 19.

[23]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 8.

[24]      The difference between the required margin on housing loans of 1 per cent x 0.2 = 20 basis point and 2.4 per cent x 0.3 = 72 basis points.

[25]      Mr Peter Hanlon, Group Executive, People and Transformation, Westpac, Proof Committee Hansard, 21 January 2011, p 87.

[26]      Joint Committee on Corporations and Financial Services (2011, p 30).

[27]      Mr Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry, Committee Hansard, 15 December 2010, p 110.

[28]      Mr Peter Strong, Executive Director, Council of Small Business Organisations of Australia, Committee Hansard, 15 December 2010, p 12.

[29]      Master Builders' Association, Submission 38, p 6.

[30]      NSW Business Chamber, Submission 84, p 4.

[31]      Mr Micah Green, Economist, New South Wales Business Chamber, Committee Hansard, 21 January 2011, p 57.

[32]      Treasury, cited in Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 66.

[33]      Master Builders' Association, Submission 38, p 6.

[34]      Chamber of Commerce and Industry Queensland, Submission 43, p 19; New South Wales Business Chamber, Submission 84, p 3.

[35]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, pp 69-74.

[36]      Uruguay established a scheme in 1896!

[37]      Beck, Klapper and Mendoza (2008, pp 2-3).

[38]      Beck, Klapper and Mendoza (2008, p 25).

[39]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 68.

[40]      Economics References Committee, Access of Small Business to Finance, June 2010, p 62.

[41]      Economics References Committee, Access of Small Business to Finance, June 2010, p 63.

[42]      See, for example, CPA Australia, Submission 82, pp 16-18.

[43]      Mr Andrew Canion, Manager, Western Australian Small Enterprise Network, Committee Hansard, 21 January 2011, p 115.

[44]      Mr Joseph Healy, National Australia Bank, cited in Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 54.

[45]      Council of Small Business Organisations, Submission 90, p 7.

[46]      CPA Australia, Submission 82, p 1.

[47]      Council of Small Business Organisations, Submission 90, p 7.

[48]      CPA Australia, Submission 82, p 10. CPA provided the Committee with more information about the codes in Canada and Ireland last year; see Senate Economics References Committee, Access of Small Business to Finance, June 2010, pp 78-79.

[49]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 80.

[50]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 50. Among studies cited were Berger, Demsetz and Strahan (1999); Carletti, Hartmann and Spagnolo (2002); Group of Ten (2001); and Hawkins and Mihaljek (2001).

[51]      Senate Economics References Committee, Access of Small Business to Finance inquiry; APRA, responses to questions on notice.no. 3, p 1.

[52]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 56.

[53]      CPA Australia, Submission 82, p 10.

[54]      CPA Australia, Submission 82, p 10.

[55]      Australian Securities and Investments Commission, cited in Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 23.

Chapter 7 - Moving between banks

[1]        Klemperer (1995, p 536), cited in Consumer Action Law Centre, Submission 87, p 5.

[2]        Council of Small Business Organisations of Australia, Submission 90, p 10.

[3]        Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 63.

[4]        Chamber of Commerce and Industry Queensland, Submission 43, pp 7 and 13.

[5]        Chamber of Commerce and Industry Queensland, Submission 43, pp 14-15.

[6]        ProSolution Private Clients, Submission 30, p 1.

[7]        Mrs Amanda Watson, Submission 64, p 1.

[8]        Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 92.

[9]        Ms Nicole Rich, Director, Policy and Campaigns, Consumer Action Law Centre, Proof Committee Hansard, 25 January 2011, p 17.

[10]      Redfern Legal Centre, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 2, p. 2.

[11]      Australian Chamber of Commerce and Industry, Submission 37, p 28.

[12]      Consumer Action Law Centre, Submission 87, p 13.

[13]      Professor Kevin Davis, Committee Hansard, 25 January 2011, p 59; Submission 8, pp 8‑9.

[14]      Consumer Action Law Centre, Submission 87, p 13.

[15]      Mr Phillip Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 14 December 2010, p 71.

[16]      Finance Brokers' Association of Australia, Submission 133, p 2. See also Mortgage House of Australia, Submission 115, pp 1-2.

[17]      Dr Evan Jones, Submission 81, p 7.

[18]      Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 2.

[19]      Mr Steven Münchenberg, Australian Bankers' Association, Committee Hansard, 14 December 2010, p 83.

[20]      APRA, Responses to questions on notice, no 6, 31 January 2011, p 3.

[21]      Mr Peter White, National President, Finance Brokers Association of Australia, Proof Committee Hansard, 4 March 2011, p 4. This possibility is also raised by Professor Milind Sathye, Submission 28, p 8; and Australian Chamber of Commerce and Industry, Submission 37, p 24.

[22]      Aussie, Submission 39, p 2.

[23]      Dr Peter Boxall, Commissioner, ASIC, Committee Hansard, 21 January 2011, p 3.

[24]      Mr Tony D'Aloisio, Chairman, ASIC, Herald-Sun, 19 November 2010, confirmed by Mr Greg Kirk, Senior Executive Leader, ASIC, Committee Hansard, 21 January 2011, p 5. A similar view is put by ACCC and ASIC in 'A guide to the unfair contract terms law', p 16.

[25]      Care Financial Counselling Service, Submission 3 to basic banking inquiry, p 3.

[26]      Ms Catriona Lowe, Co-Chief Executive Officer, Consumer Action Law Centre, Committee Hansard, 25 January 2011, p 15.

[27]      The ban will be implemented through amendments to the National Credit Code; Australian Government, Competitive and Sustainable Banking System, December 2010, p 7.

[28]      Mr Jim Murphy, Executive Director, Department of the Treasury, Committee Hansard, 13 December 2010, p 41.

[29]      Mr John Lonsdale, General Manager, Financial System Division, Department of the Treasury, Proof Committee Hansard, 9 March 2011, p 7.

[30]      As Treasury's Jim Murphy explained: 'Put yourself in their position—you are facing a ban on something you have been doing so you may as well adapt and get some credit points out of it.'; Proof Committee Hansard, 9 March 2011, p 5.

[31]      LMI is not to be confused with mortgage protection insurance, which covers borrowers to allow them to maintain mortgage payments in the event of illness or unemployment.

[32]      Mr John Symond, Executive Chairman, Aussie Home Loans, Committee Hansard, 14 December 2010, pp 111 and 128.

[33]      Mr Dinesh Warusavitharana, Submission 98, pp 2 and 4. Credit Union Australia, Submission 85, p 10 also calls for improvements to the portability of mortgage insurance.

[34]      Mr Greg Kirk, Senior Executive Leader, ASIC, Committee Hansard, 21 January 2011, pp 12‑13. Concerns were also expressed by Ms Nicole Rich, Director, Policy and Campaigns, Consumer Action Law Centre, Committee Hansard, 25 January 2011, p 23, and Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 88; Abacus, Submission 53, p 24; and Mr Peter White, National President, Finance Brokers Association of Australia, Proof Committee Hansard, 4 March 2011, p 2.

[35]      Finance Brokers' Association of Australia, Submission 133, p 4.

[36]      Commonwealth Bank of Australia, Submission 88, p 14.

[37]      Mr Peter White, National President, Finance Brokers Association of Australia, Proof Committee Hansard, 4 March 2011, p 2.

[38]      Mr Jim Murphy, Executive Director, Department of the Treasury, Committee Hansard, 13 December 2010, p 34.

[39]      Insurance Council of Australia, Submission 137, p 2.

[40]      Insurance Council of Australia, Submission 137, p 2. No reason was given why a lender would charge more to a customer in increased interest than an insurer would charge as a premium for offsetting the same risk.

[41]      Genworth Financial Mortgage Insurance, Submission 136, p 5.

[42]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 9; Mr Jim Murphy and Mr John Lonsdale, Department of the Treasury, Proof Committee Hansard, 9 March 2011, pp 9-10 and 14.

[43]      Mr James McPhee, Chief Executive Officer, Members Equity Bank, Committee Hansard, 25 January 2011, p 112.

[44]      Members Equity Bank, Submission 77, p 3.

[45]      Finance Brokers' Association of Australia, Submission 133, p 4.

[46]      Finance Brokers' Association of Australia, Submission 133, p 4.

[47]      Mr Alan Mills, Submission 15, p 1.

[48]      Mrs Maria Rigoni, Submission 86, p 1.

[49]      Mr Andrew Canion, Manager, Western Australian Small Enterprise Network, Committee Hansard, 21 January 2011, p 110.

[50]      Mr John O'Brien, Submission 117, p 2.

[51]      Ms Catriona Lowe, Co-Chief Executive Officer, Consumer Action Law Centre, Committee Hansard, 25 January 2011, p 13.

[52]      Professor Milind Sathye, Submission 28, p 15.

[53]      Name withheld, Submission 52, p 2.

[54]      National Australia Bank, Submission 91, p 10.

[55]      Consumer Action Law Centre, Submission 87, p 17.

[56]      Maurice Blackburn, Submission 31, p 7.

[57]      Mr Andrew Canion, Manager, Western Australian Small Enterprise Network, Committee Hansard, 21 January 2011, pp 110 and 117.

[58]      Accounts4Life, Submission 128, p 3.

[59]      WA Small Enterprise Network, Responses to questions on notice, no 13, 1 February 2011, p 1.

[60]      Commonwealth Bank of Australia, Submission 88, p 10.

[61]      Heath and Heath (2010, p 50).

[62]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 10.

[63]      Mr Jim Murphy, Executive Director, Department of the Treasury, Committee Hansard, 13 December 2010, p 33.

[64]      Mr Richard Lloyd, International Policy Adviser, Choice, Committee Hansard, 14 December 2010, p 33.

[65]      Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 3.

[66]      Mr Nick Stace, Chief Executive Officer, Choice, Committee Hansard, 14 December 2010, p 39.

[67]      Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 7.

[68]      Mr Ken Longshaw, Submission 134, p 1.

[69]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 9.

[70]      Australian Bankers' Association, Submission 76, p 43.

[71]      Australian Bankers' Association, Submission 76, pp 60-61.

[72]      Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 118.

[73]      Yellow Brick Road, Submission 101, pp 15-16.

[74]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 30.

[75]      Mr David Allen, Submission 126, p 10.

[76]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 14.

[77]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 14.

[78]      Australian Securities and Investments Commission, Report 229: National Financial Literacy Strategy, March 2011, p 6.

[79]      'Future of Financial Advice' information pack, foreward by The Hon Bill Shorten MP, Assistant Treasurer and Minister for Financial Services and Superannuation, 28 April 2011.

[80]      Mr Phil Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 14 December 2010, p 76.

[81]      Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 76.

[82]      Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 76.

[83]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 6.

[84]      Australian Securities and Investments Commission, Report 185: Review of Term Deposits, February 2010, p 6.

[85]      Mr Mervin Reed, Submission 5, p 7.

[86]      Abacus, Submission 53, p 24.

[87]      Finance Brokers' Association of Australia, Submission 133, p 3.

[88]      Mr Jim Murphy, Executive Director, Department of the Treasury, Committee Hansard, 13 December 2010, p 36.

[89]      Bendigo and Adelaide Bank, Responses to questions on notice, no 7, 20 January 2011, p 1.

[90]      ProSolution, Submission 30, p 3.

[91]      Report on Australia's Future Tax System, December 2009, p 479.

[92]      Treasury, Submission 102, p 28; Australian Government, Competitive and Sustainable Banking System, December 2010, p 9.

[93]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 8.

[94]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 90.

[95]      Australian Bankers' Association, Submission 76, p 65.

[96]      CHOICE, Submission 70, p 9.

[97]      About 9 per cent of customers moved in a year in the UK, compared to under 8 per cent over two years in Australia; CHOICE, Submission 70, p 9.

[98]      Independent Commission on Banking (2011, p 5)

[99]      Mr Peter Strong, Executive Director, Council of Small Business Organisations of Australia, Committee Hansard, 15 December 2010, pp 8-9. Similar issues were raised by the WA Small Enterprise Network, Submission 68, p 9.

[100]    Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 65.

[101]    ING Bank, Submission 35, p 4.

[102]    Australian Payments Clearing Association, Submission 49, p 1. APCA provide estimates of churn rates in pp 5-6 of the submission.

[103]    Commonwealth Bank of Australia, Submission 88, p 12.

[104]    Dr Richard Denniss, Executive Director, Australia Institute, Committee Hansard, 15 December 2010, p 31.

[105]    Financial Ombudsman Service, Submission 78, p 5.

[106]    Australian Bankers' Association, Submission 76, p 64.

[107]    Associate Professor Frank Zumbo, Submission 56, p 6.

[108]    Mr Mervin Reed, Submission 5, p 8.

[109]    Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 65.

[110]    Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 126.

[111]    WA Small Enterprise Network, Submission 68, p 3.

[112]    Abacus, Submission 53, p 24.

[113]    Australian Payments Clearing Association, Submission 49, p 8.

[114]    Mr Christopher Hamilton, Chief Executive Officer, Australian Payments Clearing Association, Committee Hansard, 21 January 2011, p 31.

[115]    Mr Jonathan Mott, Bank Analyst, UBS Securities Australia, Committee Hansard, 14 December 2010, pp 146-7.

[116]    Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 147. A similar concern was raised by Mr Nicholas Palmer, Submission 22, pp 3-4.

[117]    Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, pp 131-2.

[118]    APRA, Responses to questions on notice, no 6, 31 January 2011, p 3.

[119]    Australian Payments Clearing Association, Submission 49, p 5.

[120]    Credit Union Australia, Submission 85, p 10.

[121]    Maurice Blackburn Pty Ltd, Submission 31, p 6.

[122]    Mr Greg Kirk, Senior Executive Leader, ASIC, Committee Hansard, 21 January 2011, pp 10‑11.

[123]    Australian Government, Competitive and Sustainable Banking System, December 2010, p 9.

[124]    Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 65.

[125]    Ms Louise Petschler, Chief Executive Officer, Abacus, Committee Hansard, 13 December 2010, p 89.

[126]    Mr Richard Lloyd, International Policy Adviser, Choice, Proof Committee Hansard, 14 December 2010, pp 33-34. He later (p 35) referred to the Netherlands as a specific example.

[127]    Ms Catrinoa Lowe, Co-Chief Executive Officer, Consumer Action Law Centre, Committee Hansard, 25 January 2011, p 14.

[128]    Consumer Action Law Centre, Submission 87, p 9.

[129]    Consumer Action Law Centre, Submission 87, p 9. See also Choice, Response to questions on notice, no 5, 17 December 2011. 

[130]    Mr Matt Baxby, Managing Director, Virgin Money Australia, Proof Committee Hansard, 4 March 2011, p 29.

[131]    ING Bank, Submission 35, p 4.

[132]    Consumer Action Law Centre, Submission 87, pp 10-11.

[133]    Consumer Action Law Centre, Submission 87, p 11.

[134]    Mr Richard Lloyd, International Policy Adviser, Choice, Committee Hansard, 14 December 2010, p 33.

[135]    Australian Government, Competitive and Sustainable Banking System, December 2010, p 8.

Chapter 8

[1]        Adam Smith, The Wealth of Nations, first published 1776–8, Book 1, Chapter 10, paragraph 82.

[2]        The Coalition's bill—the Competition and Consumer (Price Signalling) Amendment Bill (No. 1) 2010—was introduced into the House of Representatives on 22 November 2010. The Government released an exposure draft of its bill on 12 December 2010 and conducted a consultation process. Following this, the Government's bill—the Competition and Consumer Amendment Bill (No. 1) 2011—was introduced into the House of Representatives on 24 March 2011.

[3]        House Standing Committee on Economics, Inquiry into the Competition and Consumer (Price Signalling) Amendment Bill 2010, https://www.aph.gov.au/house/Committee/economics/1BillPriceSignalling/hearings.htm (accessed 1 March 2011).

[4]        The Hon. Wayne Swan MP, Interview with Lyndal Curtis, ABC Radio, AM Program, 13 December 2011; The Hon. Wayne Swan, Interview with Kieran Gilbert, Sky News Channel, 13 December 2010. Mr Ralph Norris, Commonwealth Bank of Australia Profit Statement, 9 February 2011.

[5]        Baxt, Kiratzis and Eglezoz, (2011, p 6); Smith, Duke and Round (2009, pp 26–27); Noble (2010); and Fisse and Caron Beaton-Wells (2011).

[6]        Patrick Durkin, 'Banks irate over price signalling', Australian Financial Review, 4 January 2011, p 3; John Durie, 'Price signalling plans cast too wide a net', The Australian, 13 January 2011; Matthew Drummond, 'Proposed price signalling law 'just does not work', Australian Financial Review, 8 February 2011, p 54; Katja Buhrer and Jason Murphy, 'ACCC adamant on price signalling', Australian Financial Review, 27 January 2011, p 37; John Kehoe, 'Broader fears on price signalling clamp', Australian Financial Review, 9 February 2011, p 53; Josh Gordon, 'Petrol, groceries in consumer law push', Sydney Morning Herald, 9 January 2011; Michael Jacobs and Bill Reid, 'Price-signalling laws fraught with danger', Australian Financial Review, 1 March 2011, p 63; Terry McCrann, 'Zumbo and Samuel, a strange tag team', Herald Sun, 15 December 2010.

[7]        Mallesons Stephen Jaques, 'Price signalling - two Bills compared, neither needed', 21 January 2011; Allens Arthur Robinson, 'Client Update: Prohibiting Price Signalling', 13 December 2010; Freehills, 'Price signalling "Take 2"—the government's turn', 16 December 2010; Johnson Winter & Slattery, 'ACCC power to prosecute anti-competitive price signalling', December 2010; Mallesons Stephen Jaques, 'Government releases Exposure Draft Bill to outlaw price signalling', 12 December 2010; MinterEllison, 'Anti-competitive price signalling— implications beyond the banking sector', 15 December 2010.

[8]        Smith, Duke and Round (2009, p 24).

[9]        See Beaton-Wells and Fisse, (2010, p 83), Smith, Duke and Round (2009, pp 26-27) and Noble (2010). The coordination spectrum was also noted by ACCC Commissioner Dr Jill Walker at a public hearing; Proof Committee Hansard, 25 January 2011, p 39.

[10]      The Part IV per se prohibitions are in sections 44ZZRF, 44ZZRG, 44ZZRJ and 44ZZRK relating to cartel provisions, section 45(2) relating to exclusionary conduct, sections 47(6) and (7) relating to third line forcing and section 48 relating to resale price maintenance. 

[11]      Noble (2010, p 1).

[12]      Mr Brian Cassidy, Chief Executive Officer of the ACCC, gave the House of Representatives Standing Committee on Economics the example of a company signalling that the following week it would concentrate on supplying a certain segment of the market. This signal says to its competitors that the company will be vacating the other segments they operate in and that could establish a market-sharing arrangement. One competitor says, ‘Well, in that case, I’m going to concentrate on this segment,’ and another competitor says, ‘Well, I’ll concentrate on that segment.’ With this arrangement in place, the company is free to increase its prices in the segment of market it has signalled it is going to concentrate on without any worry about its competitors taking away market share.; House of Representative Standing Committee on Economics Hansard, 18 February 2011, p 21.

[13]      Smith, Duke and Round (2009, pp 27-28).

[14]      Mr Ralph Norris, Committee Hansard, 15 December 2010, p 72.

[15]      Mr David Craig, Chief Financial Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 65.

[16]      Ms Gail Kelly, Committee Hansard, 21 January 2011, p 71.

[17]      Mr Mike Smith, Committee Hansard, 15 December 2010, p 141.

[18]      The issue has also been the subject of recent legal and academic debate. See footnotes 6 and 8.

[19]      Mr Brent Fisse, Submission 67, p 1.

[20]      Richard Gluyas, 'ANZ shift on plan to stick with RBA', The Australian, 4 November 2009, p 5.

[21]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 40.

[22]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 42.

[23]      Mr Brian Cassidy, Chief Executive Officer, ACCC, House of Representatives Standing Committee on Economics Hansard, 18 February 2011, p. 12. While Mr Cassidy's remark did not explicitly mention Mr Smith's comment, it is likely he had this comment in mind. 

[24]      Ms Sharon Henrick, Committee Hansard, 25 January 2011, p 100.

[25]      Mr Brent Fisse, Adjunct Professor of Law at the University of Sydney, Committee Hansard, 25 January 2011, p 100.

[26]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 59.

[27]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 59.

[28]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 62.

[29]      Mr Ralph Norris, Committee Hansard, 15 December 2010, pp 60 and 72.

[30]      Mr David Craig, Chief Financial Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 72.

[31]      Mr Mike Smith, ANZ Bank, Committee Hansard, 15 December 2010, p 131.

[32]      Mr David Foster, Committee Hansard, 9 February 2011, p 2.

[33]      Australian Bankers' Association, Submission 76, p 41.

[34]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p. 41.

[35]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p. 41.

[36]      Australian Financial Review, 'Price-signalling laws fraught with danger', 1 March 2011.

[37]      Mr Brian Cassidy, Committee Hansard, 25 January 2011, p 53.

[38]      [2005] FCAFC 161.

[39]      Marshall (2008, p 2).

[40]      ACCC (2007, p 228).

[41]      ACCC (2007, p 228).

[42]      Beaton-Wells and Fisse (2010, p 75).

[43]      Australian Competition and Consumer Commission, "High Court dismisses ACCC – APCO special leave application", Media release, MR 112/06, 5 June 2006.

[44]      [2007] FCA 794.

[45]      Law Council of Australia, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011.

[46]      Mr Brian Cassidy, Committee Hansard, 25 January 2011, pp 33-34.

[47]      Mallesons Stephen Jaques, Submission 60, p 6.

[48]      Mallesons Stephen Jaques, Submission 60, p 6.

[49]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 33.

[50]      Mallesons Stephen Jaques, Submission 60, p 6.

[51]      Ms Sharon Henrick, Committee Hansard, 25 January 2011, p 91.

[52]      Mr Brent Fisse, Committee Hansard, 25 January 2011, p 93.

[53]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 43.

[54]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 27.

[55]      ACCC (2007, p 228).

[56]      ACCC (2007, p 230). Specifically, the ACCC's proposed amendment stated:

(a) The court may determine that a corporation has arrived at an understanding notwithstanding that:

(i) the understanding is ascertainable only by inference from any factual matters the court considers appropriate

(ii) the corporation, or any other parties to the alleged understanding, are not committed to giving effect to the understanding.

(b) The factual matters the court may consider in determining whether a corporation has arrived at an understanding include but are not limited to:

(i) the conduct of the corporation or of any other person, including other parties to the alleged understanding

(ii) the extent to which one party intentionally aroused in other parties an expectation that the first party would act in a particular way in relation to the subject of the alleged understanding

(iii) the extent to which the corporation was acting in concert with others in relation to the subject matter of the alleged understanding

(iv) any dealings between the corporation and any other parties to the alleged understanding before the time at which the understanding is alleged to have been arrived at

(v) the provision by the corporation to a competitor, or the receipt by the corporation from a competitor, of information concerning the price at which or conditions on which, goods or services are supplied or acquired, or are to be supplied or acquired, by any of the parties to the alleged understanding or by any bodies corporate that are related to any of them, in competition with each other

(vi) whether the information referred to in (v) above is also provided to the market generally at the same time

(vii) the characteristics of the market

(viii) the likelihood of the information referred to in (v) above being useful to the recipient of the information for any purpose other than fixing or maintaining prices;

(ix) the extent to which, if at all, the communication referred to in (v) above was secret or intended by the parties to the communication to be secret.

[57]      Department of the Treasury, Discussion Paper: The meaning of 'understanding' in the Trade Practices Act 1974, http://www.treasury.gov.au/contentitem.asp?NavId=014&ContentID=1459 (accessed 25 February 2011).

[58]      Dr Caron Beaton-Wells and Mr Brent Fisse, Submission, Treasury inquiry into the meaning of 'understanding' in the Trade Practices Act, April 2009 http://www.treasury.gov.au/documents/1511/PDF/Beaton-Wells_and_Fisse.pdf (accessed 25 February 2011).

[59]      Imperial Chemical Industries Ltd v Commission [1972] ECR 619, [118].

[60]      Dr Caron Beaton-Wells and Mr Brent Fisse, Submission, Treasury inquiry into the meaning of 'understanding' in the Trade Practices Act, April 2009, p 12 http://www.treasury.gov.au/documents/1511/PDF/Beaton-Wells_and_Fisse.pdf (accessed 25 February 2011).

[61]      Dr Caron Beaton-Wells and Mr Brent Fisse, Submission, Treasury inquiry into the meaning of 'understanding' in the Trade Practices Act, April 2009, p 12 http://www.treasury.gov.au/documents/1511/PDF/Beaton-Wells_and_Fisse.pdf (accessed 25 February 2011).

[62]      Dr Caron Beaton-Wells and Mr Brent Fisse, Submission, Treasury inquiry into the meaning of 'understanding' in the Trade Practices Act, April 2009, pp 13-14.

[63]      See Mr Brent Fisse, Submission 67, p 3.

[64]      See also Smith, Duke and Round (2009, pp 22-42).

[65]      Mr Brian Cassidy, Committee Hansard, 25 January 2011, p 29.

[66]      Mr Brian Cassidy, Committee Hansard, 25 January 2011, p 28.

[67]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 28. This shift was earlier acknowledged by ACCC Commissioner Dr Jill Walker in a speech to the Law Council of Australia's annual Trade Practices Workshop in August 2010; http://www.accc.gov.au/content/item.phtml?itemId=944183&nodeId=3a77a169d2335c5403d1052290e9407e&fn=20100821_Walker_Law%20Council%20AgreementsFacPracFinal.pdf (accessed 27 March 2011).

[68]      Mr Brian Cassidy, Committee Hansard, 25 January 2011, p 30. Mr Cassidy also told the Committee of a recent UK case involving the Royal Bank of Scotland and Barclays. The Royal Bank of Scotland was found to have passed on specific price information to Barclays and—even in the absence of an underlying agreement—was fined £328.5 million.

[69]      Proposed section 44ZZW.

[70]      Proposed section 44ZZX.

[71]      Some have referred to this prohibition as 'the signalling prohibition'. See Law Council of Australia, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011.

[72]      Department of the Treasury, Competition and Consumer Amendment Bill (No. 1) 2010, Explanatory Note, http://www.treasury.gov.au/documents/1918/PDF/Explanatory_Material_CCAB.pdf  (accessed 10 March 2010).

[73]      Department of the Treasury, Competition and Consumer Amendment Bill (No. 1) 2010, Explanatory Note, p 4.

[74]      Australian Government, Competitive and sustainable banking system, 2010, p 11.

[75]      Mr Jim Murphy, Treasury, Proof Committee Hansard, 9 March 2011, p 7.

[76]      Mr Brent Fisse, Committee Hansard, 25 January 2011, p 93.

[77]      Dr Caron-Beaton-Wells and Mr Brent Fisse, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011, p 2.

[78]      Mr Brent Fisse and Dr Caron-Beaton-Wells, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011, p 4.

[79]      Law Council of Australia, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011, p 2.

[80]      Ms Sharon Henrick, Committee Hansard, 25 January 2011, p 92.

[81]      Mr Brent Fisse and Dr Caron-Beaton-Wells, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011, p 5.

[82]      Dr Rhonda Smith, Mr Arlen Duke and Professor David Round, Submission to Treasury, p 2.

[83]      Dr Rhonda Smith, Mr Arlen Duke and Professor David Round, Submission to Treasury, p 8.

[84]      Law Council of Australia, Submission to Treasury, Competition and Consumer Amendment Bill (No. 1) 2011 (Exposure draft), January 2011.

[85]      Mr Graeme Samuel, Committee Hansard, 25 January 2011, p 31.

[86]      Mr Brian Cassidy, Committee Hansard, 25 January 2011, p 31.

[87]      Mr Brent Fisse, Submission 67, p 2.

[88]      Dr Jill Walker, LECG, Memo dated 5 May 2009, p 9.

[89]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, p. 67.

[90]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, p. 71.

[91]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, p. 72.

[92]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, p. 72.

[93]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, pp 75‑76.

[94]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, p. 68.

[95]      Competition and Consumer Amendment Bill (No. 1) 2011, Explanatory Memorandum, p. 69.

[96]      Mr Bruce Billson, Second Reading Speech, House of Representatives Hansard, 22 November 2010, p 3118.

[97]      Mr Bruce Billson, House of Representatives Hansard, 22 November 2010, p 3118.

[98]      Mr Bruce Billson, House of Representatives Hansard, 22 November 2010, p 3118.

[99]      Mr Brian Cassidy, House of Representatives Standing Committee on Economics Hansard, 18 February 2011, p 11.

[100]    Australian Bankers' Association, Submission 4, House of Representatives Standing Committee on Economics, p 3.

[101]    Mr Stephen Münchenberg, House of Representatives Standing Committee on Economics Hansard, 18 February 2011, p 36.

[102]    Australian Bankers' Association, Submission 4, House of Representatives Standing Committee on Economics, p 4.

Chapter 9

[1]        Standing Committee on Economics, Trade Practices (Creeping Acquisitions) Amendment Bill 2007 [2008], August 2008, p 9.

[2]        Senate Economics References Committee, Aspects of Bank Mergers, September 2009, pp 15‑16.

[3]        Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 56.

[4]        Access of Small Business to Finance, June 2010, p 56. A similar recommendation appears in Senate Economics References Committee, Milking it for all it's worth – Competition and pricing in the Australian dairy industry, May 2010, p 60.

[5]        ACCC, Submission to Senate inquiry into Aspects of Bank Mergers, Submission 4, p 3.

[6]        Professor Stephen King, Committee Hansard, 21 January 2011, p 109.

[7]        Professor Stephen King, 'Retrospective merger analysis', Core Economics Blog, 22 January 2011, http://economics.com.au/?p=6638 (accessed 27 March 2011).

[8]        Dr John Laker, Committee Hansard, 14 December 2010, pp 11–12.

[9]        Senate Economics References Committee, Aspects of Bank Mergers, September 2009, pp 15‑16.

[10]      Mr Leon Carter, Secretary, Finance Union of Australia, Committee Hansard, 14 December 2010, p 44.

[11]      Mr Leon Carter, Committee Hansard, 14 December 2010, p 50.

[12]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, pp 60-61.

[13]      Mr Andrew Canion, Manager, Western Australian Small Enterprise Network, Committee Hansard, 21 January 2011, pp 114-115.

[14]      Phillip Naylor, Chief Executive, Mortgage Finance Association of Australia, Committee Hansard, 14 December 2010, pp 75–76.

[15]      Mr Murray Withers, Submission 99, p 1.

[16]      Australian Chamber of Commerce and Industry, Submission 37, p iv. A similar view was expressed by the Chamber of Commerce and Industry Queensland: Submission 43, p 19.

[17]      Fear et al (2010, p 13).

[18]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 58.

[19]      Dr Richard Denniss, Executive Director, Australia Institute, Committee Hansard, 15 December 2010, p 24.

[20]      NSW Business Chamber, Submission 84, p 11.

[21]      Finance Sector Union, Submission 80, p 4.

[22]      The ACCC were understandably reluctant to express a view at the hearing; Mr Graeme Samuel, Chairman, ACCC, Committee Hansard, 25 January 2011, p 34.

[23]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 56.

[24]      Mr Jost Stollmann, Chief Executive Officer, Tyro Payments, Committee Hansard, 21 January 2011, p 38.

[25]      Mr Leon Carter, National Secretary, Finance Sector Union, Committee Hansard, 14 December 2010, p 51.

[26]      Mr Matt Baxby, Managing Director, Virgin Money Australia, Proof Committee Hansard, 4 March 2011, p 29.

[27]      Mr Graeme Samuel, Chairman, and Mr Brian Cassidy, Chief Executive Officer, ACCC, Committee Hansard, 25 January 2011, p 37.

[28]      Mr Rodney Masson, Director, Policy and Communications, Finance Sector Union of Australia, Committee Hansard, 14 December 2010, p 51.

[29]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 41.

[30]      Independent Commission on Banking (2011, p 5).

[31]      Associate Professor Frank Zumbo, Submission 56, p 14.

[32]      Mr Brian Cassidy, Chief Executive Officer, ACCC, Committee Hansard, 25 January 2011, p 56.

[33]      Mr Matt Baxby, Proof Committee Hansard, 4 March 2010, p 30.

[34]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 40.

[35]      Mr Glenn Stevens, Committee Hansard, 13 December 2010, p 10.

[36]      Mr Glenn Stevens, Committee Hansard, 13 December 2010, p. 20.

[37]      Professor Sinclair Davidson, Committee Hansard, 25 January 2011, p. 65.

[38]      Professor Kevin Davis, Committee Hansard, 25 January 2011, p 63.

[39]      Mr Jim Murphy, Executive Director, Markets Group, Committee Hansard, 13 December 2010, p 27.

[40]      Accounts4Life, Submission 128, p 2.

[41]      Abacus, Submission 53, p 6; Australian Prudential Regulation Authority, Submission 57, p 3.

[42]      Abacus, Submission 53, pp 3 and 6.

[43]      Mr David Foster, Chief Executive Officer, Suncorp, Committee Hansard, 9 February 2011, p 6.

[44]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 111.

[45]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 111.

[46]      Mr John Symond, Executive Chairman, Aussie Home Loans, Committee Hansard, 14 December 2010, p 108.

[47]      Mr Jonathan Mott, Bank Analyst, UBS Securities Australia, Committee Hansard, 14 December 2010, p 148.

[48]      Mr James McPhee, Chief Executive Officer, Members Equity Bank, Committee Hansard, 25 January 2011, p 114.

[49]      Abacus, cited in Senate Economics References Committee, Government measures to address confidence concerns in the financial sector—The Financial Claims Scheme and the Guarantee Scheme for Large Deposits and Wholesale Funding, September 2009, p 18.

[50]      National Commission on the Causes of the Financial and Economic Crisis in the United States, The Financial Crisis Inquiry Report, 2011, p xxv.

[51]      Mr James McPhee, Chief Executive Officer, Members Equity Bank, Committee Hansard, 25 January 2011, p 115.

[52]      Professor Stephen King, Committee Hansard, 21 January 2011, p 100.

[53]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 80.

[54]      Mr Mal McCullough, Submission 10, p 1.

[55]      Mr Suryan Chandrasegaran, Submission 4, pp 4-5.

[56]      Mr Richard Talbot, Submission 51, p 1.

[57]      Professor John Quiggin, Submission 103, p 6.

[58]      Finance Brokers' Association of Australia, Submission 133, p 5.

[59]      Mr Chris Webbe, Submission 11, p 1.

[60]      30 per cent of respondents disagreed with the idea. Chamber of Commerce and Industry Queensland, Submission 43, p 16.

[61]      Professor Stephen King, Committee Hansard, 21 January 2011, p 106.

[62]      Mr Suryan Chandrasegaran, Submission 4, p 5.

[63]      Mr Mervin Reed, Submission 5, p 11.

[64]      Mr Dinesh Warusavitharana, Submission 98, p 3.

[65]      Associate Professor Frank Zumbo, Submission 56, p 8.

[66]      About 15 per cent of respondents disagreed with the idea. Chamber of Commerce and Industry Queensland, Submission 43, p 16.

[67]      Dr Evan Jones, Submission 81, p 6.

[68]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 9.

[69]      Australian Bankers' Association, Submission 76, p 42.

[70]      Australia Post, Submission 120, pp 3-4. The Bank@Post arrangements are described in further detail at http://auspost.com.au/personal/personal-banking-at-australia-post.html.           

[71]      Australia Post, Submission 120, p 7.

[72]      Mr Peter Strong, Executive Director, Council of Small Business Organisations of Australia, Committee Hansard, 15 December 2010, p 12.

[73]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 59.

[74]      Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 3.

Chapter 10

[1]        Senate Economics Legislation Committee, Trade Practices Amendment (Australian Consumer Law) Bill 2009 [Provisions], September 2009, p 1.

[2]        Mr David Bell, Senate Economics Legislation Committee Hansard, Trade Practices Amendment (Australian Consumer Law) Bill 2009 [Provisions], 26 August 2009, p 35.

[3]        Productivity Commission, Review of Australia's Consumer Policy Framework, April 2008, volume 2, pp 414-5. The Productivity Commission report includes a detailed discussion of issues related to unfair contract terms (pp 403-441), and gives an example of how competitive pressure from consumers against unfair contract terms in software end-user licence agreements has led to a reduction in the use of these unfair terms (p 427).

[4]        Banking and Finance Consumer Support Association, Submission 112, p 22.

[5]        Financial Ombudsman Service, Submission 78, p 3.

[6]        Choice, Submission 70, pp 7-8.

[7]        Choice, Submission 70, p 8.

[8]        Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 55.

[9]        Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 55.

[10]      Section 78(1) of the National Credit Code provides that 'The court may, if satisfied on the application of a debtor or guarantor that:... a fee or charge payable on early termination of a credit contract... is unconscionable, annul or reduce the change or fee or charge and may make ancillary or consequential orders.' Section 78(4) expands on this, saying ' For the purposes of this section, a fee or charge payable on early termination of the contract or a prepayment of an amount under the credit contract is unconscionable if and only if it appears to the court that it exceeds a reasonable estimate of the credit provider’s loss arising from the early termination or prepayment, including the credit provider’s average reasonable administrative costs in respect of such a termination or prepayment'.

[11]      Dr Peter Boxall, Commissioner, Australian Securities and Investments Commission, Committee Hansard, 21 January 2011, p 3.

[12]      Section 79(2) of the National Credit Code provides that 'ASIC may make an application under this Division and has standing to represent the public interest' and Section 79(3) adds 'The application...may apply to all or any class of credit contracts entered into by a credit provider during a specified period...'

[13]      Dr Peter Boxall, Commissioner, Australian Securities and Investments Commission, Committee Hansard, 21 January 2011, p 3.

[14]      Australian Securities and Investments Commission, Response to submissions on CP 135 Mortgage exit fees: unconscionable fees and unfair contract terms, November 2010, p 12.

[15]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 55.

[16]      Consumer Action Law Centre, Submission 87, p 14.

[17]      Consumer Action Law Centre, Submission 87, p 14.

[18]      Consumer Action Law Centre, Submission 87, pp 16–17.

[19]      Associate Professor Frank Zumbo, Submission 56, p 7.

[20]      Choice, Submission 70, p 4.

[21]      A corresponding amendment to section 12BG of the Australian Securities and Investments Act 2001 is also likely to be required.

[22]      Associate Professor Frank Zumbo, Submission 56, p 7.

[23]      Consumer Action Law Centre, Submission 87, p 20.

[24]      Finance Sector Union, Submission 80, p 10.

[25]      Cited in Finance Sector Union, Submission 80, p 7.

[26]      Cited in Finance Sector Union, Submission 80, p 8.

Chapter 11 - The prudential supervision of financial intermediaries and their social obligations

[1]        Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 2.

[2]        There are a handful of 'other ADIs'; specialist credit card providers and purchased payment facilities providers.

[3]        Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 2.

[4]        Australian Prudential Regulation Authority, Submission 57, p 10.

[5]        Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 65. This claim is also made repeatedly by the Australian Bankers' Association head in S Münchenberg, 'Balancing bank stability and competition', The Australian, 17 January 2011, p 32.

[6]        Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 65.

[7]        Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 97.

[8]        Professor Stephen King, Committee Hansard, 21 January 2011, p 108.

[9]        Professor Ian Harper, cited in Senate Economics References Committee, Government measures to address confidence concerns in the financial sector – The Financial Claims Scheme and the Guarantee Scheme for Large Deposits and Wholesale Funding, September 2009, p 43.

[10]      Mishkin (2004, p 269), a well-known textbook by an economics professor formerly on the Federal Reserve Board.

[11]      Senate Economics References Committee, Government measures to address confidence concerns in the financial sector – The Financial Claims Scheme and the Guarantee Scheme for Large Deposits and Wholesale Funding, September 2009, p 19.

[12]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 27.

[13]      Department of the Treasury, cited in Senate Economics References Committee, Government measures to address confidence concerns in the financial sector—The Financial Claims Scheme and the Guarantee Scheme for Large Deposits and Wholesale Funding, September 2009, p 37.

[14]      Mr Graeme Samuel, Chairman, ACCC, Committee Hansard, 25 January 2011, p 56.

[15]      Bain & Co, ' Getting bank competition right post-crisis', provided by the Commonwealth Bank of Australia, Additional information no. 7, 23 December 2010, pp 1-2.

[16]      CHOICE, Submission 70, p 11.

[17]      Mr Matt Baxby, Managing Director, Virgin Money Australia, Proof Committee Hansard, 4 March 2011, p 29.

[18]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 2.

[19]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 7.

[20]      Mishkin (2004, p 263).

[21]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 62.

[22]      Mr Peter Mair, Submission 2, p 4.

[23]      Dr Nicholas Gruen, Submission 21, p 1.

[24]      Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 15.

[25]      Australian Council of Trade Unions, Submission 89, p 3.

[26]      Independent Commission on Banking (2011, p 2).

[27]      UK House of Commons Treasury Committee, Competition and Choice in Retail Banking, March 2011, p 5.

[28]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 33.

[29]      Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 68.

[30]      Professor John Quiggin, Proof Committee Hansard, 4 March 2011, p 45.

[31]      Mr Ralph Norris, Commonwealth Bank, Committee Hansard, 15 December 2010, p 68.

[32]      Mr David Craig, Chief Financial Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 68.

[33]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 12.

[34]      In Australia only the four major banks and Macquarie Bank currently have approval to use the advanced approaches.

[35]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 86. Similar remarks were made by Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 16. See also Members Equity Bank, Submission 77, p 4.

[36]      Heritage Building Society, Submission 113, p 7.

[37]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, pp 12-13.

[38]      Australian Prudential Regulation Authority, Submission 57, p 5.

[39]      Australian Prudential Regulation Authority, Submission 57, p 7.

[40]      Australian Prudential Regulation Authority, Submission 57, p 6.

[41]      Heritage Building Society, Submission 113, p 7.

[42]      Master Builders' Association, Submission 38, p 6.

[43]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 8.

[44]      Australian Prudential Regulation Authority, Submission 57, pp 7-8.

[45]      Australian Prudential Regulation Authority, Submission 57, p 8.

[46]      Further information about them can be found at Australian Prudential Regulation Authority, Submission 57, Attachment B.

[47]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 8.

[48]      Australian Prudential Regulation Authority, Submission 57, p 9. See also Dr John Laker, Chairman, APRA, Committee Hansard, 14 December 2010, p 8.

[49]      Westpac, Submission 72, p 30.

[50]      Mr Wayne Byres, Executive General Manager, Diversified Institutions Division, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 8.

[51]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 8. The risk premia are unlikely to drop back to where they were immediately before the GFC as the risk premia then had been unrealistically low.

[52]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 20. Members Equity Bank also argued for this; Submission 77, p 4, as did Aussie, Submission 39, p 5.

[53]      Australian Bankers' Association, Submission 76, p 57.

[54]      APRA, Responses to questions on notice, no 10, 31 January 2011, p 3.

[55]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 20.

[56]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 87.

[57]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 20.

[58]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 1.

[59]      'Australian Implementation of Global Liquidity Standards', Reserve Bank of Australia and APRA Joint Media Release, 17 December 2010.

[60]      Reserve Bank of Australia, Financial Stability Review, March 2011, p 61.

[61]      Abacus, Submission 53, p 23.

[62]      Australian Prudential Regulation Authority, Submission 57, p 3.

[63]      Mr Mark Degotardi, Head of Public Affairs, Abacus, Committee Hansard, 13 December 2010, p 86.

[64]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 5.

[65]      Department of the Treasury, Submission 102, p 30.

[66]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 5. See also Competitive and Sustainable Banking System, Australian Government, December 2010, p 17.

[67]      Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 66.

[68]      Mr Ralph Norris, Commonwealth Bank, Committee Hansard, 15 December 2010, p 67.

[69]      Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 84.

[70]      Abacus, Submission 53, p 21. The mutual ADIs with ESAs are Greater Building Society, Heritage Building Society, IMB Ltd, and Police Department Employees Credit Union.

[71]      Australian Financial System Review Group, Report, pp 56-57.

[72]      House of Representatives Standing Committee on Finance and Public Administration (1991, p 129).

[73]      Heritage Building Society, Submission 113, p 5.

[74]      Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 82. See also their Submission 84, p 3. A similar view was put by Heritage Building Society, Submission 113, p 6 and Abacus, Submission 53, p 22.

[75]      Credit Union Australia, Submission 85, p 5.

[76]      Abacus, Submission 53, p 22.

[77]      Productivity Commission Annual Review of Regulatory Burdens on Business: Business and Consumer Services. August 2010 Research Report, cited in Abacus, Submission 53, p 23.

[78]      Mr John Brogden, Chief Executive Officer, Financial Services Council, Committee Hansard, 21 January 2011, p 21.

[79]      Mr Chris Whitehead, Chief Executive Officer, Credit Union Australia, Committee Hansard, 25 January 2011, p 86.

[80]      Ms Louise Petschler, Chief Executive Officer, Abacus, Committee Hansard, 13 December 2010, p 83.

[81]      Mr Mark Degotardi, Head of Public Affairs, Abacus, Committee Hansard, 13 December 2010, p 86.

[82]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 97.

[83]      Mr Jonathan Mott, Banking Analyst, UBS Securities Australia, Committee Hansard, 14 December 2010, p 146.

[84]      Dr Peter Boxall, Commissioner, ASIC, Committee Hansard, 21 January 2011, p 13.

[85]      Provic Group, Submission 123, p 5.

[86]      Provic Group, Submission 123, p 6.

[87]      Professor Kevin Davis, Committee Hansard, 25 January 2011, p 77.

[88]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 77.

[89]      Mr Anthony Rose, Chief Financial Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 8.

[90]      Confidential, Submission 81, p 19.

[91]      Independent Commission on Banking (2011, pp 3-4).

[92]      Kay (2010, pp 225-226).

[93]      Independent Commission on Banking (2011, p 2).

[94]      Australian Council of Trade Unions, Submission 89, p 3.

[95]      Chamber of Commerce and Industry Queensland, Submission 43, p 5.

[96]      Mr Peter Higgins, Submission 17, p 2.

[97]      Finance Sector Union, Submission 80, p 11.

[98]      Australian Council of Trade Unions, Submission 89, p 2.

[99]      The Hon. Joe Hockey MP, 'Address to the Australian Industry Group Annual National Forum, Canberra, 25 October 2010.

[100]    Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Proof Committee Hansard, 9 March 2011, p 11.

[101]    Mr Andrew Oliver, Submission 1, pp 2-3.

[102]    Chamber of Commerce and Industry Queensland, Submission 43, p 3.

[103]    Brotherhood of St Laurence, Submission 29, p 3.

[104]    The Hon. Joe Hockey MP, 'Address to the Australian Industry Group Annual National Forum, Canberra, 25 October 2010.

[105]    Mr Lindsay Johnston, Submission 97, p 10.

[106]    Finance Sector Union, Submission 80, pp 1- 3.

[107]    Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 2.

[108]    Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, pp 78-79.

[109]    Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, pp 2 and 5.

[110]    Mr Gerard Brody, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 3.

[111]    Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 21. Mr Liddy stated that while the lottery account was unique in Australia similar products were offered in New Zealand and the United Kingdom.

[112]    Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, pp 3-4.

[113]    Australian Bankers' Association, Submission 76, p 44.

[114]    Mr Gerard Brody, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 11.

[115]    Mr Gerard Brody, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 7.

[116]    Australia Institute, Submission 46, p 3.

Chapter 12 - Government guarantees and support

[1]        The Bank for International Settlements identified September–November 2008 as the most severe stage of the global financial crisis; BIS (2009, p 16).

[2]        Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 27.

[3]        Dr Ken Henry, Secretary, Department of the Treasury, cited in Senate Economics References Committee, Government measures to address confidence concerns in the financial sector – The Financial Claims Scheme and the Guarantee Scheme for Large Deposits and Wholesale Funding, September 2009, p 11. APRA expressed a similar view.

[4]        Professor Milind Sathye, cited in Senate Economics References Committee, Government measures, p 19.

[5]        Reserve Bank of Australia and Australian Prudential Regulation Authority, cited in Senate Economics References Committee, Government measures, p 9. A table with an international comparison is also given in that report.

[6]        Australian Bankers' Association, Submission 76, p 12.

[7]        Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, was asked twice about provisioning but did not answer; Committee Hansard, 15 December 2010, p 69.

[8]        Unlike the FCS, the Funding Guarantee Scheme also guarantees, with some restrictions, issuance by foreign-bank branches.

[9]        Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 19.

[10]      Mr Ralph Norris, Chief Executive Officer, Commonwealth Bank of Australia, Committee Hansard, 15 December 2010, p 43.

[11]      Australian Bankers' Association, Submission 76, p 12.

[12]      Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 117. See also Australian Bankers' Association, Submission 76, p 23.

[13]      Reserve Bank of Australia, Submission 41, p 26.

[14]      ANZ Bank, Submission 94, p 7.

[15]      Mr Richard Lloyd, International Policy Adviser, Choice, Committee Hansard, 14 December 2010, p 29.

[16]      As defined by the Financial Services Council, these include cash management trusts, mortgage trusts and certain bond funds.

[17]      Financial Services Council, Submission 121, p 4.

[18]      Mr John Brogden, Chief Executive Officer, Financial Services Council, Committee Hansard, 21 January 2011, p 19. See also Aussie, Submission 39, p 5.

[19]      Provic Group, Submission 123, p 6.

[20]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 28. The Reserve Bank expressed a similar view; Senate Economics References Committee, Government measures, p 30.

[21]      Australian Securitisation Forum, Submission 74, p 11.

[22]      Provic Group, Submission 123, p 6.

[23]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 13.

[24]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 28.

[25]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 9.

[26]      Heritage Building Society, Submission 113, pp 3-5.

[27]      Reserve Bank of Australia, Submission 41, p 27.

[28]      Mr Mark Degotardi, Head of Public Affairs, Abacus, Committee Hansard, 13 December 2010, p 92.

[29]      Mr Richard Lloyd, International Policy Adviser, Choice, Committee Hansard, 14 December 2010, p 31.

[30]      Mr John Minz, Chief Executive Officer, Heritage Building Society, Proof Committee Hansard, 4 March 2011, p 13. See also Mr James McPhee, Chief Executive Officer, Members Equity Bank, Committee Hansard, 25 January 2011, p 11.

[31]      Mr Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry, provide effectivelyCommittee Hansard, 15 December 2010, p 114. See also Chamber of Commerce and Industry Queensland, Submission 43, p 19.

[32]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 17.

[33]      Reserve Bank of Australia, Financial Stability Review, March 2009, p 46.

[34]      BIS (2009, p 106).

[35]      The CEO of the Australian Bankers' Association said '...at the time of that announcement perhaps no-one could have anticipated this looking-through issue'; cited in Senate Economics References Committee, Government measures, p 17.

[36]      Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 10.

[37]      Bank of Queensland, Submission 44, pp 4-5.

[38]      Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 16.

[39]      Schwartz, (2010, p 20), cited by Abacus, Submission 53, p 8.

[40]      Heritage Building Society, Submission 113, p 5.

[41]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 78.

[42]      Senate Economics References Committee, Government measures, p 19.

[43]      The notion that the major banks are 'too big to fail' is discussed in Chapter 11.

[44]      Abacus, Submission 53, p 12.

[45]      Professor Ian Harper, cited in Senate Economics References Committee, Government measures, p 7.

[46]      Professor Ian Harper, cited in Senate Economics References Committee, Government measures, p 7.

[47]      Ms Louise Petschler, Chief Executive Officer, Abacus, Committee Hansard, 13 December 2010, pp 83 and 88. This argument is supported by Credit Union Australia, Submission 85, p 11 and Heritage Building Society, Submission 113, p 5.

[48]      Abacus, Submission 53, p 32.

[49]      Senate Economics References Committee, Government measures, pp 50-51.

[50]      The poll was conducted for IFSA. Australian Financial Review, 7 August 2009, p 56.

[51]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 96.

[52]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 40.

[53]      Australian Bankers' Association, Submission 76, p 51.

[54]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 16.

[55]      Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 145.

[56]      Professor Stephen King, Committee Hansard, 21 January 2011, p 99.

[57]      Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 160.

[58]      Abacus, Submission 53, p 12.

[59]      Professor Stephen King, Committee Hansard, 21 January 2011, p 101.

[60]      Yellow Brick Road, Submission 101, p 9.

[61]      Abacus, Submission 53, pp 13-14.

[62]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 18.

[63]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 14.

[64]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 14.

[65]      Mr Mervin Reed, Submission 5, p 11.

Chapter 13 - Bonds: a key funding source

[1]        Albertazzi et al (2011, p 1).

[2]        Reserve Bank of Australia, Submission 41, p 4.

[3]        Structured investment vehicles. Laminar Group also suggests SIVs bought about half the RMBS; Submission 34, p 8.

[4]        Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, pp 3-4.

[5]        Australian Chamber of Commerce and Industry, Submission 37, p v.

[6]        Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 18.

[7]        Heritage Building Society, Submission 113, p 6.

[8]        Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 145.

[9]        Mr Owen Williams, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 102.

[10]      Australian Bankers' Association, Submission 76, p 66.

[11]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 4.

[12]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 97.

[13]      Mr Michael Bath, Acting Chief Executive Officer, Australian Office of Financial Management, Committee Hansard, 15 December 2010, p 106.

[14]      Heritage Building Society, Submission 113, p 5.

[15]      Australian Prudential Regulation Authority, Responses to questions on notice, no 6, 31 January 2011, pp 3-4.

[16]      Albertazzi et al (2011, pp 2-3). Their own study casts some doubt on this for the case of Italian banks.

[17]      Department of the Treasury, Responses to questions on notice, no 14, 4 February 2011, p 2.

[18]      Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 97.

[19]      Mr Jonathan Mott, Analyst, UBS, Tabled document no. 5, 14 December 2010, p 1.

[20]      Australian Bankers' Association, Submission 76, p 56.

[21]      Mr Glenn Stevens, Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 2. He elaborated somewhat on p 6.

[22]      Mr Glenn Stevens, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 6.

[23]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 36.

[24]      Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 145.

[25]      Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Committee Hansard, 14 December 2010, p 104.

[26]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 98.

[27]      Australian Bankers' Association, Submission 76, p 57.

[28]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 21.

[29]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 21.

[30]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 16.

[31]      Mr Dalton, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 19.

[32]      Mr Michael Bath, Acting Chief Executive Officer, Australian Office of Financial Management, Committee Hansard, 15 December 2010, p 96.

[33]      Mr James Austin, Chief Financial Officer, FirstMac Group, Proof Committee Hansard, 4 March 2011, p 20.

[34]      Mortgage House of Australia, Submission 115, p 2. See also FirstMac Group, Submission 26, p 5 and Australian Bankers' Association, Submission 76, p 58.

[35]      Australian Securitisation Forum, Submission 122, p 15.

[36]      International Organization of Securities Commissions, Unregulated Financial Markets and Products: Final Report, September 2009, p 21.

[37]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 21.

[38]      Mr Glenn Stevens, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 7.

[39]      Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 145.

[40]      Mr Michael Bath, Acting Chief Executive Officer, Australian Office of Financial Management, Committee Hansard, 15 December 2010, p 106.

[41]      Goodhart (2010, p 165).

[42]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 97.

[43]      Heritage Building Society, Submission 113, p 7.

[44]      Heritage Building Society, Submission 113, p 8.

[45]      Bendigo and Adelaide Bank, Submission 58, p 6.

[46]      Australian Government, Competitive and Sustainable Banking System, December 2010, pp 19‑20; 'More support for a competitive lending market', Treasurer's media release no 031, 8 April 2011.

[47]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 24.

[48]      Reserve Bank of Australia, Submission 41, p 6.

[49]      Mr Glenn Stevens, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 18.

[50]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 43.

[51]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 19.

[52]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 19.

[53]      Ms Louise Petschler, Chief Executive Officer, Abacus, Committee Hansard, 13 December 2010, p 84.

[54]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 17.

[55]      Mr Steven Münchenberg, Chief Executive Officer, Australian Bankers' Association, Proof Committee Hansard, 14 December 2010, p 79. See also Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 2; Members Equity Bank, Submission 77, p 2; and ING Bank, Submission 35, p 2.

[56]      Mr Phillip Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 14 December 2010, p 67.

[57]      Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, p 54.

[58]      Mr Phillip Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 14 December 2010, p 66.

[59]      Mr John Symond, Executive Chairman, Aussie Home Loans, Committee Hansard, 14 December 2010, pp 117-8.

[60]      Credit Union Australia, Submission 85, p 8. At the hearing CUA's CEO added that the amount 'is unlikely to be sufficient to support anticipated demand from the credit unions and building societies movement if competition in banking is indeed to increase to meaningful levels'; Mr Chris Whitehead, Committee Hansard, 25 January 2011, p 82. See also Abacus, Submission 53, p 16.

[61]      Members Equity Bank, Submission 77, p 3. See also Think Tank Property Finance, Submission 61, p 5.

[62]      Australian Securitisation Forum, Submission 74, p 12.

[63]      Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 16.

[64]      Mr Jonathan Mott, UBS Securities Australia, Committee Hansard, 14 December 2010, p 145.

[65]      Proof Committee Hansards, 14 December 2010, pp 114-6; 15 December 2010, pp 58-59, 97‑103; and 9 March 2011, p 15.

[66]      Australian Bankers' Association, Responses to questions on notice, no 15, 8 February 2011, p 3.

[67]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 19.

[68]      Mr Mark Bouris, Executive Chairman, Yellow Brick Road Wealth Management, Committee Hansard, 13 December 2010, p 99. This is elaborated in Submission 101, p 10.

[69]      Yellow Brick Road, Submission 101, pp 11-13.

[70]      Australian Bankers' Association, Responses to questions on notice, no 15, 8 February 2011, p 3.

[71]      Abacus, Submission 53, p 17.

[72]      Australian Bankers' Association, Submission 76, p 57.

[73]      Members Equity Bank, Submission 77, p 4.

[74]      Mr Michael Bath, Acting Chief Executive Officer, Australian Office of Financial Management, Committee Hansard, 15 December 2010, p 96.

[75]      Mr Phillip Naylor, Chief Executive Officer, Mortgage and Finance Association of Australia, Committee Hansard, 14 December 2010, p 67.

[76]      Mr Phillip Naylor, MFAA, Proof Committee Hansard, 14 December 2010, p 73.

[77]      Mr Phillip Naylor, MFAA, Proof Committee Hansard, 14 December 2010, p 67.

[78]      Mr John Symond, Executive Chairman, Aussie Home Loans, Committee Hansard, 14 December 2010, p 111.

[79]      Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, pp 86-87. See also Virgin Money Australia, Submission 62, p 4 and Associate Professor Frank Zumbo, Submission 56, p 10.

[80]      Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 2. See also Mr David Liddy, Chief Executive Officer, Bank of Queensland, Committee Hansard, 9 February 2011, p 16.

[81]      Mr Michael Bath, Acting Chief Executive Officer, Australian Office of Financial Management, Committee Hansard, 15 December 2010, p 97.

[82]      Members Equity Bank, Submission 77, p 3.

[83]      Treasury, Submission 167 to House of Representatives Standing Committee on Infrastructure, Transport, Regional Development and Local Government for its 2009 inquiry into the impact of the global financial crisis on regional Australia, cited in Treasury, Responses to questions on notice, no 14, 4 February 2011, pp 3-4.

[84]      As part of this commitment, on 24 March 2011 Treasury released an exposure draft of the Banking Amendment (Covered Bonds) Bill (No.1) 2011 for consultation.

[85]      Reserve Bank of Australia, Financial Stability Review, March 2011, p 17.

[86]      Department of the Treasury, Submission 102, p 30.

[87]      Mr Mark Joiner, Executive Director, Finance, National Australia Bank, Committee Hansard, 13 December 2010, p 64.

[88]      ING Bank, Submission 35, p 2.

[89]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 64.

[90]      Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 16.

[91]      Professor Milind Sathye, Committee Hansard, 15 December 2010, p 35.

[92]      Mr Philip Coffey, Chief Financial Officer, Westpac, Committee Hansard, 21 January 2011, p 94.

[93]      Dr Guy Debelle, Assistant Governor, Reserve Bank of Australia, Committee Hansard, 13 December 2010, p 8.

[94]      Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 64.

[95]      Reserve Bank of Australia, Financial Stability Review, March 2011, p 17.

[96]      Australian Securitisation Forum, Submission 122, p 15. The countries are Austria, Canada,  Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, South Korea, Spain, Sweden, Switzerland, United Kingdom, U.S.A. and Ukraine.

[97]      Dr John Laker, Chairman, Australian Prudential Regulation Authority, Committee Hansard, 14 December 2010, p 2. See also Reserve Bank of Australia, Financial Stability Review, March 2011, p 17.

[98]      Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 36.

[99]      Abacus, Submission 53, p 17. See also Mr John Minz, Chief Executive Officer, Heritage Building Society, Committee Hansard, 4 March 2011, p 15.

[100]    Mr Jonathan Mott, Banking Analyst, UBS Securities Australia, Committee Hansard, 14 December 2010, p 149. See also Professor Milind Sathye, Committee Hansard, 15 December 2010, p 36; Associate Professor Frank Zumbo, Committee Hansard, 14 December 2010, pp 55-56; and Dr Evan Jones, Submission 81, p 6.

[101]    Bank of Queensland, Submission 44, p 4. See also Bendigo and Adelaide Bank, Submission 58, p 5; Heritage Building Society, Submission 113, p 7; Mr David Foster, Suncorp Bank, Committee Hansard, 9 February 2011, p 2;

[102]    Mr Jonathan Mott, Banking Analyst, UBS Securities Australia, Proof Committee Hansard, 14 December 2010, p 150. A survey by the Australian Securitisation Forum suggests there is some investor interest in smaller issuance sizes of $100 million to $200 million; see their Submission 74, p 16.

[103]    Mr Graham Hodges, Deputy Chief Executive Officer, ANZ Banking Group, Committee Hansard, 15 December 2010, p 125. A similar view was put by Mr Philip Coffey, Chief Financial Officer, Westpac, Committee Hansard, 21 January 2011, pp 70-71.

[104]    Mr George Ivanov, Submission 124, p 6.

[105]    Mr Jonathan Mott, Banking Analyst, UBS Securities Australia, Proof Committee Hansard, 14 December 2010, p 151.

[106]    Reserve Bank of Australia, Financial Stability Review, March 2011, p 18.

[107]    Australian Securitisation Forum, Submission 74, p 17.

[108]    Reserve Bank of Australia, Financial Stability Review, March 2011, p 18.

[109]    Mr Mike Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 82.

[110]    Australian Government, Competitive and Sustainable Banking System, December 2010, p 24.

[111]    Australian Government, Competitive and Sustainable Banking System, December 2010, p 23.

[112]    Mr Rob Paton and Mr Ismar Tuzovic, Submission 13.

[113]    ING Bank, Submission 35, p 3.

[114]    A mutual ADI, cited by Abacus, Submission 53, p 14.

[115]    Australian Securitisation Forum, Submission 74, p 18.

[116]    Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 2. See also Bendigo and Adelaide Bank, Submission 58, p 6; Mr Michael Murphy, Chief Executive Officer, Queensland Teachers Credit Union, Proof Committee Hansard, 4 March 2011 and Ms Gail Kelly, Chief Executive Officer, Westpac, Committee Hansard, 21 January 2011, p 80.

[117]    Australian Bankers' Association, Submission 76, p 58.

[118]    Australian Bankers' Association, Submission 76, p 59.

[119]    Australian Bankers' Association, Submission 76, p 59.

[120]    Australian Bankers' Association, Submission 76, p 58.

[121]    Financial Services Council, Submission 121, p 3. The FSC argues that population aging will lead to greater amounts invested in fixed income securities without any intervention.

[122]    Mr John Brogden, Chief Executive Officer, Financial Services Council, Committee Hansard, 21 January 2011, p 18.

[123]    Cited in Financial Services Council, Submission 121, p 3.

[124]    Professor Tom Valentine, Committee Hansard, 25 January 2011, p 62.

Chapter 14 - Competition in the payments system

[1]        Mr Richard Lloyd, International Policy Adviser, Choice, Committee Hansard, 14 December 2010, p 29.

[2]        Mr Nick Stace, Chief Executive Officer, Choice, Committee Hansard, 14 December 2010, p 29.

[3]        Professor Tom Valentine, Committee Hansard, 25 January 2011, p 74.

[4]        Mr Christopher Hamilton, Australian Payments Clearing Association, Committee Hansard, 21 January 2011, p 30.

[5]        Care Financial Counselling Service, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 3, p 6.

[6]        Flood, Hancock and Smith (2011, p 44). The authors point out that 'it is possible that the survey respondents may have modified their behaviour during the course of the survey as a result of making a record of the direct charges incurred'.

[7]        Flood, Hancock and Smith (2011, p 45).

[8]        John O'Brien, Submission 117, p 5.

[9]        Redfern Legal Centre, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 2, p 2.

[10]      Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 3.

[11]      Filipovski and Flood (2010, pp 40-41) and Flood, Hancock and Smith (2011). Similar responses were observed in the US: see McAndrews (1998, p 3).

[12]      Dr Christopher Kent, Head, Payments Policy Department, Reserve Bank of Australia, Proof Committee Hansard, 4 March 2011, pp 35-36.

[13]      ATM Industry Reference Group, Submission 79, p 2.

[14]      Ms Nicole Rich, Director, Policy and Campaigns, Consumer Action Law Centre, Committee Hansard, 25 January 2011, p 19. See also Brotherhood of St Laurence, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 5, p 4.

[15]      Mr John Minz, Chief Executive Officer, Heritage Building Society, Proof Committee Hansard, 4 March 2011, pp 16-17.

[16]      Filipovski and Flood (2010, p 42).

[17]      National Australia Bank, Submission 91, p 9.

[18]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 1.

[19]      Filipovski and Flood (2010, p 43). A similar tale is told by Choice, Response to questions on notice, no 5, 17 January 2011.

[20]      Dr Christopher Kent, Head, Payments Policy Department, Reserve Bank of Australia, Proof Committee Hansard, 4 March 2011, p 36.

[21]      Commonwealth Bank, Responses to questions on notice, no 8, 15 December 2010, p 2.

[22]      Schwartz et al (2007, pp 100-101). The main components of the cost are the ATM equipment (18 cents), cash handling and storage (14 cents), ATM owner centre management (9 cents) and rental (12 cents). The cost is now likely to be significantly higher, at least for some ATMs as site rents have increased and ATMs are now deployed in sites where servicing costs are higher or transactions volumes lower; Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 10. Cash restocking costs may vary significantly from site to site, depending on whether the ATM is stocked by the site owner with recirculated cash, or externally by the ATM provider.

[23]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 9.

[24]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 10.

[25]      Treasury, Responses to questions on notice, no 14, 4 February 2011, p 8.

[26]      Treasury, Responses to questions on notice, no 14, 4 February 2011, p 8.

[27]      McAndrews (1998, p 2).

[28]      Senator Tom Harkin's amendment no 3812, co-sponsored by Senator Charles Schumer, to S. 3712, the Restoring American Financial Stability Act. The 1997 initiative was by Senator Alfonse D'Amato, then chair of the Senate Banking Committee.

[29]      Salvation Army, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 6, p 2.

[30]      Mr David Bell, ABA Media Release, 3 March 2010.

[31]      Dr Christopher Kent, Head, Payments Policy Department, Reserve Bank of Australia, Proof Committee Hansard, 4 March 2011, p 42.  Flood, Hancock and Smith (2011, p 47) report that 'the highest direct charge that the Bank is aware of in any location is $5.00 for a cash withdrawal at a specialised venue'.

[32]      Ms Nicole Rich, Director, Policy and Campaigns, Consumer Action Law Centre, Committee Hansard, 25 January 2011, p 19.

[33]      Professor Milind Sathye, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 1 p 6.

[34]      Brotherhood of St Laurence, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 5, p 4.

[35]      Joint Committee on Corporations and Financial Services, Report on the ATM Fee Structure, January 2004, p 24.

[36]      Brotherhood of St Laurence, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 5 p 4.

[37]      Consumer Action Law Centre, Submission 87, p 23.

[38]      Filipovski and Flood (2010, p 44).

[39]      Professor Milind Sathye, Senate Economics Legislation Committee inquiry into the Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010, Submission 1, pp 4-5.

[40]      McAndrews (1998, p 2).

[41]      Donze and Dubec (2009, p 584).

[42]      Banktech, Customers Ltd and First Data International (Cashcard Australia).

[43]      ATM Industry Reference Group, Submission 79, p 1.

[44]      ATM Industry Association, Submission 71, p 2.

[45]      Australian Government, Competitive and Sustainable Banking System, December 2010, p 15. The Taskforce has provided an interim report to the Government on the impact of ATM charges on indigenous communities; Mr John Lonsdale, General Manager, Financial System Division, Proof Committee Hansard, 9 March 2011, p 12.

[46]      National Australia Bank, Submission 91, p 9.

[47]      Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, pp 2 and 5.

[48]      Mr Gerard Brody, Senior Manager, Financial Inclusion, Brotherhood of St Laurence, Committee Hansard, 25 January 2011, p 2.

[49]      Mr Peter Mair, Submission 2, p 8.

[50]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p 62.

[51]      Professor Tom Valentine, Submission 14, pp 7-8.

[52]      Ms Carolyn Currie, Submission 114, p 2.

[53]      Visa, Submission 127, p 3.

[54]      Ausubel (1991) examined the US credit card market, which also shows high and 'sticky' interest rates, and found that credit card lending earned a much higher rate of return that other banking activities, and this could not explained by the higher bad debts during recessions. His calculations suggest the interest rate was around 5 percentage points above the competitive rate.

[55]      Reserve Bank of Australia, Responses to questions on notice, no 6, 18 January 2011, p 7.

[56]      Sydney Morning Herald, 6 April 2011, p 6.

[57]      Study by the University of Warwick, cited in Sydney Morning Herald, 6 April 2011, p 6.

[58]      Accounts4Life, Submission 128, p 3.

[59]      National Consumer Credit Protection Amendment (Home Loans and Credit Cards) Bill 2011.

[60]      The Government gave the following example: 'the Johnson family may have a credit card balance of $5,000, consisting of a $2,500 balance transfer from a previous lender on which they are now paying interest at a special rate of 1.9% per annum, and another $2,500 which they have spent using a credit card from their new lender on which they are paying interest at 19.9% per annum. If the Johnson family were able to make a $2,000 payment towards their credit card balance, most lenders would seek to use this to pay off $2,000 of the debt which is only costing 1.9% per annum. The Government will legislate to ensure that the lender must instead use the $2,000 to pay down some of the debt on which interest is owed at the much higher rate of 19.9%, saving the Johnson family around $360 a year.' Australian Government, Competitive and Sustainable Banking System, December 2010, p 13.

[61]      Ms Karen Cox, Co-ordinator, Consumer Credit Legal Centre, Sydney Morning Herald, 6 April 2011, p 6.

[62]      Professor Ross Buckley, Submission 32, p 3.

[63]      Mr Peter Mair, Submission 2, p 7.

[64]      Mr Mervin Reed, Submission 5, p 9.

[65]      Mr Darren Flood, Deputy Head, Payments Policy Department, Reserve Bank of Australia, Proof Committee Hansard, 4 March 2011, p 36.

[66]      Mr Mervin Reed, Submission 5, p 2.

[67]      Accounts4Life, Submission 128, p 2.

[68]      Tyro Payments. Submission 36, p 2.

[69]      The following paragraphs draw on Tyro Payments, Submission 36.

[70]      Tyro Payments. Submission 36, p 9.

[71]      Mr Jost Stollmann, Chief Executive Officer, Tyro Payments, Committee Hansard, 21 January 2011, p 34.

[72]      Mr Jost Stollmann, Tyro Payments, Committee Hansard, 21 January 2011, p 36.

[73]      Mr Jost Stollmann, Tyro Payments, Committee Hansard, 21 January 2011, p 45.

[74]      Mr David Foster, Chief Executive, Suncorp Bank, Committee Hansard, 9 February 2011, 9 February 2011, p 8.

[75]      Council of Small Business of Australia, Submission 90, p 5.

[76]      Dr Christopher Kent, Head, Payments Policy Department, Reserve Bank of Australia, Proof Committee Hansard, 4 March 2011, p 40.

[77]      Dr Christopher Kent, RBA, Proof Committee Hansard, 4 March 2011, p 39.

Chapter 15

[1]        Mr Don Koch, Chief Executive Officer, ING Direct, Proof Committee Hansard, 14 December 2010, p 135.

[2]        The 2009 Report on Australia's Future Tax System and the Australian Financial Centre Forum’s 2010 report Australia as a financial services centre: Building on our strengths.

[3]        The Hon. Wayne Swan MP, 'Phasing down interest withholding tax on financial institutions to support banking competition', Media release, 11 May 2011.

[4]        Treasury, Responses to questions on notice, no 14, 4 February 2011, p 2.

[5]        Mr Mark Mullington, Chief Financial Officer, ING Direct, Committee Hansard, 14 December 2010, p 138. See also their Submission 35, pp 3-4. Similar views are put by Citi, Submission 116, p 2; Chamber of Commerce and Industry Quuensland, Submission 43, p 19; Dr Bob Such MP, Submission 6, p 2; and Australian Chamber of Commerce and Industry, Submission 37, pp 22-23. The tax was also noted as a barrier to competition by Professor Kevin Davis, Committee Hansard, 25 January 2011, p 63.

[6]        Australian Bankers' Association, Submission 76, p 54.

[7]        Department of the Treasury, Responses to questions on notice, no 14, 4 February 2011, p 2.

[8]        Report on Australia's Future Tax System, Part One, December 2009, pp 32-33.

[9]        Australian Bankers' Association, Submission 76, p 53.

[10]      Mr David Foster, Chief Executive Officer, Suncorp Bank, Committee Hansard, 9 February 2011, p 2.

[11]      Australian Bankers' Association, Submission 76, p 53.

[12]      Australian Bankers' Association, Submission 76, p 53.

[13]      ING Bank, Submission 35, p 4.

[14]      Report on Australia's Future Tax System, Part Two, December 2009, p 286.

[15]      Abacus, Submission 53, p 28.

[16]      Abacus, Submission 53, p 28.

[17]      Australian Taxation Office, Refund of franking credits—frequently asked questions, www.ato.gov.au/nonprofit/content.asp?doc=/content/17149.htm&page=3&H3
(accessed 21 March 2011).

[18]      Abacus, Submission 53, p 27. Similar points are made by the Heritage Building Society: Submission 113, p 8.

[19]      Heritage Building Society, Submission 113, p 8.

[20]      Abacus, Submission 53, p 27. A similar argument is made by Credit Union Australia: Submission 85, p 11.

[21]      Credit Union Australia, Submission 85, p 11. Again, a similar argument is made by Heritage Building Society, Submission 113, p 8.

[22]      Department of the Treasury, Responses to questions on notice, no 14, 4 February 2011, pp 2-3.

[23]      Abacus, Supplementary Submission 53a, p 2.

[24]      Citi, Submission 116, p 3. A similar argument is put by HSBC, Submission 107, p 4.

[25]      Australian Bankers' Association, Submission 76, p 54.

[26]      Super System Review: Final Report, June 2010, part 1, p 115.

[27]      Super System Review: Final Report, June 2010, part 2, pp 321-2.

[28]      Abacus, Submission 53, p 18.

[29]      Abacus, Submission 53, p 18.

[30]      Abacus, Submission 53, p 19.

[31]      Abacus, Submission 53, p 19.

[32]      Dr Richard Denniss, Executive Director, Australia Institute, Committee Hansard, 15 December 2010, p 29.

[33]      Australia Institute, Submission 46, p 7.

[34]      Yellow Brick Road, Submission 101, p

[35]      Professor Ross Buckley, Submission 32, p 5.

[36]      Dr Carolyn Currie, Submission 114, p 3.

[37]      Professor Tom Valentine, Committee Hansard, 25 January 2011, p. 61.

Government Senators’ Minority Report

[1]        Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 44.

[2]        Senate Economics References Committee, Access of Small Business to Finance, June 2010, p 44.

[3]        Mr Cameron Clyne, Chief Executive Officer, National Australia Bank, Committee Hansard, 13 December 2010, p 63.

[4]        Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Proof Committee Hansard, 9 March 2011, p 5.

[5]        Mr Michael Smith, Chief Executive Officer, ANZ Banking Group, Proof Committee Hansard, 15 December 2010, p 137.

[6]        Mr Philip Coffey, Chief Financial Officer, Westpac, Proof Committee Hansard, 21 January 2011, p 96.

[7]        Competitive and Sustainable Banking System, Australian Government, 2011, p 7.

[8]        Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Proof Committee Hansard, 9 March 2011, p 18.

[9]        Mr Kim Cannon, Managing Director, FirstMac, Proof Committee Hansard, 4 March 2011, p 25.

[10]       Heath and Heath (2010, p 114).

[11]       Ms Nicole Rich, Director, Policy and Campaigns, Consumer Action Law Centre, Proof Committee Hansard, 25 January 2011, p 18.

[12]       Mr Kim Cannon, Managing Director, FirstMac Group, Proof Committee Hansard, 4 March 2011, p 24.

[13]       Ms Nicole Rich, Director, Policy and Campaigns and Ms Catriona Lowe, Co-Chief Executive Officer, Consumer Action Law Centre, Proof Committee Hansard, 25 January 2011, p 16.

[14]       Mr Graeme Samuel, Chairman, Australian Competition and Consumer Commission, Proof Committee Hansard, 25 January 2011, p. 29.

[15]       Mr Graeme Samuel, Chairman; Mr Brian Cassidy, Chief Executive Officer, Australian Competition and Consumer Commission, Proof Committee Hansard, 25 January 2011, p. 40.

[16]       Mr Brian Cassidy, Chief Executive Officer, Australian Competition and Consumer Commission, House of Representatives Standing Committee on Economics Hansard, 18 February 2011, pp. 11-12.

[17]       Mr Brian Cassidy, Chief Executive Officer, Australian Competition and Consumer Commission, House of Representatives Standing Committee on Economics Hansard, 18 February 2011, p. 13.

[18]       Australian Bankers' Association, Submission 76, pp 26-7.

[19]       Mr James McPhee, Chief Executive Officer, Members Equity Bank, Proof Committee Hansard, 25 January 2011, pp 106-7.

[20]       Ms Louise Petschler, Chief Executive Officer, Abacus, Proof Committee Hansard, 13 December 2011, p 84.

[21]       Mr Paul Orton, Director, Policy and Advocacy, New South Wales Business Chamber, Proof Committee Hansard, 21 January 2011, p 55.

[22]       Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Proof Committee Hansard, 13 December 2011, p 43.

[23]       Mr Michael Bath, Acting Chief Executive Officer, Australian Office of Financial Management, Proof Committee Hansard, 15 December 2010, p 96.

[24]       Mr Jim Murphy, Executive Director, Markets Group, Department of the Treasury, Committee Hansard, 13 December 2010, p 44.

[25]       Mr Michael Hirst, Managing Director, Bendigo and Adelaide Bank, Committee Hansard, 15 December 2010, p 84.

[26]       Mr Chris Dalton, Chief Executive Officer, Australian Securitisation Forum, Committee Hansard, 14 December 2010, p 19.

[27]       Australian Bankers' Association, Submission 76, p 58.

[28]       Mr James Austin, Chief Financial Officer, FirstMac Group, Proof Committee Hansard, 4 March 2011, p 20.

[29]       Mortgage House of Australia, Submission 115, p 2.

[30]       Jim Murphy, Treasury, Proof Committee Hansard , 13 December 2010. p. 26.

[31]       Cameron Clyne, CEO National Australia Bank, Proof Committee Hansard,13 December 2010, p. 64

[32]       Mr Joiner, NAB, Proof Committee Hansard , 13 December 2010, p. 64

[33]       Dr John Laker, Chairman, APRA, Proof Committee Hansard, 14 December 2010, p. 3

[34]       Australian Government, Competitive and Sustainable Banking System, December 2010, p 10.

[35]       Ms Nicole Rich, Director, Policy and Campaigns, Consumer Action Law Centre, Proof Committee Hansard, 25 January 2011, p 18.

[36]       Mr Jim Murphy, Executive Director, Department of the Treasury, Proof Committee Hansard, 13 December 2010, p 33.

[37]       Mr Anderson, Chief Executive, Australian Chamber of Commerce and Industry, Proof Committee Hansard, 15 December 2010, p. 112

Additional Comments by Senator Xenophon

[1] Treasury, Submission 102, Pg 22

[2] Chamber of Commerce and Industry Queensland, Submission 43, Pgs 3 and 16

[3] Fear et all, 2010, Pg iv

[4] Mr Leon Carter, Finance Sector Union, Proof Committee Hansard, 14 December 2010, Pg 45

[5] Associate Professor Frank Zumbo, Proof Committee Hansard, 14 December 2010, Pgs 61-62

[6] Commonwealth steals BankWest, http://www.intelligentinvestor.com.au/articles/Commonwealth-Bank-CBA/Commonwealth-steals-BankWest.cfm?articleID=817412, 9 October 2008

[7] Mr Mark Degotardi, Head of Public Affairs, Abacus, Proof Committee Hansard, 13 December 2010, Pg 93

[8] Mr Richard Lloyd, International Policy Adviser, Choice, Proof Committee Hansard, 14 December 2010, Pg 31

[9] Mr John Minz, Chief Executive Officer, Heritage Building Society, Proof Committee Hansard, 4 March 2011, Pg 13. See also Mr James McPhee, Chief Executive Officer, Members Equity Bank, Proof Committee Hansard, 25 January 2011, Pg 11

[10] Mr Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry, Proof Committee Hansard, 15 December 2010, Pg 114. See also Chamber of Commerce and Industry Queensland, Submission 43, Pg 19

[11] CPA Australia, Submission 82, Pg 9

[12] Chamber of Commerce and Industry Queensland, Submission 43, Pg 16

[13] Mr Nick Stace, CHOICE, Proof Committee Hansard, 14 December 2010, Pg 28

[14] Associate Professor Frank Zumbo, Submission 56, Pg 8

[15] Document tabled by Mr John Symond at a public hearing in Sydney on 14 December 2010; email correspondence between Michael Bath and Ernest Baisi

[16] Daily Telegraph, Aussie John Symond slams Wayne Swan's bank reforms,  http://www.dailytelegraph.com.au/news/national/aussie-john-symond-slams-wayne-swans-bank-reforms/story-e6freuzr-1225971171836, 15 December 2011

[17] Competitive and Sustainable Banking, http://www.treasury.gov.au/banking/content/report/report_01.htm