Gillard faces test on bank, telco laws
Australia’s minority Labor government faced its biggest test since winning power when parliament’s final session of the year began and rivals began to test its strength with bank and telecommunications laws. |||
Canberra – Australia’s minority Labor government faced its biggest test since winning power when parliament’s final session of the year began on Monday and rivals began to test its strength with bank and telecommunications laws.
Prime Minister Julia Gillard holds a razor-thin majority and needs support of three independents and a Green lawmaker to control parliament in the final two-week sitting before the southern summer break.
Minority Greens lawmakers promised to test the government’s muscle by unveiling controversial laws to prevent banks from lifting mortgage interest rates above central bank rate adjustments and abolishing some automatic bank machine fees.
“The banks need some hauling in,” Greens leader Bob Brown told reporters, pointing to mounting anger after the country’s big four banks raised home loan rates above a 0.25 percentage point central bank rise to 4.75 percent this month.
“It will give some reassurance to borrowers that they are not going to be gouged further like they have been,” Brown said.
Interest rates are a major political faultline in Australia, where about two-thirds of voters own their homes, and commercial cash rates can swing the outcome of elections.
An Essential Media poll on Monday showed 68 percent of respondents believed the nation needed more banking competition, and almost half, or 47 percent, thought that would drive down interest rates reaching close to eight percent.
The conservative opposition coalition is unlikely to support the Greens. But mounting political fury has made banking stocks more volatile, and moves to cap interest rate rises could impact on a stellar recent run of bank profits.
Gillard’s Labor is under pressure to contain the banks after the four main lenders, National Australia Bank, ANZ, Commonwealth Bank of Australia Ltd and Westpac, booked record earnings and still raised commercial rates well above the independent central bank.
The big banks were mixed in trade on Monday. Commonwealth and National Australia both gained 0.6 percent, while ANZ and Westpac fell 0.6 percnet and 0.1 percent respectively.
A cautious Treasurer Wayne Swan said he would not be rushed into unveiling a plan to help people switch business away from the four, which control more than 80 percent of home loans, fearing impulsive moves could be counter-productive.
“The banks are just arrogant in the extreme, completely out of touch. That’s why we need a second wave of competition reforms, and we will put those in place. We’re determined to have enduring reforms over time,” Swan told Australian radio.
The conservative opposition said it would propose its own legislation, which will seek stronger powers for the competition watchdog to investigate bank price signalling.
Gillard’s government will also struggle to find support for legislative measures underpinning construction of a $43 billion national high-speed broadband network, with lawmakers set to clash over a telecommunications competition bill from Monday.
The measures support an A$11 billion non-binding deal reached with the country’s biggest phone company, Telstra Corp, in June to fold much of its infrastructure into the new fibre network, to be run by a state-backed NBN Corporation.
The plan would also require the legislative split of Telstra into wholesale and retail businesses – a hurdle lowered last week when key independent Senator Steve Fielding agreed to support the government’s legislation in the obstructive upper house after talks with Telstra chief David Thodey, NBN chief executive Mike Quigley and Communications Minister Stephen Conroy.
Fielding scuttled attempts to pass the competition laws during Labor’s first term in office – prior to a dead-heat August election – amid concern it would hurt the price of Telstra shares held by many Australian investors.
The bill must be passed before parliament rises on Nov. 25 so the deal can be put before Telstra shareholders and market watchdog the Australian Competition and Consumer Commission.
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