We really don’t love capitalism
I’M going to spell this out for you, banks, because you seem too dim to work it out for yourselves. Australians don’t hate banks because blokes like Ian Narev and the other CEOs earn a lot of money.
They don’t hate banks because you charge 28 per cent interest on credit cards, or because you foreclosed on grandpa’s farm. Admittedly, that’s all pretty bad.
The real reason Australians hate the banks is because you make too much profit.
I’m serious. Australians like living in a capitalist economy where they can buy nice stuff.
But they don’t really like capitalism that much. They don’t like it $30-billion-profit much. They believe strongly that banks have a social licence to operate a vital service — a bit like suburban trains — and although they’re happy for the banks to be strong and healthy and profitable, they do not wish them to make $30 billion a year in profit.
That is too much. It is obscene. Why isn’t $10 billion enough profit? What about $1 billion? I know what the banks will say — they’ll say they need profit buffers because they take such huge risks by lending to people who may default at any moment. Australians get that. But Australians also know the banks are too big to fail. No Australian government will ever allow a major bank to collapse.
So here is the banks’ dirty little secret. The real reason they are obsessed with gigantic profits is they have CEOs on short-term contracts whose bonuses (and tenure) rely on one metric: profit growth.
The banks employ a great many people and are wonder- ful pillars of our economy.
They benefit from Australians’ innate caution, and the lingering memories of events such as the 1990 collapse of the Pyramid Building Society, which entrenched an entire generation in the erroneous belief the only safe financial institution was a big bank.
But the cold truth is banks can only keep profits growing by screwing the little people. Australians understand that very sharply. Scott Morrison gets it too. That’s why he knows he can introduce a Great Big New Tax on banks to help repair the budget and fund a new regulatory regime.
A few months ago, Morrison may have thought “Stop The Boats” was the catchphrase that’d be on his gravestone. In fact, it’s “Cry Me A River”. That’s what he said when the banks started their outraged complaining about this. And he is right.
With this measure as the centrepiece of their 2017 Budget, Turnbull and Morrison have dealt themselves back into the game. Now, I hold no brief for either of these men.
I thought it was wrong to oust Tony Abbott, despite the flaws of his government, just as I thought it was wrong to oust Kevin Rudd, despite the manifest flaws of his.
But I’ve also been bemused by all the people so eager to death-ride Malcolm Turnbull.
Since he took the job, Australia’s been split between those who think he’s a failure because he’s a closet Trotskyite, and those who think he’s a fascist. Everybody’s furious because he hasn’t “done anything”; he hasn’t swept in a republic or gay marriage, or cracked down on unions.
But Turnbull, like him or not, has undeniably recovered his mojo. It started with Snowy Hydro 2.0 and continued with Gonski 2.0 (someone needs to tell him 2.0 is no longer a thing — not since Vegemite tried to rename itself iSnack 2.0, which presumably was a prank).
He adeptly alerted the sleepy nation to the terror of — and then resolved with trumpets sounding — a national gas crisis.
And now the Budget, which nobody has yet been able to seriously criticise. Sure, it isn’t quite low-tax enough for some on the right, and not quite welfare-y enough for some on the left, but the crucial measures are sound, will work, and will get through Parliament. Exhibit A, the bank tax. The banks may try on an emotive ad campaign, last executed to stunning success by the big mining companies when the Kevin Rudd-Wayne Swan government mooted a “resource super-profits tax”.
The accepted wisdom is that the mining companies’ hugely expensive ad campaign was so brilliant it persuaded the entire population of Australia the super-profits tax was a dog, thereby killing it off.
Actually, that’s not what happened at all.
All the campaign did was scare the bejesus out of Labor Party parliamentarians, who freaked themselves out so thoroughly they dumped Kevin Rudd and Wayne Swan and brought in Julia Gillardto make it all go nigh-nighs.
Swan and Rudd, and Labor, could have kept their cool, and their jobs, and got it through.
If Morrison and Turnbull want this enough, they’ll get it through. They know it will take more than TV commercials to change an entire nation’s mind about capitalism.