The extraordinary remuneration packages for executives of the major finance corporations are supposedly necessary to ensure “good corporate governance”. The Royal Commission is revealing that as a lie.
These executives sit on many other boards, and are a who’s who of the most powerful individuals in Australia. It’s not just the masters of the finance sector being exposed, it’s the masters of Australian capitalism.
So is this just a problem of broken rules that apply to the for-profit financial sector, or is for-profit an inherently bad basis for managing savings and credit facilities? I think the latter.
And I think that the labour movement as well as studying the revelations about financial institutions, should also be proposing much more than tighter government regulations, strongly enforced by bureaucracy. Democratic control by workers and consumers of financial services could put an end to the various exploitative practices, legal or not, of the banks.
Some bank re-regulation is very likely, with closer scrutiny and greater enforcement powered by government bodies such as APRA. But APRA’s scrutiny has always been more about prudent management of risk to the system, via prudent internal management of the finance corporations, than about meeting the needs of everyday borrowers for credit and savings, and definitely not about workers in the sector. The banks weigh up the regulations and recommendations made APRA, as something to work around in the chase for profits. Culture is much bandied term, but the culture grows out of the unavoidable principle of private banking, to maximise profits from households, especially home mortgages which make up about a third of bank business.
The size of the Australian finance sector in terms of the money it controls is so huge, it makes a weekly wage like a drop of water in Sydney Harbour. “ADIs (Authorised Deposit –taking Institutions, banks and other financial institutions) hold $4.6 trillion in assets, around two-and-a-half times the size of Australia’s $1.8 trillion nominal economy.” The major banks hold around ¾ of the $4.6 trillion, which is “around 55 per cent of the total assets of Australian financial institutions.”
The Big Four banks are not just the four biggest banks, they are the four biggest companies listed on the Australian Stock Exchange. Even the smallest of the Big Four, is larger than BHP by its ASX market value (though BHP is valued at $220,900 million including the London stock exchange). Their share price at end of 2017 financial year valued these banks: ANZ – $59 billion; CBA - $63 billion; NAB $51 billion and Westpac - $61 billion.
The left press in Australia makes the case for nationalisation. Tom Bramble in Red Flag explains further the weight of the banks in the economy. Privatisation of the CBA was a gift to private capital. As Jim McIlroy notes in Green Left Weekly, the Australian Government’s privatisation of the CBA between 1991 and 1997 netted only $7.8 billion, and in 2017 alone CBA profits were more than that, at $10 billion. Those articles do not connect the case for nationalisation to finance sector workers.
Over 420,000 people, of 3.3 million Australian employees, have their main job in the finance sector (ABS Nov 2017), around the 10th largest employment sector. The Big Four employ at least 40% of these people.
Financial planning is getting a special bollocking at the Royal Commission. The industry structures the “rewards” for planner in such a way as to elevate conflict of interest to an art form. Before the 1980s, most workers didn’t need financial planning. We didn’t have complicated superannuation schemes, or multiple varieties of accounts and mortgages, and pressure to insure every detail of our lives. These complicated “financial products” are one of the ways that banks and other financial institutions compete with each other to make more money out of us.
The Finance Sector Union is calling for industry wide employer paid professional accreditation to lift the standards and stronger regulation to protect consumers and finance workers from the abuse of the bank bosses predatory sales culture. Sally Mc Manus has asked industry super funds to review their relationships with dodgy banks. But where are the non-dodgy places for super investments? And if superannuation account holders want a decent retirement they have to care about returns, i.e. profits, which the banks have been good at getting, that’s a dilemma.
Banking and finance sector workers are very much aware of how the banks screw customers and bank workers. In the words of an insider “The level of outsourcing, offshoring and the exploitation of vulnerable foreign workers on temporary visas is fucking unbelievable.”
Many workers in the sector could lose their jobs as banks and AMP get rid of some of their lines of business to try to clean up.
The scale of the finance industry combined with the exposure of bank profit-seeking and disregard for customers and employees, has produced such a collapse in public confidence, that the labour movement should not be timid about effective solutions that challenge profitability as the guiding principle of finance.
If finance sector workers assert themselves against their management they could win a lot of public support. They could consider voting no-confidence in senior management, demanding the abolition of incentives and bonuses, substantial reduction of executive and management pay, ending commercial in confidence and secrecy about policies, procedures and large transactions, election by workers of their own managers, election of boards by workers and customers, as well as better general pay, security and conditions. The implications of this are nationalisation of the finance sector.
If all we get out of this Royal Commission is some more regulations, then gradually the for-profit finance industry will get back to profit-maximising business as usual. If that is all we demand, we will have squandered an opportunity to assert a working class solidarity perspective against capitalist misrule.
POSTSCRIPT: It is difficult to find out from outside the industry what finance workers have done and are doing in regards to contesting the current culture and operational practices of the banking industry. Workers’ Liberty will be seeking further information about what workers in the sector are doing to educate the public about for-profit banking, finance and credit, and to win wider support for their own demands for decent employment.
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