Advanced Search

Share Coverage



Category: Business, Economics and Finance / Federal Government / Government and Politics / Banking

Former RBA board member backs inquiry into banks

Wednesday, 3 Aug 2016 20:56:20 | Sabra Lane

John Edwards called on the big banks to pass on this week's official interest rate cut in full. (7.30 Report)

A former board member of the Reserve Bank of Australia has added his voice to the calls for an inquiry into the banks.

John Edwards, who last week finished a five-year term on the RBA board, told 7.30 "some kind of inquiry would be helpful".

"I think we do need to do a lot more work on the quality of financial advice being offered by banks, particularly because they've become such a huge presence in funds management and because the population is ageing," Mr Edwards said.

"Their authority in that area is becoming vastly bigger than it was even a decade ago and I think that's where we need to get a better idea of what the culture is and how good the performance and practice is."

Mr Edwards also called on the big banks to pass on this week's official interest rate cut in full.

"I think the banks should have passed that on. I think it'd be helpful for the Australian economy and I rather think that's what the RBA would have intended," he said.

"When you make a decision to cut by 25 basis points, your intention is to effect household demand and lending and that effect is going to be muffled.

"It's incumbent on [the banks] to consider the economic impact of what they're doing on the economy as a whole and not just on their own profits."

When asked if there was much more the RBA could do to stimulate the economy, Mr Edwards replied "there's a huge amount more it can do, if [they] had to".

"You could do what is happening elsewhere. You could buy bonds, you know, quantitative easing, you can buy mortgages, you can intervene directly in the exchange rate, you could go to negative interest rates if you wanted to, but we don't, because actually, the economy is performing quite well," he said.

Superannuation, income and capital gains tax reform 'needed'

On the topic of Australia's triple-A credit rating being at risk, Mr Edwards said the Government needed to do more to cut spending.

"I don't think the Government has a convincing plan to substantially reduce the deficit within a reasonable timeframe," he said.

"Its current plan depends upon a very, very big increase in personal income tax collections of the order of 20 per cent over the next three years and that really involves something like a 10 to 15 per cent increase in the personal income tax paid by all employees and basically I don't think that's on.

"So I think we've got to look at other forms of tax increases to substitute for that bracket creep.

"I think we need to do more in super. We need to do more in capital gains tax. I don't know that we need a company tax cut at this point. Those are areas I'd be looking at to offset the increase in personal income tax."

AustraliaPlus


 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend