Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
The Senate Inquiry into ASIC took further evidence this past week. One notable contribution was from an academic, who really went to town on the role and purpose of the regulator. Indeed, he posed the question” Why does ASIC not enforce the law….”?
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Journalist Dale Webster over at The Regional has rightly launched an attack on APRA, the banking regulator.
https://www.theregional.com.au/post/apra-bogged-in-a-data-mess-of-its-own-making
They released their annual points of presence data that showed an 11 per cent fall in bank branches nationally in 12 months. It triggered HEADLINES around Australia last week screamed out about bank closures. Channel Nine was one of many media outlets that picked up the story, reporting 424 branches had “shut their doors for the final time”.
As Dale writes, the problem is APRA never actually said that.
“The latest statistics show a further decline in bank branches in the year to 30 June 2023, with a reduction of 424 branches across Australia (11 per cent), including 122 branches (7 per cent) in regional and remote areas. This continues a trend that has seen branch numbers decline by 34 per cent in regional and remote areas, and 37 per cent overall, since the end of June 2017.”
What unsuspecting media did not pick up on was that among those 424 branches were a number of sites that had been stripped of branch status because they no longer provided the level of service required to be classified as such by law.
The doors are still very much open but they are among the growing number of banks that have no tellers and customers can only get cash from an ATM.
So we are left with what could be described as a bit of a situation, according to Dale. I think it is more deliberate, as APRA again manages to hide the real story – on this they have form, given their close alignment to the Banks. They are in my view hardly independent, nor an effective regulator.
On Melbourne Cup day we will get the next RBA cash rate decision. Michelle Bullocks testimony before the Senate this week was pretty vague – waiting for data, will update forecasts etc.
But as Christopher Joye writes in the AFR, following the material upside surprise to inflation in the September quarter, almost all economists and investors agree that the Reserve Bank of Australia should lift interest rates in November.
But participants worry that a concerted campaign to politically compromise Australia’s central bank may result in the RBA remarkably choosing not to seek to combat its existential inflation crisis.
This would be the latest in a chapter of accidents, with the RBA cutting rates too low, and stoking the economy via the Term Funding Facility, and Quantitative Easing. Their yield control attempts went wrong, and then they held rates way to low, promising no hike for years. And their forecasting is a disaster.
This is a central bank with a 4.1 per cent cash rate that is just a smidge above what it assesses to be the neutral rate of 3.8 per cent. And that is a cash rate that is 1.0 to 1.5 percentage points below peer rates in the US, Britain, Canada and New Zealand.
Even the RBA’s outgoing assistant governor Luci Ellis, who is now chief economist at Westpac, called a “hike” only days after she predicted that inflation would not be robust enough to warrant one.
In sum, we know the RBA should hike in November. Whether it actually does or not appears to now be a question of its ability to resist political interference.
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An important debrief on the past weeks Senate Inquiry into Regional Branch closures, use of cash and other banking issues, with Robbie Barwick from the Australian Citizens Party.
Senate replay here: https://www.aph.gov.au/News_and_Events/Watch_Read_Listen/ParlView/video/1733879
The power of democracy at work!
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Join me for a live Q&A show tonight with Robbie Barwick from the Australian Citizens Party.
We will examine the latest in the Senate Inquiry into Regional Banking Closures, the ASIC Inquiry, banks and corporates behaving badly and some of the broader geo-political risks in play. You can ask a question live.
We look at the latest Senate hearings on Regional Branch closures, and discuss the continued misdirection coming from the cost-cutting banks – justified – so called – by the migration to digital banking.
But as discussed during the hearings, the banks do not want to talk about what they are doing, and a peoples bank is required to offer a real alternative.
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Breaking news, as Westpac reverses its decision to close some of its regional branches, in response to the pressure form the Senate inquiry (which we managed to get up). I discuss this with Robbie Barwick from the Citizens Party.
The job is not done yet, and we need to ensure the Treasurer reverses his support for a totally independent Central Bank!
Giving up authority over the RBA – The ultimate BETRAYAL of the Australian people https://youtu.be/EA7FhBZxfuM
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Dale Webster at The Regional has caught CBA out, as despite their promise not to close regional branches while the Senate Inequity is running, they are, by carefully defining down “Regional” to a very narrow definition, conveniently leveraging the ABS definitions, despite elsewhere calling these same regions Regional.
https://www.theregional.com.au/post/commonwealth-breaks-pledge-to-pause-regional-bank-closures
The Senate needs to hold CBA to account here. Write to your Senator, and also CBA management. This is plainly not acceptable nor within the spirit of their earlier statement! Well done Dale!
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The latest RBA’s Statement On Monetary Policy (More than 80 pages) said very little which was new, with inflation not expected to land within their target zone until 2025, with lower growth and higher unemployment. They reconfirmed an expectation rates could still go higher.
They did try to defend corporate profits as not driving inflation…. hum… but not very successfully in my book.
https://www.rba.gov.au/publications/smp/2023/may/
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A further deeper dive into the RBA Review recommendations. I felt it was more like blancmange, than a piece of innovative reform – not least because the proposed structural separation and targetting are close to that used by other Central banks, who make precisely the same mistakes as our own.
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