Business Just3rdWay

Greens Leader Wants Reserve Bank To Serve Australian People’s Needs, But There is Another Key To Economic Growth

Richard Di Natale, Australia’s Green Party Leader(Archives)

Editors

Greens leader Richard Di Natale will unveil the proposal that would transform the RBA into a “People’s Bank” during a speech in Canberra on Wednesday that will call for a return to the era of interventionist big government, the Sydney Morning Herald revealed.

Under the Green’s leader proposal the first home buyers could get low interest loans directly from the Reserve Bank of Australia under a radical Greens plan designed to give them and other people locked out of the property market an advantage over property investors and turbocharge competition between the banks.

“Today’s problems require government to be more active and more interventionist, not less,” Senator Di Natale is expected to say.

“Banking is a prime example. Banks are now an essential service. You can’t have a job or get government support without having a bank account. They are the gatekeepers for first home-buyers and aspiring small business owners.

“In the face of ongoing misconduct and price gouging, it’s time for government to step in and ensure that there is a low-cost banking service, backed directly by the RBA, which is focused on the everyday savings and mortgage needs of customers.”

Under the plan, people would be able to establish accounts directly with the RBA for day-to-day banking facilities. Customer service would be provided online, by telephone, or face-to-face through Australia Post.
It would also offer a no-frills ‘mortgage tracker’ account to homeowners. People paying off their home would be able to borrow up to 60 per cent of the value of the property directly from the RBA.


Former productivity commissioner Nicholas Gruen has been a proponent of the idea, which he says would expose the big four banks to increased competition.

The interest rate would be set at a minimum of three per cent, plus an administration fee of approximately 0.5 per cent for service provider partners. The base rate would go up with the cash rate if it rises above three per cent.

Mortgage tracker accounts would only be available to people with no other direct residential property holdings, including through self-managed superannuation funds and private trusts, to prevent people gaming the system.

Former productivity commissioner Nicholas Gruen has been a proponent of the idea, which he says would expose the big four banks to increased competition.

A recent Bank of England study concluded if the central bank offered its own banking services direct to customers on the same terms as it offers them to the banks it could permanently lift GDP by 3 per cent.

The Just Third Way perspective:

Ownership in the Economic Growth

A new Green Party’s proposal can be a great beginning of positive changes in the economic situation of Australian households suffering due to the rough policies of excessive cuts and savings affecting the weakest and poorest.

This proposal addresses fundamental need of utilizing government’s power for money creation to empower an average, and impoverished Australian consumer. As the economic Say’s Law states: one cannot consume if one does not produce. To express it in other words: production and consumption must be balanced. This goal can be achieved by using the powers of a Central Bank to provide an equal economic opportunities, but not outcomes.

But the Just Third Way emphasizes even more important truth: economic empowerment of households depends on their ownership of productive capital.

 


Australian households can be economically strengthened with powers of a Central Bank that would provide an equal economic opportunities, but not outcomes.

 

In the modern economy the economic growth is becoming increasingly capital-intensive and less and less labor-intensive.

The consequences are clear: more jobs will not resolve problem of impoverishment since productiveness of human labor will be lower than efficiency of a robot.

Therefore Just Third Way begins from the issue of money that is a zero-interest investment loan for purchase of productive capital (i.e. shares, land) for the future income on shares. This loan should be insured, according to the existing legal standards. The investment loan needs to be renewable and shares with full voting rights should not be transferable.

Through such mechanism of new loans a new money will be created. A not-fiduciary money but currency backed up with hard assets.

The economy in which more participants will become owners productive owners (the program will be always voluntary) will be growing without any busts and hikes. In fact, economic growth will be non-inflationary.
From this reason the Just Third Way does not see any need for establishing of any minimum or cap on anyone’s income.

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