AP, some good discussion on this. re question on "why the banks are not passing on rate cut"? .... because price setting is one of a handful of items that the govt doesn't regulate in this highly regulated banking system.
Our banking market is a mixture of govt regulation & protection, which has allowed the Big Four banks to prosper and become very stable highly profitable businesses. One of the components of this business which the govt doesn't regulate is price. Therefore the system is skewed heavily in favor of the "big four"; which has placed very high entry barriers for any new competitors to the market. You could say Govt policy on Big four has created a "protection Racket" or as its commonly referred to an Oligarchy As a result we the consumer are paying a premium for this system. the question is how much protection should the big four be receiving? Should new entrants to the market be encouraged with some sort of support in the same way the big four get?
This is something Joshy should be focusing on as opposed to talking "tough" on interest rates or giving big banks further tax concession.
Here's a though!...why not offer tax breaks to new banking entrants into the market.....help level out the playing field Joshy!
