We'll create a Queensland State Bank with fair rates and no fees
The Big Four Banks are crushing mortgage holders. As the housing crisis exploded, Commonwealth Bank, Westpac, NAB and ANZ made $30 billion in profit every year, or 33% profit after tax.
Even when interest rates were low, the Big Four charged rates 3% above the RBA cash rate and pocketed the difference. Now that rates have skyrocketed, they are cashing in. In fact, $400 from the average monthly mortgage repayment is pure profit for the big banks.
They pay their CEOs about $6 million each year even while so many Queenslanders struggle to make mortgage repayments.
Over the last ten years, the Big Four have donated $33 million to Labor and the Liberal/Nationals across the country. It’s not surprising that politicians from both sides have kept letting the big banks rip off Queenslanders.
Australia and Queensland used to have public banks which offered cheap mortgages, like Commonwealth Bank and the Queensland SGIO. The Greens will create a public bank here in Queensland to bring down the cost of mortgages and take the pressure off families.
The Greens will create a Queensland Public Bank to:
- Offer owner-occupier mortgage holders interest rates 1.5% below the Big Four banks, by cutting out corporate profits.
- Save the average new or recent first home buyers $6,165 every year or $514 every month, based on an average new mortgage of $531,000, compared to the Big Four.
- Offer fair mortgage rates, credit cards, savings, transaction accounts for households, and cash handling & EFTPOS facilities for small businesses with no fees.
- Drive down home loan interest rates among the Big Four by creating real competition in the banking sector.
Help for mortgage holders
The Greens would create a new State-government owned bank, the Queensland Public Bank to offer cheaper mortgages and take the pressure off families and first home buyers. By cutting out corporate profits and giant CEO salaries, the Public Bank would offer interest rates 1.5% below the big four banks.
Cutting out the 33% in corporate profits means the Greens could offer a cheaper alternative to the Big Four banks, taking the pressure off families. It would also drive down interest rates among private banks by creating stronger competition.
Queensland owner-occupiers could switch their mortgages to the Public Bank, saving thousands on their repayments every year. Investors and landlords would not be eligible.
Saving $6,000 every year
The average recent home buyer in Queensland has a mortgage of $531,000.1 Based on that mortgage, first home buyers would save $6,165 every year compared with a mortgage from the Big Four Banks. That means a saving of $514 every single month back into people’s pockets.
A family with a $750,000 mortgage would save $8,703 per year and $725 per month compared to a mortgage from the Big Four banks.
The average mortgage amount across all owner-occupiers is $362,000. Based on that loan, households would save $4,202 per year and $350 per month.
|
Interest rates |
|
|
10 year average |
|
|
Average RBA cash rate |
1.61% |
|
Big Four Banks: Average variable home loan rate |
4.67% |
|
Big Four Banks: Average interest rate margin above the RBA cash rate |
3.06% |
|
Today |
|
|
RBA cash rate |
4.35% |
|
Big Four Banks: Average variable home loan rate (source) |
6.82% |
|
Greens’ Queensland Public Bank variable home loan rate |
5.32% |
|
Savings for households |
|||
|
Household and mortgage |
Monthly repayments with a Qld State Bank mortgage |
Monthly saving vs Big Four |
Annual saving vs Big Four |
|
Owner occupier with a $362,000 mortgage - i.e. the average Queensland mortgage in 2023 |
$2,015 |
$350 |
$4,202 |
|
First home buyer with a $531,000 mortgage - i.e. the average new mortgage in Queensland in 2023 |
$2,956 |
$514 |
$6,165 |
|
First home buyer with a $750,000 mortgage |
$4,173 |
$725 |
$8,703 |
|
Investor or landlord |
Not eligible |
Not eligible |
Not eligible |
Fee free banking services
The Public Bank would offer fair mortgage rates, credit cards, savings, transaction accounts for households, and cash handling & EFTPOS facilities for small businesses all with no fees.
Customers could access a full range of banking services from the Queensland State Bank at any State government service centre including Transport & Main Roads offices. Customers could also do basic banking at hundreds of AusPost Local Post Offices, via the Bank@Post initiative, allowing deposits, withdrawals, balance enquiries and business deposits.
Returns to fund public services
The Queensland Public Bank would make a modest 8% in net operating profit after covering its costs, compared to 33% which the Big Four banks rake in. The Public Bank would generate a 0.25% return on assets per year. That return would create a new stable revenue stream for better public services and infrastructure in the long term.
Once the Queensland Public Bank reaches 20% of the Queensland owner-occupier mortgage market in the coming years, it would hold $62 billion in assets.
Based on that market share, over the next decade, the Queensland Public Bank would hand back $9.3 billion to mortgage holders in the form of lower interest rates. It would also generate a $1.6 billion return for the State Budget to fund better public services.
Helping families who default
The Queensland Public Bank would help families who fall behind on their mortgage repayments, letting them stay in their home.
It would administer the existing Mortgage Relief Loan scheme which offers households a $20,000 lifeline if they get into trouble, along with other Queensland government hardship programs.
Families who still cannot keep up with their repayments would have the option to sell their home to the Bank to become public housing, and would be able to stay there for life.
Funding and institutional arrangements
The Public Bank would be founded under its own Act of Parliament as a Government Owned Corporation. It would be accountable to the Parliament. It would be able to raise capital using State government borrowing, with interest costs covered by its estimated 8% operating profit per year.
The Bank would be regulated in the same way as other major financial institutions, via the federal Council of Financial Regulators, including APRA, ASIC the RBA and the Australian Treasury. It would be covered by the Federal government guarantee of deposits up to $250,000.
It would, have a legislated mission to:
- Give Queenslanders the chance to buy their own home with an affordable mortgage, either via the private market or from the Greens’ new Public Developer.
- Provide simple, fee-free banking services to owner-occupier households and small businesses.
- Generate a modest return for the people of Queensland, with the proceeds to be spent on long-term improvements to public services like hospitals, schools and housing.
Too big to fail
The Big Four banks are seen as “too big to fail”, so they benefit from a huge effective Federal government subsidy. The government’s promise that they will always be bailed means they can access very cheap loans to make their giant mortgage profits.
The Queensland Public Bank would take back a share of those giant profits, handing them to households as lower interest rates.
We used to have public banks
State owned banks, building societies and insurance offices were once common in Australia, providing affordable home loans and other services to regular people.
Just like the post-WW2 boom in public housing construction, public banks played a key role in boosting home ownership.
The Queensland government established the Workers Dwellings Board in 1909 which provided affordable loans to regular people. The Board was later incorporated into the publicly owned Queensland Government Savings Bank, itself created in 1865. The discounted interest rate mortgages were later handed to the Commonwealth Bank in 1966.2
In just the last 35 years, Labor and the Liberal Nationals privatised a huge range of public services, creating more profits for big corporations but higher prices for regular people.
In 1994, Queensland Labor began the privatisation of the former State Government Insurance Office (SGIO) later Suncorp, and the Liberal National government finished the job in 1996. The Federal Labor government sold off the Commonwealth Bank in 1991 and 1996. It was sold for $8.1 billion, and today it’s worth over $200 billion, and rakes in $10 billion in profits annually.
A nearby example: Kiwibank
New Zealand has a publicly owned bank, Kiwibank. It has a market share of 9% and is the largest domestically owned bank, competing directly with the Australia-based Big Four. Kiwibank initially operated from post offices, similar to the Greens’ proposed Queensland Public Bank.
In 2020, Kiwibank dropped its home loan interest rates by 1% below the Big Four, offering significant savings to New Zealand residents.
Existing public lending in Queensland
Even today, the Queensland government offers commercial-rate home loans for first home buyers to purchase private dwellings if they can’t access private finance. The Queensland government also offers home loans at a “discounted” interest rate to public housing tenants to buy the home they live in.
The Queensland Public Bank would take responsibility for these programs alongside lending mainstream home loans.
Sources:
1 Average Value of New Owner Occupier Loans (excl refinancing), Queensland: ABS 'Lending indicators’ June 2024.
2 M Zeremes, State banks in Australia: their role and significance, Queensland Parliamentary Library, 1 June 1987, p 4.