The ACCC’s findings on residential mortgage prices are extremely embarrassing for the Prime Minister and Treasurer and the latest reminder of the cost to the taxpayer of negative gearing.
Josh Frydenberg’s statement today on the ACCC report is nothing more than a pathetic and disgraceful defence of price gouging and the taxpayer picking up a large part of the tab.
The ACCC found that APRA’s macro prudential measures had lessened competition and had seen banks pass on higher costs to borrowers:
“While APRA’s interest-only benchmark had the objective of contributing to financial system stability, we find it lessened price competition for interest-only lending
“We consider that the benchmark provided the opportunity for the banks to synchronise their significant increases to interest-only rates during the price monitoring period, at a significant cost to these borrowers.”
The ACCC found that “accommodative pricing behaviour among the big four banks” saw an estimated revenue of over $1.1 billion in the 2018 financial year.
The comes just months after the Productivity Commission found that current negative gearing settings have helped underwrite the pass through of the cost of APRA’s macro prudential measures to the banks – at a cost to the taxpayer of about $500 million a year.
Scott Morrison and Josh Frydenberg have been championing these measures for years now – they should be taking responsibility for how banks have increased costs for borrowers which has seen the taxpayer underwrite higher bank profits through current negative gearing arrangements.
If the banks are gouging customers through higher interest rates – the taxpayer is automatically underwriting part of that cost through the operation of negative gearing.
Only a few years ago Scott Morrison himself argued that there were “excesses” in negative gearing only to quickly drop that in favour of backing in vested interests to campaign against Labor’s housing affordability reforms.