Well, in addition to receiving the clear (albeit belated) backing of the RBA in relation to the arguments I have made about the stability of the banking system yesterday (add that to the housing supply debate), it has been revealed today that the Commonwealth Treasury has also firmly backed our controversial 'Son of Wallis' financial system inquiry idea, which Joe Hockey deserves considerable credit for pushing publicly. This was first articulated in an op-ed I co-authored with the former ACTU President, Sharan Burrow (dated June 2009), and then in more detailed in a letter I co-authored with a bunch of other leading economists (published in The Age and elsewhere back in July 2009). Here is what AAP reports:
"A new political stoush has erupted over banking competition after newly released Treasury advice called for a full review of the financial system.
Opposition treasury spokesman Joe Hockey accused the government on Friday of "blatantly ignoring" the advice from one of its key departments when it was returned to government last year...
In one section, [the Treasury's just re-released Red Book] talks about international risks to the Australian economy that highlight domestic vulnerabilities.
"While there is considerable work being done in a number of areas, both domestically and internationally, to improve existing arrangements, there is a clear need for a comprehensive review of the financial sector regulatory framework," Treasury advised.
Australia last undertook a full review in 1997.
Mr Hockey said the advice contrasted with the treasurer's "ad-hoc and piecemeal" approach to banking reform...
"Wayne Swan must immediately follow the advice of his own department and establish a full financial services inquiry along the lines of my terms of reference," Mr Hockey said in a statement, referring to his own nine-point banking plan announced in November."
