After a decade of sitting back and doing diddly squat while financial
services cartels and monopolies blatantly rip off consumers, it should
come as no surprise that Peter Costello yesterday waved through the merger of SFE Corp and the ASX with no conditions.
It’s hard to imagine a more powerful monopoly than a combined SFE-ASX,
which will presumably continue on its merry way jacking up charges for
its captive customers if the merger is approved by SFE shareholders at
a meeting in Sydney on 5 July.
While some SFE shareholders continue to agitate for a bigger premium,
both ACCC chairman Graeme Samuel and the Federal Treasurer are showing
no concern about what will be one of the world’s ten biggest exchanges
in a financial services market that comprises barely 3% of global
Sounds a bit like Sydney Airport’s current $7 billion-plus valuation
being way out of whack with its relative size because the
Costello-Samuel double act have sat back and allowed the Millionaires
Factory to gouge away mercilessly.
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Australia has one of the world’s most concentrated corporate sectors
and, with the exception of resource stocks, it is dominated by
domestically-focused service sector oligopolies that usually rely on
government licences or weak regulation to prosper.
Look no further than ABC Learning, Australia’s most subsidised company,
which now runs a staggering 780 child care centres nationally but was
only required by the ACCC to sell a pitiful five centres after its recent
takeover of the 101-centre Kids Campus.
Then we have our old friends the banks. Today Tonight
had a good hit at bank fees on Monday night, highlighting the case of
some poor sucker getting slugged $45 for doing a $1 transfer. The $10
billion a year bank fee bonanza is now so out of hand that it is
starting to show up in the official inflation figures and is certainly
a big driver in booming company tax receipts over the past decade.
Costello made some vague noises about being concerned about bank exit
fees last month but hell will have frozen over before he’ll actually
use his vast powers under The Banking Act to do something about it.
Even Labor has now ditched some of the bolder aspects of Mark Latham’s
banking policies, which would have offered some protection to consumers.
The government’s hands-off approach to financial services regulation
even extends to financial planner commissions after the Westpoint
collapse. Costello’s underling Chris Pearce yesterday told an IFSA
lunch that the industry should clean up its own mess.
Yeah right, and banks should voluntarily cut fees – just like the ASX
certainly won’t once SFE Corp is in the bag, even though the original
606 stockbroking shareholders in the ASX are already about 200-fold in
front on their original $25,000 investment in Australia’s most
If Costello gave a toss about consumers he would have implemented a
formal price monitoring regime for ASX-SFE, just like Telstra and most
other monopoly utilities have had to put up with.