Originally published in On Line Opinion on March 15, 2010

Banking is an essential part of the Australian economy – almost an essential service. So why should it be “extremely profitable” to use the former RBA’s Governor’s words? Why do bankers have to be exceedingly privileged? What does that mean to those of us who need to use the banking system? And what can we do about it? The Australia Institute has just published a paper, A licence to print money: bank profits in Australia, that tries to answer some of those questions. It confirms the Governor’s words that the banks are indeed extremely profitable, especially the big four; the ANZ, Commonwealth, National and Westpac. Despite the setback due to the global financial crisis the profits of the big four have been gradually increasing from 1 per cent of GDP 20 years ago to around 2 per cent today – and they would have been higher still if not for the global financial crisis.

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