The government’s much lauded guarantee of bank deposits seems to have succumbed to the Cane Toad disease. This is otherwise known as the law of unintended consequences. Having given a guarantee for all deposits in Australian banks and credit unions, people are trying to cash in other investments, even if they are blue chip. This includes the savings of ordinary Australians in superannuation funds.
The decision has now triggered a run on non -bank funds. Already reputable funds, for example some mortgage funds, have been forced to refuse redemptions.
People, often of limited means, cannot now get their money out. They are understandably stressed.
Neither the decision, nor the process, has been transparent. In all the obfuscations, it seems the Treasury is saying it knew of the consequences but thought this to be a matter of detail which should not clutter the minds of the ministers.
So it seems the Prime Minister and Treasurer, neither of whom have any especial expertise in these matters, were not advised of the dangers.
And as former Treasury head John Stone says, “inexplicably” the Chairman of the Reserve Bank was not present when the decision was taken.But these days the Commonwealth has handed over monetary policy to the Reserve Bank.
[Incidentally this is a decision I have difficulty with. It is a core function of government is to maintain stable currency. Why hand that over to someone else?]
…the prime minister, the constitution, and other unintended consequences…
The lesson is that every decision can have unintended consequences. The Prime Minister, who has hitherto demonstrated neither expertise nor interest in constitutional matters, has announced that he will remove the Australian Crown from the constitutional system.
He has not explained why this is to be done, in what form and when. But he even announced his intention to the international media just before he had an audience with The Queen, which many thought to be an act of singular discourtesy.
Then he called the 202O Summit which concentrated on the issue but, in the words of one leading republican, was so poorly managed it became as if it were a Mad Hatters’ Tea Party.
Just as the bank guarantee has been affected by the Cane Toad disease, so will any rush to constitutional change.
Australians well remember that the cane toad, or bufo marinus, was introduced into Queensland from Hawaii in 1935 to eat the cane beetle which was doing damage to the sugar cane industry. But someone forgot that the beetle can fly but bufo cannot.
The beetle was hardly affected , but the cane toads have multiplied , marching out of Queensland and advancing at a terrifying rate.At least the cane toad was introduced to tackle a real problem.
The campaign to savage the Australian Constitution and remove its oldest institution – and a central check and balance on political power –is worse.
Because the republican movement was so unable to indicate any problem or failing about the Australian Crown they had to invent a series of more and more preposterous advantages they claimed would flow from the act of constitutional vandalism they wanted.
We are today seeing the unintended consequences of the decision on bank gurentees. We all hope it can be overcome.Admittedly,some action was necessary to deal with the financial crisis.
There is absolutely no reason to take the risk of the unintended consequences of removing a core institution, a central check and balance against the political branch, from one of the world's most successful constitutions.