Corrupt RBA and APRA politicised by bursting housing bubble

As we’ve observed before, there is nothing that the Reserve Bank of Australia and friends won’t do, no place they won’t go, to protect their pet housing bubble.

On the surface the financial regulators appear to be happily deflating said bubble by pretending that the economic outlook is good, tightening macroprudential and holding interest rates steady. But under the bonnet there are a bunch of signals that show the regulators are dangerously close to losing independence to keep the great economic hernia hanging from their belly nicely plumped.

Recall that behind the scenes the RBA is working with Treasury to prevent any change to the corrupt banking regime exposed by the Hayne Royal Commission upon which the bubble depends:

The Reserve Bank of Australia and Treasury have privately cautioned the Morrison government that any regulatory response to the financial services Royal Commission must be careful to avoid putting the brakes on lending to home buyers and business.

This despite four our of five Australians losing faith in their own banking system:

Only one in five Australians believes banks act ethically and only one in four thinks banks take responsibility for mistakes and keep their promises to customers, according to the damning findings in a new national survey.

The survey underlines that the job of repairing customer trust in the wake of the Hayne royal commission will be a long and challenging road.

The inaugural Deloitte Trust Index – Banking 2018 has found the public’s dim view of banks is not influenced by major political party persuasion, class or gender. Nor are branch customers any more trusting than those banking over the internet.

We’ve lost confidence for good reason, with a new dump of royal commission shockers late yesterday for the RBA and Treasury to protect:

From CBA:

…multiple reports of sexual harassment at work events and outside the workplace.


…erroneous listing of credit card defaults against 16,228 customers in breach of the Privacy Act,… personal details of 60,463 customers sent to the owner of a string of adult websites.


…falsified more than 100 loan applications, two business bankers who colluded with third parties to make 47 fraudulent loans…


…staff manipulating internal systems such as ‘simulating’ account deposits to trigger bonuses, falsely recording that offers had been made in order meet key performance indicators…

Recall that it was Labor that triggered the royal commission. It is also Labor that continues to agitate for it continue. And it is Labor that has made it clear that it will legislate appropriately against any repeat of illegal and immoral banking. Yet the RBA and Treasury have implicitly lined up with the Coalition to prevent it.

It doesn’t stop there. The RBA’s sister organisation, APRA, is giving some sort of tacit endorsement to the Coalition regarding management of the bubble into the election, via the AFR:

Mr Frydenberg on Wednesday accused Labor of trying to “smash” the already-falling housing market from its plan to curtail negative gearing and capital gains tax breaks.

He has instead endorsed the prudential regulator’s interventions to cool the property market via cracking down on investor loans.

This follows Treasurer Frydenberg reappointing APRA chair, Wayne Byers, for five years when his term is not even up, even while he faces extraordinary questions about APRA’s competence. A chorus of observers including the AFR ‘s Chanticleer described that as dodgy this week:

The early reappointment of Australian Prudential Regulation Authority chairman Wayne Byres sends a message that is both poorly timed and off-key, given the important questions that have been raised by the royal commission.

Commissioner Ken Hayne’s interim report was so incendiary that it’s easy to forget it only covered the first two-thirds of the commission’s hearings.

Perhaps this is just the ham fist of an apprentice treasurer but the optics are terrible.

Long ago MB christened the mock separation of fiscal and monetary powers as the “politico-housing complex”, run by a sad gaggle of bureaucrats that have no better idea for their nation than to protect a debilitating property bubble. Said complex has been able to keep the bubble inflated far longer than elsewhere owing to its one competitive advantage – dubious ethics – which has enabled sequential policy violations to ‘kick the can’ through several serious periods of threat. This strategy is also very much in regulator’s own personal interests as they hold huge numbers of properties themselves, as well as avoiding blame and associated career damage if the thing implodes.

As the deflation gathers pace, and Labor looms as the democratically endorsed pin for the bubble via negative gearing reform, that complex is being exposed in the plain light of day as oligarchic, corrupt and politicised to the core.

Latest posts by David Llewellyn-Smith (see all)


  1. … AUSTRALIA: Why are Aussies such slow learners about simple structural housing affordability ? …

    … Not surprisingly … a politically corrupted urban land use system corrupts the finance sector …

    … Let the numbers do the talking …

    Shocking examples of red tape in Sydney … News Com Au

    … extract …

    … 5. Restrictive zoning rules add $489,000 to the cost of the average Sydney home and $399,000 to the cost of an apartment.

    The shocking effect of zoning on house prices is laid bare in a report by The Reserve Bank of Australia report.

    Analysis by Ross Kendall and Peter Tulip presented a “disturbing picture of how much cost has been added to houses and apartments in Sydney”, planning experts said.

    “These are massive amounts of money that are clearly impacting on housing affordability in Sydney.

    “The problem seems to be most extreme in Sydney as the extra for Melbourne is $324,000 and for Brisbane $159,000.

    “Clearly restrictive zoning which is driven by community concerns about change is the biggest component of Sydney’s housing affordability crisis.” … read more via hyperlink above …
    … The median price for detached housing in Houston is currently $ US 232,500 and townhouse / condos $ US 159,450 …

    MLS Press Releases and Archive – HAR members –
    Demographia International Housing Affordability Survey: All Editions


    For metropolitan areas to rate as ‘affordable’ and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household earnings. To allow this to occur, new starter housing of an acceptable quality to the purchasers, with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market (refer Demographia Survey Schedules for guidance).

    The critically important Development Ratios for this new fringe starter housing, should be 17 – 23% serviced lot / section cost – to balance the actual housing construction.

    Ideally through a normal building cycle, the Median Multiple should move from a Floor Multiple of 2.3, through a Swing Multiple of 2.5 to a Ceiling Multiple of 2.7 – to ensure maximum stability and optimal medium and long term performance of the residential construction sector.

  2. An important part of this massive fraud on the public is the cover being given by the financial institutions by obsfucating about what is going on.

    There is nothing in this article about RBA blowing a massive housing bubble with cheap credit and a dismissal of the suggestion that we are seeing an attempt to deflate the bubble with reduced access to credit.

    According to Macquarie Bank there is nothing to see, fundamentals are just fine, and if prices do fall it is all the fault of the scaredy cat public who have contracted ‘fear’.

    You see folks you can ignore private banking because it all about fear and animal spirits. How convenient.

    The outright BS that is being sprayed in every direction by the private banking industry and its facilitators at RBA and APRA and in government is hitting new highs.

    “…As for the risks to their call, Deverell and Fabo believe it will be on the demand side of the equation.

    “To us this is the real risk,” they say.

    “If households were to lose faith in housing markets, given current elevated prices, the demand for credit could fall more than we currently expect,” they say.

    In essence, the main thing to fear for Australian housing is fear itself.”

  3. HadronCollision

    Mb you guys should be in the Senate grilling this muppets month after month

    You could still
    Write articles surely

  4. St JacquesMEMBER

    Put the Sustainable Australia Party number one or two on your Senate ballot. We need an intelligent voice in there.

    • I see reports of lots of posters around St Milda/Elwood area (including on the temp fencing around the site of the former Gteyhound Hotel – lol) – will be interesting what that does to the vote count.

      • roylefamilyMEMBER

        A party benefactor funded the corflute drop. Vote for me if you are in Albert Park. All 11 lower house seats within the Southern Metro upper house district have candidates. All upper house districts have candidates.

    • ErmingtonPlumbingMEMBER

      Does SAP preference Labor over the LNP???
      I keep asking this Question without answer.

      • I don’t understand the question.

        You do your own preferences however you like.

        Are you asking about SAP “how to vote” flyers?

      • ErmingtonPlumbingMEMBER

        On senate Of cource,…but on the reps ballot if you 1 them where does their preference go.

  5. Keep it up pointing out political behaviour by public institutions. I’ll keep up pointing out that the Greens wanted the royal commission in the face of opposition from both Labor and Liberal. Let’s not yet forget, labor love business and sucking up to the ruling class.

    • ErmingtonPlumbingMEMBER

      I think a movement that demands harsh legislative reform against ALL kinds of instutionalised lobbying, including former Politicians and Apparchicks getting “payed off” with Cushy post politics gigs needs to happen.
      It is an area where Solidarity can be found among the rank and file of all the political parties Labor, LNP, Greens and all the rest.
      The current system is hopelessly corrupted by these powerful and Shadowy moneyed interests, regardless of whichever New or Old party comes to power.

      That story on the Vic Andrews Government just made my blood boil and I know most of my Rank and File ALP colleagues feel the same.
      Cross party Solidarity is required. Join your party of preference and make this your primary demand and dont give up,….its the only way!
      The leadership of Any party getting close enough to Power is to weak by itself to resist Powerful moneyed interests without an informed and agressive Rank and File calling them to heal.

      Its Time to fulfill you responsibilities as a member of this Democracy,

      • Unless you bring a brown paper bag full of cash, I think the lobbyists may have a more persuasive argument, and more forceful demands.

      • ErmingtonPlumbingMEMBER

        Those Brown Paper bags are not for the Rank and File,….this is why the rank and file should oversee all “leadership decisions” before they are enacted.
        Its the only way to root out the personal enrichment mentality and corruption of the Sociopaths and Psychopaths who have clawed their way to “the top”.

  6. St JacquesMEMBER

    Shock? Anger? Outrage? Why? APRA and the RBA are just tools of the FIRE sector. That is their function.

  7. St JacquesMEMBER

    Scptt Morrison, under the constitution you have the power over all international agreements so it’s time to put the kibosh on the secret agreement between Premier Dan and Beijing. Stop WHINGING and TAKE IMMEDIATE EMERGENCY ACTION TO KILL Dan’s secret Chinese deal NOW, before the Chinese DIVIDE AND RULE AUSTRALIA, you hypocrite.

    • Start an online campaign quick. Most Victorians would sign and call Dan’s bluff and force ScoMo to act. This is so much worse that Dan’s no open tender contracts and other opaque Red Shirts etc. If Dan wins it’ll show Victorians are dumb and up for rorting for whatever reason.

    • St JacquesMEMBER

      hahahahaha, it’s boomeranged right into the tool’s face, Much more fun to come. haha !

    • DefinitelyNotTheHorribleScottMorrisonPM

      Stop lying a call it what it is – “Labour’s EVIL property tax designed to hurt nurses, teachers and police officers (and then Bill and his mates all cackle about it)”.

  8. Both parties will do absolutely nothing to rein in the property market because they know that even the smallest thing will simply add to the already crashing property market, but that voters will see them as being responsible for the wealth destruction that is coming Australia’s way. So which ever party tries to interfere will be blamed, and they will sit in Opposition for the next 20 years (or until people forget). Both parties know it will be political suicide, so they will turn a blind eye and park it in a “committee/working group” for the foreseeable future.

    • This is correct. But can I just say I’m thrilled you know the difference between “rein” and “reign”.

      • The Kiwis are well educated – especially those who have read Shakespeare. Those were the days when his plays formed a compulsory part of our English studies curriculum. My son managed to get through High School without covering any of Shakespeare’s plays, a sign of regression in our education as we veer towards asianisation.

  9. Even StevenMEMBER

    Why attribute to corruption of the regulators what could instead be attributed to dogmatic application of a flawed monetary (credit creation) model? A la Pfh007.

    MB is getting a little conspiracy theorist these days.

  10. I wrote a submission to the Royal Commission saying as much. The RC needs to understand all these shenanigans in the context of the three property bubbles stacked on top of each other giving us our Hyperbubble. It’s not regulatory failure that got us here, quite the opposite – it was entirely deliberate and concocted.

    You can download the PDF I submitted from here:

    It’s around 50 pages, but covers the bases.

    I would love to be called as a witness to go into detail about this. Relish it in fact.