Scotty; there's several issues with that (Hockey). I agree with Hockey, and think he's a moron at the same time. He's right, yet going about it the wrong way and speaking complete rubbish while he's at it. And on top of that, he's in the Liberal party - who are traditionally free non-interventionalist in business markets.
For starters, he just said "pull levers" to control banks rising interest rates, of which none exist. He's been rightly called out on it. Honestly, I don't think economics is in Hockey's (or Abbott's) skill set at all. Robb should be the economics guy for the Liberals, and they must have a leader who is willing to at least deal with economics, unlike Abbott. One can only hope with Turnbulll...
Secondly, the banks are actually right, their cost of funding is rising, for several reasons. The 30% they source overseas is more expensive as hedging costs have increased, plus competition for funds is large (and it's NOT because of Labor government borrowing - another Hockey and Abbott lie - Australia's federal borrowings are actually tiny compared to the massive amount of sovereign borrowings world wide and are tiny enough to have no effect on the cost of borrowing for Australian banks). The money the Australian banks source from local deposits (to lend) here increased in costs as well, as high interest savings accounts are back in vogue as they fight for Australian deposits once again (see Ubank for instance, which is a NAB offshoot used to fund their loans). The banks have actually reduced their profit margin on mortgages, and increased it on businesses, and the business sector has been shafted. Mortgage rates from banks should, actually, be higher if you revert to traditional margins.
Now, to their huge profits. Which are quite obsence and wrong.
The banks have abused the government's borrowing guarantee - they used the government's AAA during the GFC (when it was available), and then loaned their sourced money out locally at much higher rates. Macquarie in particular was a bad abuser of this. Actually, becuase of the stimulatory measures the Australian banks actually did very well out of the GFC - much better than they should have. CommBank and Westpac have also been huge abusers - durring the GFC those two were writing 75%(!) of all residential mortgages in Australia. It's no wonder then you see Westpac expecting a government bailout should those GFC FHB (dubbed "Rudd prime" for those who used his increased grant as their only deposit on record low interest rates) ever starting defaulting en mass.
Hockey should be demanding why Australian banks have forsaken business lending for mortgages. The NAB business arm (NAB has traditionally been more of a business lending bank than residential) has complained about exactly that for nearly half a year now. It's not something that a productive country would do, and it's a worrying trend. How can a country who excels at digging up dirt and rocks to sell overseas, and selling houses for ever increasing amounts, ever hope to be productive into the future?
Whilst our regulation of the banking sector is better than the Americans, it still leaves much to be desired. When Basel III comes in hopefully it will lessen the banks willingness to take on massive residential loan books.
I wish Hockey well for his attempts at an inquiry. I think that he just completely botched it, which is unfortunate. He just wasn't the right person for the task.
One guy who deserves respect is Senator Ludlam, who is from the Greens and doing what the Liberals should be doing: attacking the Labor government over stimulatory housing policies (like negative gearing, CGT concessions, FHB grants, other tax concessions on rental properties, etc), yet at the same time the government is creating "affordability" schemes (like NRAS, etc) which have nothing to do with stopping increased prices and speculation. In fact, when Senator Ludlam stated that the best way to get affordability to improve is removing stimulatory policies (and to allow prices to deflate), he was flatly told that was not in the government's area, and to go talk to Treasury.
Here's the irony, which I am sure Labor haters will like: when Labor was elected, they made some noise about housing affordability. The then housing minister, Tanya Plibersek, is actually on quote in saying that increasing the FHB grant will "not improve affordability" and will "drive up prices", and they were not looking at that as a solution. Come the GFC, and what did they do? And they had the gall to say they were doing it to "help FHB enter the market". Flat out liars.
(PS: I hate both major parties.)
(PPS: I am a little drunk.)
For more anti-Australian housing blogs, you can read:
http://delusionaleconomics.blogspot.com/
http://www.unconventionaleconomist.com/
Remember to get balanced opinions from both sides - the other side is Christopher Joye from Rismark, normally, who also has his own blog, but he tends to be a little self-flagellating.