The Reserve Bank fights inflation by raising interest rates. There are other ways. They could require the Banks to share the interest from owner-occupied home loans.  This petition asks the Reserve Bank to investigate this claim - and others - for better ways to control inflation than Raising and Lowering interest rates.

We (myself and others who have signed) seek your support to present an alternative view to the Reserve Bank Board. 

This video from the Saturday Paper describes the Housing Crisis and one way out of it.  Sharing interest on owner-occupied house loans is another way to reduce the cost of owning your house and reduce the CPI.

When the Reserve Bank raises interest rates, all the Banks raise their interest rates. The extra money from higher rates goes to the Bank shareholders and depositors. The extra money comes from mortgage holders and other borrowers, but they get nothing in return.

The burden of reducing inflation falls on borrowers who have mortgages on owner-occupied houses. This is unfair and unjust. However, there is a way the Reserve Bank can reduce inflation without raising interest rates.

When a borrower makes a Bank loan repayment, some money reduces the loan, some cover the Bank’s cost, and the rest is Bank Profit. This profit can be shared with borrowers by reducing the loan by a percentage of the interest.

Raising interest rates increases the cost of paying for a home. Sharing 50% of the interest typically reduces monthly repayments by about 20%. This reduces inflation, as 22% of the CPI is the cost of housing.

Sharing interest increases the borrower's wealth, while lowering interest does not increase investment. One of the ways the Reserve Bank tries to control inflation is through productivity increases with increased investment. Sharing interest increases investment because the shared interest tends to stay invested while Bank profits tend to accumulate as static wealth with Bank Shareholders. Sharing is a cost-effective way of increasing investment as it is a relatively trivial book-keeping change.

This petition asks the Reserve Bank to fight inflation by requiring Banks to share the interest from Home Loans with borrowers.  The Reserve Bank is asked to establish a group to work with one or more Banks and other government entities to run trials with home loan clients in limited geographic areas. The experiments are to be open, transparent and well-publicised. The results should be evaluated and the results published immediately.

For further information, read Improving Capital Productivity.