Question: Interest rates and ATM fees are too high. Why not create a new State bank and have low interest rates and low ATM fees?

Answer: To answer this question, we need to recognise 2 realities in the market:

1. Interest rates and ATM fees are the "prices" that consumers pay for a service. In the case of banks - this is a service rendered by a private organisation to a private citizen. The business of a government is "to govern", and not to regulate prices or enter into the market as a service provider in order to set prices. By way of analogy, if people complained about high bread prices and high flat TV screen prices - then let's create a government bakery and  a government TV screen manufacturer. This is nonsense.
2. High prices in an industry are very often due to the operation of a monopoly or cartel. Following the era of deregulation in the banking industry, mergers and acquisitions have resulted in the formation of the "big 4" banks in Australia. A quick test to see if they operate as a cartel - is to see how many days (if not hours) it takes for all the banks to adjust their interest rates when one of them announces a change.

In light of the above - the solution to high interest rates and high ATM fees is not for the government to intervene in the market to force down prices (which historically has always been a disaster) - but rather to open up the market for competition so that private individuals who are entrepreneurial can offer their own solutions at a better price. An example is the airline industry, and even the mobile phone and internet market. As soon as competition is introduced (e.g. Tiger Air and Virgin Blue) - prices fall and options increase.

This is what is needed - an "opening up" of the banking market, and an environment that encourages the introduction of new banks and competition. Lower interest rates and lower ATM fees will be the natural consequence.