THE DISTILLERY: ANZ agenda

The monthly ritual speculation of whether the Reserve Bank will move interest rates and whether the big four banks will follow has done nothing to increase consumer understanding about where their mortgage dollars come from. The government has and will always argue that the funding pressures from international markets are insufficient to justify more pain for the politically crucial mortgage holders. It's up to the banks to make their case but up until now their monthly window has been in the midst of a media frenzy like that we've seen over the last few days – a tough crowd. This morning's Distillery features insights from the Sydney Morning Herald's Elizabeth Knight, the Australian Financial Review's Michael Smith and The Australian's Matthew Stevens that explain what it's like to make a rates decision in the current environment and the scale of the public relations challenge that the banks face.

First is the Sydney Morning Herald's Elizabeth Knight, who offers a fascinating insight into the "war rooms” that the big four banks set up on Tuesday where only the most senior operators watch every slither of news and debate every possible scenario, waiting for an opponent to blink. Everyone thought it would be National Australia Bank, and then ANZ threw a spanner into the works.

"Most consumers will not understand the significance of ANZ moving away from the Reserve Bank's rate agenda. They will just see a 25-basis-point rate cut as a win. But the breakaway is sufficiently radical and unexpected that the rest will need to reform their strategies. The ANZ action was not included in the competitors' list of scenarios. It was meant to play out differently. The consensus among the finance industry was that NAB was the weakest link. It has been growing mortgage and business lending faster than the others, adding less profitable loans. As a result it was under more funding pressure and less able to sustain the financial pain of passing on the full rate cut.”

The Australian Financial Review's Chanticleer columnist Michael Smith (Tony Boyd is on leave) makes the crucial point that the decision by ANZ chief executive Mike Smith to put two-and-a-bit weeks between his company's interest rate movement's and the Reserve Bank's monthly meetings will take some of the sting out of the politics. But until borrowers and voters are better informed, the public relations battle will continue – particularly if NAB has anything to do with it.

"NAB, which has stolen market share with its 'break up' campaign, showed it was not giving up without a fight yet and also passed on the full rate cut, but said there were no immediate plans to change the decision-making methodology. Rival bank chiefs like Cameron Clyne at NAB and Westpac chairman Ted Evans have been making noises about if for some time. Whether all the banks follow ANZ or not, they still face an uphill public relations exercise as they seek to educate the public about what they are doing. The bank bashing will continue.”

The Australian's Matthew Stevens picks up on this point, arguing that it's about time the banks dragged the debate out of this predictable and increasingly hostile cycle.

"The fact is that the official cash rate has little or nothing to do with what it costs the ANZ, or any of the other pillars, to fund its business and the time has come to end the continuing monthly theatre around the RBA's monthly meetings. That does not mean that ANZ customers should imagine they are to be victim to a more volatile pricing environment. That is not the point. Rather, what Chronican wants to identify for his customers is that there are a range of market metrics people should watch if they are to anticipate a change in ANZ's pricing – and the RBA's cash rate is not really one of them.”

Staying with company news for the rest of this morning's commentaries, and the Age's Michael West finds speculation re-emerging over a Wesfarmers tilt at Insurance Australia Group, but also spots some political sensitivity relating to the target's history. The Australian's Criterion columnist Tim Boreham takes a trip back in time to explain why Wesfarmers scrip issued for the Coles acquisition isn't more highly sought after. And the same newspaper's Bryan Frith says engineering group Bradken is looking at the possibility of litigation due to its acquisition of Canadian company Norcast Wear Solutions from private equity group Castle Harlan, because Castle Harlan had only held it for seven hours before Bradken took it away. The inference is that Norcast was always headed for Bradken, which just used an intermediary to get a lower price.

Meanwhile, the Age's Adele Ferguson explains how the Productivity Commission's report on the retail industry is likely to be delayed, possibly until after Christmas, because there's unlikely to be much in there that the industry will like. Ferguson also explains how lowering the GST duty on international internet purchases costs more than it generates in revenue, regardless of what level it's set at. Elsewhere, The Australian's John Durie sits down with a very irate Greg Medcraft, boss of the Australian Securities and Investments Commission. He's frustrated by suggestions that the corporate watchdog's budget will be cut again next year despite having an increased workload.

And finally in economic matters, The Australian's Judith Sloan points out that the 'sudden' softness in the labour market has actually been present for about 12 months. The same newspaper's economics correspondent David Uren reminds readers to remember that, whenever economic data seems confusing, it's usually explicable by the push-and-pull forces currently being unloaded on the Australian economy – China and the global financial crisis. And Fairfax's Mat Murphy explains just how much of an illusion the recent drop in the US unemployment rate was.