Are private banks necessary?

[Dirty Beatle]

why cant there be a 100% state controlled bank that charges 0 interest on loans/mortgages so long as you pay back on time?

Because that would cost the state money that it just does not have

Setting up the banks, employing and paying staff, having the money to just loan out, the most the government could afford was something like the first house buyers scheme and even that cost them a fucking heap.

It's simply not what government does. Banks are a business. The reserve bank is there to try and guide the interest rates but even that can't make banks abide by its advice.

What you are suggesting would also cripple our economy.