The Senate Rural and Regional Affairs and Transport Committee today released a report which recommends investment in the financial services available in rural and regional Australia to make up for the loss of services from bank closures in recent years.
There are 596 Australian towns which once had a major bank branch but now do not have a bank branch at all. In most cases, our major banks left these towns with no plan on how financial services would be provided after a bank closure. In recent years, more than a third of bank branches in regional Australia have closed.
Despite commitments from the banks in recent years to prepare impact statements on bank closures, the Committee found that these have amounted to nothing better than “tick the box” exercises. None of the major banks consult local communities before a branch closures and the impact statements are nothing more than desktop templates with minimal information about the impact of a local community of a closure.
The Committee found that there is unlikely to be a “silver bullet” solution so we have recommended a range of responses to help, including:
1. The creation of a new fund to help support towns establish “community branches”. These branches would require co-investment from a local community. Public support could be funded through a small increase in the Major Bank Levy.
2. Making the existing Banking Code of Conduct mandatory and strengthening its terms to include a requirement to consult local communities before a closure is decided and investigate ways to help communities adjust to any bank closure that does occur. A regulator should be appointed to enforce adherence to these requirements and no bank branch in regional Australia should be able to close without the provisions of the Code being met.
3. An expansion in the services of the Bank@Post so that small businesses can make larger deposits at Australia Post branches, and that customers can use Australia Post for basic identification and multiple signatories purposes. The Government should consider ways to make ANZ sign up to Bank@Post services.
4. The Government should consider the establishment of a public bank possibly through Australia Post offering direct financial services. The Committee’s final report concluded that a full feasibility study should be conducted before a decision is made on whether a public bank is viable. Senator Gerard Rennick made additional comments in the report in support of a public bank.
The Final Report on Banking Closures in Regional Australia is the culmination of thirteen separate Committee hearings covering every Australian state. The Committee received over 600 submissions. The Liberal and Nationals members of the Committee thank all of those who provided evidence and attended the Committee’s hearings.
Comments from senators
Chair of the Regional and Rural Affairs and Transport Committee, Senator Matthew Canavan, said:
“The major banks have treated rural Australia with contempt in recent years. Not only have they left many communities high and dry, the banks have barely paid “lip service” to the previous commitments they made to do things better.
“Our Committee’s recommendations go further than many previous reports on banking closures but there is clearly a need for a different approach. The major banks have not acted in good faith on the closure of branches in regional towns. There now needs to be a stricter and more proactive approach to rebuild financial services in the bush.
“It is unacceptable that small businesses in vibrant rural towns must spend hours travelling far away just to deposit their takings. The Committee heard of businesses in the Pilbara (a major wealth generating part of our country) having to fly to Perth just to deposit cash.
“Even before this report was released, the major banks seem incapable of admitting to their past failures. They have pre-empted our report by making empty threats of fees increasing in response to a small increase in the Major Bank Levy. However, there is no evidence that the major banks raised fees when the Levy was introduced in 2017, and the proposed increase in this report is small compared to the $7 billion the Levy now raises over the forward estimates.
“The major banks have been the principal reason why there is a financial desert in so many country towns and so it is perfectly reasonable for them to pay a small fee to help rebuild financial services in the bush.”
Senator Richard Colbeck said, “It seems incongruous that so many communities that make such a significant contribution to our national economy are without face to face banking facilities.”
“Circular Head, in North West Tasmania contributes in excess of $1.2 billion a year in mostly agricultural produce with a population of over 8,000 people, yet there is not a bank branch in the main town of Smithton – it just really doesn’t make sense.
“It is as though these so called service providers, no longer think they are in the service business.”
Senator Slade Brockman said, Bank@Post is undeniably an essential service across regional Australia. It is of paramount importance that we establish the right policy settings to enable them to meet the needs of consumers.
“The continuity and availability of cash in regional communities — and indeed throughout all parts of Australia — is a critical issue that governments must address,” he concluded.
