Alternative means of providing banking and like services in regional Australia
Media Releases

Media release, 6 November 1997

WHAT WILL REPLACE CLOSING BANK BRANCHES?

The Chairman of the Financial Institutions and Public Administration Committee, David Hawker MP, today released the terms of reference for an inquiry into the provision of financial services in regional and remote areas of Australia.

The terms of reference provided to the Committee by the Treasurer are:

the Committee inquire into alternative means of providing banking and like services in regional and remote Australia to those currently delivered through the traditional bank branch network.

"The Wallis inquiry served to highlight the rapid change that is taking place in the provision of financial services and the likelihood that Australians are facing an array of alternatives to the traditional banking services that they have known in the past." said Mr Hawker.

"Nowhere is this more evident than in the bush where many Australians are confronting the closure of bank branches on a daily basis."

"This trend is forecast to continue and it is of critical concern that individuals and small businesses in the country are given more than vague promises of the brave new world that technology offers, they need to know more precisely what it is that the future holds for them."

"Many people are afraid that the only way they will be able to access the essential financial services that people in the cities take for granted is through a computer or a telephone and they are far from convinced that this will adequately meet their basic needs." Mr Hawker added.

With regard to technology, Mr Hawker noted that the Committee will be looking at just what is envisaged by the banks, credit unions, building societies and other prospective providers of financial services, including that the issue of access to appropriate technology and the cost of that access.

"For example, it is my understanding that many parts of Australia do not even have proper access to Internet facilities." Mr Hawker said.

"Small business people and farmers in regional and remote Australia require regular contact with banks in order to conduct their businesses, are they now expected to make round trips of hundreds of kilometres every time they need to discuss their financial affairs?"

"Do we now expect local businesses to become defacto banks, holding sufficient cash for small communities to access through EFTPOS facilities?"

"When will country people experience the benefits of the hot competition in banking, or are the benefits they will receive all negative?"

Mr Hawker added, "We also regularly hear of new developments in smart card technology, perhaps this offers the opportunity to overcome the potential difficulties related to accessing cash, but it too is reliant on an extensive and sophisticated telecommunications network."

"I also wish to examine the extent to which building societies and credit unions are in a position to step into the breach and provide services to rural people and what government may be able to do to encourage new providers."

"I read with interest a recent article detailing Bendigo Bank's plans to foster the development of community banks in country Victorian towns." said Mr Hawker.

Another area that the Committee will canvass relates to an issue raised in the Wallis report where it was recommended that governments should examine alternative means of providing low-cost transaction services.

This recommendation relates to the increased recovery of fees and charges from consumers by banks and other financial institutions.

"The report acknowledges that government has a role to play in ensuring that consumers are not disadvantaged, and there are many groups such as pensioners, the unemployed and low income earners who would be severely disadvantaged by full cost recovery on transaction accounts." said Mr Hawker.

"The report suggests that the Commonwealth use its large volume of transfer payments to foster the development of new low-cost transaction services and the Treasurer has advised the Committee that a number of government agencies are examining this proposal."

"The Committee will be seeking their advice on this recommendation and the inquiry will provide an excellent opportunity to explore the possibilities and obtain feedback from the community."

Mr Hawker noted that the inquiry will focus on the provision banking and like services, not investment, superannuation or insurance services; although it should be noted that they are often delivered through banks, credit unions and building societies.

"It is my intention that this inquiry will address the strong feelings of insecurity felt in many parts of Australia regarding their future access to what is an essential service and provide people with a more certain view of what the future holds."

"Finally I would like to point out that while I have focussed on regional and remote Australia, many of the problems being experienced in the bush are also being felt in parts of metropolitan Australia and the issues that are canvassed in this inquiry will also be relevant to people living in those areas where banking services have been withdrawn." Mr Hawker concluded.

The inquiry will be advertised on 15/16 November and the Committee hopes to commence public hearings early in 1998.

Ends
6 November 1997
Further information: David Hawker MP (Chairman) (02) 6277 4100
Chris Paterson (Secretary, FIPA Committee) 02 6277 4587

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