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Chapter 1 - Introduction
Establishment of the inquiry
In March 1999, the House of Representatives Standing Committee on
Economics, Finance and Public Administration tabled a report, Regional
Banking Services: Money too far away. The report strongly encouraged
service providers, governments and communities to work together to develop
strategies aimed at ensuring that rural and regional communities have access to
the financial services they need.
The subsequent years witnessed further change in the banking industry as
technological developments continued to spearhead advances. The Parliamentary
Joint Committee on Corporations and Financial Services considered that it was
time to assess whether government and service providers have achieved effective
outcomes in the way financial services are delivered to country Australia and
how communities in these areas are responding to changes in the delivery of
On 25 July 2002, the Chairman of the Parliamentary Joint Committee on
Corporations and Financial Services announced that the Committee had agreed to
inquire into the level of banking and financial services available to
Australians living in rural, regional and remote areas of the country. The
inquiry was to place particular focus on:
- options for making additional banking services available to rural and
regional communities, including the potential for shared banking facilities;
- options for expansion of banking facilities through non‑traditional
channels including new technologies;
- the level of service currently available to rural and regional
- international experiences and policies designed to enhance and improve
the quality of rural banking services.
Conduct of the inquiry
The Committee advertised the inquiry in all capital cities, in the Australian
Financial Review, the Weekend Australian and major rural magazines
during the last week of July 2002, calling for written submissions to be lodged
with the Committee by 30 August 2002. The Committee also wrote to relevant
Commonwealth Government ministers, State premiers and Territory chief ministers
drawing attention to the inquiry and inviting submissions. In addition, the
Committee notified local shire councils, banks, credit unions and building
societies, financial planners, consumer associations, and organisations and
people interested in matters dealing with banking and financial services in
rural, regional and remote Australia.
The terms of reference and other information about the inquiry were also
advertised on the Committee’s internet homepage at
A total of 133 submissions was received together with a number of
supplementary ones. A list of submissions is contained in Appendix 1. All but
three of the written submissions were made public documents.
Apart from the information contained in written submissions and in oral
evidence presented to it, the Committee drew on a range of material contained
in reports and reviews from various committees of inquiries and from comments
and articles by people directly involved with banking and financial services. A
select bibliography is set out at the end of the report.
After initial consideration of the submissions, the Committee commenced
its program of public hearings in Canberra on 12 and 14 November 2002. They were followed by further hearings in Sydney, Melbourne, Adelaide and Darwin as
well as in some regional areas including Tanunda and Jamestown in South
Australia; Yarraman, Nanango, Toowoomba and Boonah in Queensland; and Daly
River and Alice Springs in the Northern Territory. The Committee also made
field visits to a number of small towns including Yacka and Port Broughton in South
Australia and Blackbutt and Crows Nest in Queensland to inspect their banking
facilities. On 5 November 2003, the Committee held a special hearing,
which took the form of a round table discussion, on proposed changes to the ATM
fee structure and the likely implications for country Australia.
Details of the hearings and the witnesses who appeared at them are
contained in Appendix 2. The Hansard transcript of evidence taken at the
hearings was made available on the internet.
Structure of the report
The report reviews recent developments in the provision of banking and
financial services in rural, regional and remote Australia. It assesses the
direction being taken by financial institutions and the communities they serve
in meeting the challenge to provide adequate banking and financial services to
those in country Australia.
Although the report describes the problems experienced by people in
country areas in obtaining access to adequate banking and financial services,
it also discusses and gives serious consideration to practical means to improve
the delivery of such services. The report is divided into four broad parts as
Part 1 focuses exclusively on bank branch closures. It reviews
the available statistics on the network of branches that spreads across Australia
and describes the underlying causes for the recent cutback of this network. It
documents the effects that the rationalisation of branches has had and
continues to have on regional communities. Finally, it looks at the practices
of banks when closing branches and the steps they have taken to better manage
Part 2 surveys the much broader landscape of banking and
financial services in country Australia especially the substantial structural
changes taking place in the industry. It examines the statistics
covering the distribution of banking and financial services in regional Australia.
It looks at the way institutions such as credit unions, building societies and
community banks are providing banking and financial services in regional Australia
and the many different partnerships that have emerged over the last decade for
delivering such services. This part of the report concludes with a discussion
on the growing importance of electronic banking as a means of delivering
banking and financial services to regional, rural and remote Australia.
Part 3 draws heavily on the evidence presented in the first two
parts of the report but highlights the problems confronting particular sections
of the Australian population in rural, regional and remote areas of the
country—older Australians and Indigenous Australians.
While drawing together the dominant themes in this report, Part
4 focuses on the social obligations of financial institutions to the
communities they serve. It explores the regulatory regimes in operation in the United
Kingdom, the United States of America and Canada particularly their approach
to the delivery of banking and financial services to districts or communities
not well served by traditional financial institutions.
The Committee wishes to express its appreciation to everyone who
contributed to the inquiry by making submissions, providing additional
information or appearing before the Committee at public hearings. The Committee
especially thanks the Barossa Council, the Northern Areas Council, the Rosalie
Shire Council, the Nanango Shire Council, the Progressive Community Crow’s Nest
Ltd, the Nauiyu Nambiyu Community Government Council and the Tangentyere
Council for their warm hospitality.
Part I - The Traditional Bank Branch in Country Australia
Part I comprises three chapters which deal specifically with
aspects of bank branch closures in rural, regional and remote Australia.
Chapter 2 presents and analyses the statistical data on bank
branches in Australia and the rate of decline in their numbers over recent
years. It identifies the reasons behind this pattern of branch closure and
examines the following matters:
- the influence of globalisation on the banking industry in Australia;
- financial regulatory policy and its effect on the banking
- technological developments and their influence on the way banks
and their customers conduct their banking and financial affairs;
- consumer preferences; and
- demographic trends in regional Australia and their influence on bank
Chapter 3 looks behind the statistics to gain an
understanding of how branch closures affect people in rural, regional and
remote Australia. It is concerned with representing the views, experiences and
expectations of those who live in areas where branches have closed. It
considers the effects of branch closures on individual customers, local business
and the community as a whole.
Chapter 4 investigates the measures the banks have taken to
manage branch closures. In particular, it looks at the development of a bank
branch closure protocol and assesses its adequacy.
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