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Chapter 10 - Rural transaction centres
10.1
The giroPost experience demonstrates the enormous advantages to be
gained through co-operation between financial institutions and other
enterprises. Such collaboration coupled with advances in technology broaden the
scope for improved delivery of financial services to country Australia.
10.2
This chapter looks at another venture, the Rural Transaction Centre
(RTC) Program, that is presenting similar opportunities for various parties to
enter a joint arrangement to provide a range of services including banking and
financial services to small country towns. The first section of this chapter
documents the history of the CreditCare initiative—the predecessor to the RTC
program—before examining in detail the operation of RTCs.
CreditCare
10.3
Credit unions and the Commonwealth initiated the CreditCare project in
June 1995 with the aim of using the self-help and community focus of credit
unions to meet the challenge of providing financial services in ‘no bank’
towns.[1]
10.4 Within two years of its establishment, the program had contacted 85
communities around Australia and facilitated the development of 29 new
establishments.[2]
In light of its success, the project received in 1997 an additional $2.4
million to extend its operation for a further three years.[3] Almost 60 communities—serving around 40,000 residents—regained access to
financial services through initiatives under the CreditCare program[4]
(see appendix 6).
10.5
The funding established a network of CreditCare Field Officers, employed
through CUSCAL and with experience in the provision of financial services, to
work with communities to bring financial services back to their town. Community
groups such as the Crows Nest Tourist and Progress Association appreciated the
early assistance offered through the CreditCare program. According to members
of the association, CreditCare provided the necessary outside expertise, the
confidence building, the structure and finally the support to push their
venture of a community bank ‘over the line’.[5]
10.6 It should be emphasised that CreditCare did not cover the start-up costs
or provide the initial seed funding for institutions to open services in
smaller communities in regional Australia. Rather the program relied on
community support to develop a detailed business plan to demonstrate the
viability of the service provision to a financial institution.[6]
Dr Gary Lewis explained:
The model was carefully designed to neither directly fund nor
subsidise the establishment of credit union branches or agencies. Rather the
program provided resources to assist communities themselves discover the
means of re-establishing financial services utilising existing resources, and
link these with a host institution. CreditCare’s maxim was that it was in a
community not simply to help but to help a community help itself.[7]
10.7
CUSCAL believed that the lack of funds in this area was a real
constraint on the capacity of the program and that it reached a point where
there ‘seemed to be limited opportunities for the sector—largely, the credit
union sector—to continue to open those services without some additional support
for some of the infrastructure and start-up costs’.[8]
10.8
While the CreditCare scheme was a valuable model that offered important
lessons for policy makers, it became apparent that ‘a wider program was
required to address growing service needs in towns without banks.’ Since the
closure of the CreditCare program in 2000, federal initiatives to deliver
financial services to rural areas have been implemented through the Rural Transaction
Centre scheme. As with the CreditCare program, the RTC programs focus on small
towns without banks.[9]
Background to the RTC programme
10.9
The RTC scheme was launched in March 1999, as a Commonwealth Government
initiative to restore services to rural and regional Australia. It is a $70
million program over five years and was funded from the sale of the first
tranche of Telstra to establish 500 RTCs in rural areas with populations of up
to 3,000.
10.10
The Program was designed as a grassroots measure to provide funds to
help small communities with practical and focused support.[10]
It is based on the premise that in some instances the provision of a particular
service such as a banking or welfare service may simply not be feasible as a
stand-alone operation but may be viable in conjunction with the provision of a
number of other services. In essence, the RTC model is based on the core
assumptions that:
- there are extensive economic and community benefits to be gained
from the collocation of government, private sector and community services; and
- in the longer term, the centres will develop into sustainable
community managed small businesses.[11]
10.11
The RTC scheme involves considerably more funding than the CreditCare
project, including options to subsidise infrastructure and operational costs.
As noted above, the limitation in being able to assist with start-up costs was
a significant weakness in CreditCare projects. CUSCAL was of the view that the
RTC program appeared to offer a much ‘better funded model that would enable some
of those issues to be addressed’. It should be noted that, after initial
funding for start-up costs or running costs during an establishment period,
RTCs are expected to be self sustaining.[12]
10.12
Each RTC is tailored to meet the varied and unique needs of the
community it serves. The types of services they offer include:
- financial services (including business services)
- post, phone, fax, Internet
- medicare easyclaim
- Centrelink
- facilities for visiting professionals
- printing, secretarial services
- tourism, involvement in employment schemes
- insurance, taxation
- federal, state and local government services.
In 1999, Senator the Hon. Ian MacDonald, then Minister for
Regional Services, Territories and Local Government, explained:
The local communities decide the range of services, the service
providers, the location of the centre and manage its operation. We just provide
the set up funds.[13]
10.13
Before plans can proceed in earnest, those applying for funds must
establish a case showing that their proposal is commercially viable. The
Department of Transport and Regional Services described the process in applying
for RTC funds:
Generally RTC applicants are required to demonstrate that
any RTC will be viable and sustainable in the longer term either through the
anticipated business turnover or indirectly through the commitment of a third
party such as a local government.[14]
10.14
It informed the Committee that in some instances the RTC Program has
contributed to the costs associated with providing a building to house the
financial services or assisted with the costs of equipment such as ATMs and
safes. It noted that generally the financial institution funds the installation
and running costs of terminals and other significant equipment.[15]
The RTC program and Post Office outlets
10.15
As part of the RTC Program, the Commonwealth Government is funding
eligible Licensed Post Offices to install Australia Post’s electronic point of
sale (EPOS) equipment. It allows access to giroPost.
10.16
As noted in the previous chapter, there are approximately 900 Australia
Post outlets nationwide that do not have the electronic equipment to deliver
on-line financial transactions. According to both Australia Post and the Post
Office Agents’ Association, 12,000 transactions of a financial nature are
required before the installation and use of giroPost is commercially viable.
The RTC Program provides two avenues for non on-line outlets in rural and
remote areas to apply for funding for the provision of giroPost:
- under the business planning process a community group may request
funding for a range of functions including giroPost to be located at the local
postal outlet; and
- a separate phased process allows the Licensee to apply directly
for giroPost funding from the RTC Program.[16]
10.17
Under the Program, the installation of EPOS is being implemented in
stages:
- phase 1—Licensed Post Offices processing over 5,000 transactions
at 30 June 2001;
- phase 2—Licensed Post Offices processing over 5,000 transactions
with limited financial services.[17]
10.18
It should be noted that Australia Post informed the Committee that of
their 900 outlets without giroPost only 21 per cent or 193 record between 5,000
and 10,000 transactions a year and 40 per cent conduct between 2,500 and 5,000.
10.19
In effect, the scheme would see the RTC program fund the provision of
giroPost in circumstances where the Post Office outlet falls below the required
12,000 transactions. As at March 2003, one hundred and four had been brought
on-line over the previous 18 months or so and a further 60 had been invited to
apply through the RTC program. Mr McCloskey, Australia Post, explained:
The capital funding has been provided from the RTC program.
In the initial stages, any shortfall in the operating costs are being met under
the RTC program. Once that program finishes, part of the condition is that the
licensees will then become liable—if that is the correct word—to pay an annual
technology fee to Australia Post, which is something that licensees currently
do under the EPOS system, and Australia Post will look at picking up the shortfall
if the number of transactions in those particular outlets does not reach the
10,000 limit.[18]
10.20
The Post Office Agents Association welcomed the extension of the RTC
program to some of their manually operated outlets but could see advantages in
extending EPOS to all post offices which it suggested ‘would be a huge boost to
country areas.’ It noted correctly, however, that some post offices may be so
small that even with technology they are never going to be viable giroPost
facilities.[19]
RTCs—broad support
10.21
Partnership between various groups—private enterprise, community groups
and government—are central to the success of the RTC program. The CPS Credit
Union (SA) Ltd stated that communities must be prepared to co-contribute to the
banking services within their community. Similarly it argued that governments
(State and Local) will need to co-operate more with the communities and
financial institutions to provide some of the infrastructure needed.[20]
Support from local government
10.22
Many local councils recorded their approval of the RTC model recognising
its potential for expanding services in smaller country locations.[21]
Mr Goodfellow, Elders Rural Bank, stated that one of the better options for
delivering financial services in small towns was through the shire or local
council. He maintained:
The rural transaction centre concept—with a lot of negotiation
and discussion amongst local government associations and members and, more
recently, at a higher level of government—has provided opportunities and cash
flow for rural transaction centres to prosper.[22]
10.23
Mr Nigel Hand from the Port Broughton RTC agreed with the view that the
local council can have a pivotal role in both establishing the Centre and
ensuring its viability by offering assistance such as providing premises at
less than cost, access to equipment and help with staffing.[23]
In Blackbutt, the RTC runs at a loss of approximately $8,000 per annum but
continues to operate through the direct assistance of the Nanango Shire
Council.[24]
Indeed, in numerous cases the involvement of local government in supporting
RTCs has been essential.[25]
10.24
The Gulin Gulin & Weemol Community Council Aboriginal Corporation
submitted that for several months it had been working towards the development
of a business plan for the operation of an RTC in Bulman. It saw the RTC
program as an ideal solution—‘a proven means to provide additional services’.[26]
10.25
The Narrandera Shire Council also recognised the advantages in having
RTCs provide small communities with access to electronic banking services. An
RTC was opened on 27 August 2003 at Barrellan due to the joint efforts of the
Council and the owner of the Australia Post outlet through the Department of
Transport and Regional services. It offers e-banking facilities using giroPost,
Centrelink Access Point, Medicare easyclaim, public access to business
equipment and to Internet and e-mail facilities.[27]
The Council urges the Government to continue with this program.[28]
Endorsing this view, the Summerland Credit Union Limited submitted that:
The continued establishment of RTCs is to be applauded and
will no doubt provide a valuable service to a good many rural and remote
communities. This is especially so for those communities deemed too small to
support any sort of commercial enterprise be it bank or credit union. Not only
do RTCs meet their banking needs but also assist in providing some of the
services they have traditionally lacked or replacing those that have
disappeared following the latest round of withdrawal of many government
services.[29]
10.26
It envisaged the expansion of RTCs not only as filling a gap in the
provision of banking services to rural and regional communities but as a means
to reverse the trend of declining services. It stated:
The maintenance and expansion of the RTC scheme will have a
number of positive flow on effects. Not only will it provide essential banking
services to a large part of regional Australia from which the banks have
withdrawn services but it will also assist in creating a significant number of
employment prospects within that area.[30]
10.27
Likewise, the Nanango Shire Council welcomed the establishment of an RTC
in Blackbutt which provides many government services and has become ‘a true
advantage’ for its residents. According to the Council, the RTC is instrumental
in cutting travelling time and expense for residents who do not have to journey
to a larger regional town to avail themselves of these services.[31]
Support from financial providers
10.28
There are many financial service providers keen to participate in the
program. The Summerland Credit Union Limited, told the Committee that credit
unions in particular have a social charter to provide cooperative banking
services to those overlooked by the traditional banking services. It maintained
that participation in the RTC program ‘sits very comfortably with this charter
and is an area in which the credit union industry has considerable expertise’.
It saw a role for credit unions in facilitating the roll out of such a program.[32]
10.29 A number of the major banks have also shown an interest in the program.
The ANZ is actively involved in the RTC initiative through providing full
personal and business banking transaction services at the Victorian Rural
Transaction Centre in Welshpool and the South Australia RTCs in Port Broughton
and Port Macdonnell.[33]
It noted:
The RTC program is a viable alternative because the third party
who operates the RTC, such as the local council, community organisation or
chamber of commerce, provides the infrastructure and staffing costs. This
provides an opportunity for ANZ to provide face-to-face banking services on a
lower cost basis than would otherwise be possible.[34]
It supported this initiative which in its view has
been successful in increasing the level of face-to-face banking in a number of
rural and regional locations.[35]
10.30 Westpac is also involved in the program. It informed the Committee that
the local community in Leitchville, Victoria, approached it to purchase its
former bank premises. Westpac explained that:
The community only had $10,000 to invest so Westpac subsequently
agreed to make the sale for that amount. The community has subsequently
established a Rural Transaction Centre which includes a Westpac In-store.[36]
Shortcomings of RTCs
10.31
Although many witnesses supported the RTC program, some nonetheless
criticised or raised questions about the followings aspects:
- the implementation process;
- the limited range of services;
- commercial viability;
- maintaining momentum; and
- future funding.
The following section looks in turn at the issues
identified above.
Implementation—slow start
10.32
A number of witnesses were disappointed with the program’s slow start.
The Finance Sector Union of Australia observed that there were 49 RTCs
throughout Australia which is ‘hardly an adequate replacement for the thousands
of branches closed across the country’.[37]
The Summerland Credit Union, which has been involved in one such establishment
at Coraki, also noted that only 49 RTCs had been established with a smaller
number still in the pipeline.[38]
A recent update shows that to October 2002, 124 RTCs had received approval and
there were 65 communities which had operational RTCs.[39]
This number is still far short of the goal of 500 RTCs. Further, nearly one
third of these establishments were initiated under the CreditCare scheme.
10.33
According to Mr Shaun McBride, Local Government Association of New South
Wales, the program’s goals had probably been optimistic but the program was
gathering some momentum.[40]
Figure 10.1—Status of Rural Transaction
Centres, February 2003
10.34
In drawing attention to the time taken to establish an RTC, the
Summerland Credit Union cited a number of reasons for the slow start ranging
from ‘the difficulties in galvanising local support, through to overcoming the
bureaucratic obstacles associated with any government funded scheme’.[41]
It suggested that the program administration be streamlined to speed up the
process of establishing an RTC. In its view, this process could involve ‘the
elimination of a number of layers of government involvement with say funding
provided direct to local government’.[42]
10.35
CUSCAL also identified problems with delays in the establishment of new
RTCs and the lengthy approval processes as major concerns. It claimed that
‘limited support for the community building phase of compiling applications and
business plans’, placed a high demand on volunteer community members.[43]
It also recommended a streamlining of approval and review processes for
communities to reduce waiting times.[44]
10.36
Based on its experiences with establishing RTCs at Dirrandbi and Bell,
the Heritage Building Society found the process ‘fairly cumbersome and time
consuming.’ It also noted the difficulties during the start-up period of an RTC
and recognised the need for funding for the initial inquiry and survey costs to
establish the business case for such a facility.[45]
Mr Read-Smith acknowledged that the early exploration stage could be a big
impost on a community to raise funds for the surveys to establish the
commercial viability of a proposal. He added ‘particularly as it is moneys that
is, in a sense, at risk, it may not lead, depending upon outcome of the
business case analysis, to a project getting off the ground’. He suggested that
this is an area where governments could play a role.[46]
10.37 The Committee appreciates the importance of early and well-targeted
assistance from the Department of Transport and Regional Services to guide
interested parties through the process of developing a business plan. It notes
the valuable role taken by field officers under the CreditCare scheme in
facilitating and expediting the early stages of investigating and planning for
the establishment of a community-based service provider.
Limited range of services
10.38
While appreciating the contribution that RTCs are making in providing
financial services, CUSCAL was concerned that a number of RTCs appear to offer
very limited services and some are operating without a financial service
component. It considered the provision of a financial service in an RTC as
essential to its viability.[47]
It claimed:
RTCs are ‘output’ focused, often with limited services (eg
Medicare Easyclaim). While important, these services alone do not deliver on
the program aims.[48]
10.39
The Department of Transport and Regional Services informed the Committee
that of the 65 communities that have operational RTCs only 26 deliver a
financial service through either a bank, credit union, building society or
community bank.[49]
10.40 CUSCAL also maintained that the RTC model had not expanded to seek new
service areas or partnerships with private and public sector bodies. It suggested
that the program has limited focus that is tied to creating a viable commercial
model to sponsor additional services.[50]
10.41
The Committee accepts that progress in implementing the program is
disappointing and is particularly concerned that so few RTCs offer a financial
service.
Meeting the needs of business
10.42
RTCs share the same problems as agencies and post office outlets in
catering for the particular needs of small business (see paragraphs 9.19–9.22).
They do not always meet or suit the requirements of business customers and face
security and privacy issues. For example, most RTCs do not facilitate business
transactions including business cash deposits and withdrawals nor form part of
the commercial world providing advice and access to finance so necessary for
small businesses to develop. The Gunning Shire Council informed the Committee
that it was successful in establishing an RTC within the Gunning Post Office.
It noted, however, that only $3,000 can be banked in any one day and third
party cheques cannot be banked into individual accounts.[51]
The Australian Centre for Co-operative Research and Development stated:
The capacity of locally owned businesses and social enterprises
can be enabled by locally based and supported financial institutions that understand
and help their business customers (eg develop business plans or look at
alternative sources of finance to expand and invest and overcome collateral
difficulties, and business cash flow difficulties). Recent years have seen a
huge decline in rural banking services that have not been replaced by services
that understand or cater for the financial needs of rural businesses and
community enterprises. Community banks, Rural Transaction Centres and Giro Post
institutions do not cater for the specific needs of small business and
community enterprise needs; nor do they attempt to understand what they are.[52]
10.43
The Report in Chapter 3 described at length how the absence of a bank
branch in a town creates difficulties for local businesses in the day-to-day
management of cash flow but also limits their access to professional advice and
to finance.[53]
Strategies to expand services
10.44
Of the RTCs that are established, the Department of Transport and
Regional Services highlighted the importance of commitment to the program. It
noted that community-driven solutions often rely on communities developing the
necessary skills to deliver and manage financial services. It asserted that
providing appropriate training and small business management skills to deliver
effective banking services can be time consuming and involves a continuing
commitment on the part of the community.
10.45 CUSCAL also noted the importance of sustaining the level of enthusiasm
for and commitment to the centres. It suggested, however, that there was a lack
of ongoing support services for RTCs once established.[54]
Indeed, during its site visit to Blackbutt, the Committee was surprised to
learn that no communication links had developed between the various RTCs, even
with those operating in neighbouring districts. It would appear that no one has
assumed responsibility for ensuring that operators and groups involved in the
work of RTCs form a nationwide network of enterprises pursuing similar goals.
At the moment there is no effective mechanism that brings RTCs together as a
cohesive group.
10.46
A number of councils raised a related issue dealing with the level of
communication and understanding that exists between the bureaucracy and those
seeking assistance from the program. They indicated that departmental officers
do not appreciate the uniqueness of communities, their specific needs and how
the RTC program could assist them. Mr Clinton Weber, Rosalie Shire Council,
told the Committee of difficulties the officers in Canberra had in
comprehending the decentralised nature of the shire with its numerous small
local towns with populations of between 200 and 300 people dotted throughout
the district. He stated:
Our main problem was getting somebody to understand where we
were coming from rather than them trying to explain to us where the program was
coming from.[55]
10.47
The Nyirranggulung Mardrulk Ngadberre Regional Council reported that
progress to establish an RTC at Bulman in the Northern Territory had stalled
because:
Bulman’s remoteness makes it impossible to undertake the negotiation
necessary to develop the agreements and commitments required to complete a
business plan...
The negotiation process was intended to be aided by an RTC Field
Officer. Whilst it may be true that our field officer was involved in
negotiation with providers at the general level of convincing providers of the
need to fully cost remote service provision, including lease of facilities, it
seems that specific negotiations to get agreements on the Bulman site never
took place.[56]
10.48
The Committee believes that the program could benefit greatly by having
a strong communication network linking all RTCs. This would give those involved
in the program a better appreciation of how RTCs operate in different areas,
the types of arrangements others have entered into and the range of services
they offer. For example the department was concerned about the disclosure of
commissions and their disparity between individual centres especially in light
of the lack of competition. It noted in its submission:
When entering into contractual arrangements with financial
institutions communities should be aware of the typical arrangements in place
in other communities. In terms of financial service providers in RTCs there is
great variation in policies on commissions and retainers and the products
offered differ. This has resulted in some disparity between RTCs. For example
commissions can range between $1.00 and $1.60 per transaction.[57]
10.49
In the Committee’s view, the RTC program should incorporate as part of
its on-going support and development strategies a component dedicated to
bringing RTCs together to share and gain valuable insight from each other’s
experience. Regular workshops would provide an ideal opportunity for those
involved in RTCs to exchange ideas. The Committee envisages the Department of
Transport and Regional Services as a catalyst in facilitating communication
between RTCs. Through this type of involvement, the department would not only
foster stronger links between RTCs but would enable its officers to gain a
better understanding of the operation of RTCs in other areas and the various
approaches taken to expand the businesses. With the assistance of those
actually working in the RTCs, the department would be better placed to develop
and implement measures to improve the operation of the scheme and to offer
guidance to those contemplating establishing an RTC.
Recommendation 9
The Committee recognises a need for those managing RTCs to be part
of a more effective communication network so that they can benefit from each
other’s experience and provide valuable advice for those considering applying
for assistance. The Committee recommends that the Department of Transport and
Regional Services take a more active role in encouraging the development of
stronger links between RTCs throughout Australia and between RTCs and
departmental officers.
10.50
In looking at matters such as the Government’s role in assisting
communities with the establishment of an RTC, the question arises about
on-going support for the program. Some witnesses argued that the Government
should remain an active partner in the RTC program and that its involvement
should go beyond merely the establishment of an RTC. CUSCAL stated:
...whilst many of those RTCs are operating very effectively, there
continues to be a need for a government program that oversees and coordinates
some of those initiatives and assists those centres. It would be a tragedy if
those communities that had fought to get services back to their area lost out
because of the lack of a coherent strategy or a strategy that continues to be
funded post mid-2004.[58]
10.51
The Committee is concerned about ensuring that the program not only
retains momentum but explores new ways to expand and improve its operation.
This matter raises the issue of funding the program not only to make certain
that the gains already made are not lost but to determine whether extra funding
is warranted.
Funding
10.52
The same economic imperative applies to RTCs as to giroPost and
community banks—they need to achieve a level of activity to ensure that the facility
becomes commercially viable. Put bluntly, however, there are some localities
that are not able to support an RTC. Mr McBride, Local Government Association
of New South Wales concluded:
I think in some areas it was never realistic to expect them to be
self-funding—maybe contributing significantly to their cost, but never fully
self-funding.[59]
10.53
For example the Laverton Shire Council investigated the setting up of an
RTC. It received a grant under the program to carry out a feasibility study but
failed to establish that the enterprise would be commercially viable. The RTC
service, therefore, has not proceeded because the proposed centre would not
have been self-sufficient in the long term.[60]
10.54
The situation in very small communities, where the local economy cannot
support even a basic banking facility, presents challenges for decision makers
and questions the requirement for all RTCs to be self-funding. Indeed, some
submissions saw increased funding as a means to further support the RTC program
and advocated a less demanding approach to the requirement for a centre to be
commercially viable.[61]
10.55
The Summerland Credit Union would like to see ‘a further financial
commitment to fund the establishment of a far greater number of Rural
Transaction Centres, as was initially intended’.[62]
The Rosalie Shire Council submitted that it may be necessary for the RTC
program to finance any losses involved in operating this service, at least for
a period up to five years, after which the level of assistance could be
reviewed.[63]
10.56
In some cases, the local council has been prepared to subsidise an RTC.
The Nanango Shire Council provides between $8,000 and $10,000 to the RTC at
Blackbutt to keep it operational. When the National closed its doors in
Blackbutt five years ago, it left the town of 800 people and a district of
2,000 without banking services. Councillor Lee explained:
...if we were to wave a wand tomorrow and the credit union in
Blackbutt disappeared, there would be a terrific upheaval over it. You could
not do it, because it is a community facility that is provided by the council
and is expected by those people down there to be provided by local authority.[64]
10.57
In this case the local council has accepted responsibility for ensuring
that the residents of Blackbutt have a banking service in their town. This
situation poses the question about whether such an undertaking is the
responsibility of local government. Mrs Zerbst felt that the council has a lot
of other services to deliver and should not be the ones that have to provide
financial services to a town.[65]
10.58
The Committee accepts that some areas may not qualify for assistance
because they cannot establish a sound business case for an RTC. Clearly some
councils, recognising this commercial reality, propose that funding under the
RTC program should be extended beyond the current guidelines. This issue of
funding raises the question about subsidisation for communities unable to
qualify for RTC funding on commercial grounds alone. The same issue arose in
relation to the absence of giroPost in towns where the number of financial
transactions simply could not support its installation.
10.59
Professor Ian Harper stated that he thought it was acceptable for
government to support or subsidise programs such as RTCs but with
qualifications. He told the Committee:
...it is entirely appropriate for the Australian government to
be easing the community through this transition...my concern is that the
motivation behind it is not to stop the advance of a tide which is simply
unstoppable. By all means, provide tax breaks to regional areas and subsidies
that are targeted. Provided they are competitive, they can seed this process.
Sometimes all that is necessary is to publicise the opportunities.[66]
10.60
The Committee acknowledges the work that has been achieved through the RTC
program and recognises that it has the potential to continue to make a valuable
contribution to the provision of services to regional, rural and remote Australia.
It fully supports on-going funding for the RTC program. Even so, the Committee
believes that the program could benefit from a review of its operation.
Conclusion
10.61
The Committee endorses the RTC program as an effective means of
restoring services to towns. It also notes that an RTC is a means of providing
services to a small community that may never have had such services.
10.62
The Committee witnessed the success of the RTC program when it looked at
the contribution being made by the Electricity Credit Union and the Heritage
Building Society in delivering banking services to small communities in South
West Queensland. In both cases, the institutions had stepped in to fill the
void left by the major banks which had either left the community without a bank
presence or were withdrawing their services from the town. In both cases the
community organisation had assistance from either the CreditCare or RTC
program. The RTC at Port Broughton with assistance from the local council was
also delivering banking services to a community in need of improved banking
services.
10.63
An RTC can be a means of renewing confidence, promoting local
enterprise, and providing a convenient and safe location for people to conduct
their banking affairs with staff on hand to assist them in transacting
business. This in turn may reverse the trend of declining services by
attracting and retaining business in the town. The presence of an RTC, however,
does not address all the problems experienced by a community that has lost or
never had access to adequate basic services.
10.64
While the Committee believes that such a scheme holds promise it is
concerned about:
- its slow progress;
- the number of RTCs that do not provide banking and financial
services;
- sustaining, even reinvigorating, the program to ensure that the
progress made is built upon and not eroded;
- future funding.
10.65
In light of such concerns the Committee makes the following
recommendation:
Recommendation 10
The Committee recommends that the Australian Government conduct a
review of the RTC program and its future direction. The review would:
- identify ways to streamline the process of applying for
funding and to better assist communities formulate a business case for an RTC;
- develop a program designed to produce a better and more
effective communication network between individual RTCs;
- establish why many RTCs do not provide banking or financial
services;
- examine the scope and formulate a better strategy for
extending the services provided by the centres particularly the provision of
banking and financial services;
- determine the adequacy of the level of funding, especially the
requirement for on-going funding, to ensure that established centres maintain
their momentum and that new centres can be established; and
- consider the value in subsidising RTCs in localities without
accesses to banking services but which would have difficulty in becoming self
sufficient.
10.66
The drafting of this report was nearing completion when the Australian
National Audit Office released its performance audit report, The
Administration of Telecommunications Grants, which looked at a number of
government programs including the RTC program. Among its key findings was that
the Department of Transport and Regional Services did not translate the
Government’s program objectives for the RTC program into ‘operational
objectives that would have helped to establish an appropriate performance
management framework to monitor the efficiency and effectiveness of program
delivery’. It found failings in the initial planning process, in particular
‘the absence of any mechanism for feeding information gained from the
evaluation of individual projects into an evaluation of the efficiency and
effectiveness of the programs.’
10.67
The audit report noted that the department is aware of many of the
shortcomings with the administration of the RTC program and is working towards
resolving them.
10.68
Although the audit report and this report cover some common ground and
the department is taking action to evaluate and rectify a number of problems
highlighted in the auditor’s report, the Committee believes that it should
nonetheless retain its recommendation for the Government to review the program.
In doing so, the Committee wants to reinforce the message coming out of the
auditor’s report and the department’s own evaluation that a serious review is
needed and problems with the program must be addressed.
10.69
Furthermore, the Committee emphasises that any review of the program
should place a clear emphasis on RTCs as providers of banking and financial
services and be directed at enhancing this role not downgrading it
Recommendation 11
In light of the findings of the Auditor-General, Audit Report No.
12, 2003–4, The Administration of Telecommunications Grants, the Committee
recommends that the Government make a public recommitment to the RTC program
especially to enhancing its role as a provider of banking and financial
services to areas without access to such services.
10.70
Community banks, giroPost and the RTC program have demonstrated that
small communities together with private enterprise and government assistance
can work together to find solutions to providing their communities with access
to banking and financial services. As noted in the report such joint ventures
require the combination of a number of key factors—community drive, commitment
and leadership, critical mass, a sympathetic and willing financial service provider
and in some instances government subsidy. Even when these factors do come
together, the provision of banking services may fall short of the community’s
needs and expectations.
10.71
Advances in technology offer some hope of improved banking and financial
services. The following section of the report focuses on this aspect of banking
services.
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