The Senate Rural and Regional Affairs and Transport Committee has 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 branch 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 there is unlikely to be a “silver bullet” solution so it has 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.
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.
Regional and Rural Affairs and Transport Committee Chair, 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,” he said.
“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.”
