Interview on ABC Brisbane about agreement with Armaguard

Cathie Schnitzerling: The country’s largest banks, along with the big supermarkets like Coles and Woolworths, Bunnings and Australia Post, have agreed to pay Armaguard $50 million to ensure that cash can get to you and me for the next year. But after that, it’s still not clear whether there will be a sustainable way to transport banknotes and coins across the country. Anna Bligh is the CEO of the Australian Banking Association and joins me now.  

Hello, Anna. 

Anna Bligh: Good morning, Cathie. How are you? 

Cathie Schnitzerling: Pretty good, thanks. Probably, we’re better than Armaguard. Why does Armaguard need this money?​ 

Anna Bligh: Well, I would describe this as good news. I heard you asking people to call in for good news. 

Cathie Schnitzerling: Thank you. Thank you. 

Anna Bligh: It’s good news. This is good news for Australians, and particularly those Australians who either like to or need to use cash, and really, that can be any of us at any time. Queensland is no stranger to natural disasters and sometimes when the system goes down because of a flood or something or a big storm, lots of people need to go back and rely on cash. But more and more Australians in their everyday lives are using digital payments, and so we’re using less and less and less cash as a country and moving cash around the country is an expensive business. Armoured vehicles, drivers who are trained and licensed to have guns. These are high fixed costs and trucks are carrying less and less and less cash. So, Armaguard is finding it very difficult, but ultimately the economy needs cash and it’s an unusual arrangement where the major customers have sat down with the business and provided them with funding support for the next 12 months. But it’s not just here is the money and “let’s not worry about it for a year”, there are very, very clear KPIs for Armaguard to meet – new efficiencies, and a better way of doing things. 

Cathie Schnitzerling: I wouldn’t imagine that the big banks, the big supermarkets and Australia Post would not have KPIs. What are they? If you can share some of those. 

Anna Bligh: Sure. Ultimately, for the business to be effective and sustainable into the long term, we need to see fewer drop offs and pickups, and that means being much more efficient about the pickups and drop-offs you do and when you do them. Right now, many customers, including all the big major players in the cash distribution network, all have their own arrangements with Armaguard, and that’s really a luxury we can’t afford anymore. We need to standardise the dates and times that they go to a particular regional centre. So, at the moment, for example, they might be sending a truck to, you know, let’s pick a regional town in Gympie, Toowoomba. They might be sending a truck four or five times a week to service the interests and needs of all of their customers when they could probably go once or twice a week and do everybody on those days. So, it means the customers having to think about a different way of doing cash and it needs the business to be much more efficient in the way they’re doing it. We’ve seen cash drop off very, very quickly after the COVID shutdowns and the business has to adapt. But what this 12 months of funding support will do is give the business and the major customers the breathing space necessary. I don’t have all the answers yet, Cathie, but the breathing space will allow us to sit down together and work through issues such as; how do we take some cost out of the business, how do we rationalise the routes that are used, ow do we make sure that we’re using the best technology to allow some of the customers to hold more money from time to time so they don’t need as many pickups. 

Cathie Schnitzerling: I was going to ask that. I would think that’s going to mean that the armoured vehicles are going to have to carry more cash and there will be more cash on premises than what they have been previously. Will that mean an increase in security for those businesses? 

Anna Bligh: Well, security will be one of the number one issues. We won’t be putting in place arrangements that in any way compromise the safety and security, particularly of the frontline people who are delivering cash into our communities. But, as I said, these are armoured vehicles, these are staff who are equipped with guns. The bank branches and the major retailers all have very, very secure vaults and safes on premises. So, we just need to sit down together – quite unusual for customers collectively to sit down with their service provider and find a solution that works for a country like Australia. Cathie, we’re not the only country looking into this and there are European countries that are using less cash than us already. But there aren’t many that have the geographic challenge that Australia does. Getting cash, I should say, to Toowoomba and Gympie, is actually pretty easy. 

​ Anna Bligh: It’s getting it to Broome and Winton and Cloncurry and all of the little places in between. And not just to banks, but to supermarkets, to post offices where people can access cash. 

Cathie Schnitzerling: 9:18am here on 612 ABC Brisbane. Anna Bligh, the CEO of the Australian Banking Association, has joined me to talk about this bailout for Armaguard, but it’s only a twelve-month bailout, and there are strict KPIs attached to that to come up with a more sustainable way to move cash around this very diverse country that we have. Anna, are there any alternatives to Armaguard, which is, I believe, the only armoured vehicle cash transport company in Australia. Are there any alternatives to transport cash around Australia? 

Anna Bligh: There used to be two businesses: Armaguard, and some of your listeners might have known a company called Prosegur. They had big yellow and black trucks. Some of them are still on the road. Armaguard and Prosegur were authorised by the ACCC in the middle of last year to merge and to become one company. So, that does mean that there are opportunities to rationalise. So, in those places where there are two depots, two truck fleets, that’s the hard yards that Armaguard is currently engaged in. But that won’t be enough. We will need to have customers rethinking how often they need cash. When I say customers, I mean the big supermarkets, the bank branches. How often do they need cash delivered, how often do they need it picked up? And that’s some of the hard yards we have to do together. 

Cathie Schnitzerling: Who came up with this idea to get the business and the customers together? Was it the customer saying, we need the cash, or was it the business saying, please help us out or else you won’t have cash? Because it is such an unusual arrangement. 

Anna Bligh: It is. It was much more the business identifying that despite the merger, the business was very unlikely to be sustainable in the long term, and some of this can’t be done by individual contracts. You need to sit down and say, right, how is the best way to get cash? Who needs it in Winton? Who needs it in Cloncurry? How do we actually do this together in a much more efficient way. I should say, Armaguard, just in answer to your previous question, has over 90 per cent of the market now since it’s merged. But there are some smaller second tier providers. There is a company, for example, on the Gold Coast that largely services the Gold Coast, and the same in regional Victoria and a couple of other places. I mean, as far as I know, they run very good businesses, but at this stage they’re a very small part of the market and couldn’t by themselves.​ 

Cathie Schnitzerling: Is there a certain convenience to closing local bank branches in remote and rural locations? Because you can’t get the cash there anyway. So, it’s kind of convenient that there’s no longer a branch there.​ 

Anna Bligh: Cathie, we’ve still got a cash-in-transit business that is delivering cash. There’s no shortage of cash and there is no shortage of deliveries. But the company was losing money every month and that’s just not sustainable. You can’t look at the trajectory and think, we’ll all just sit back and wait till it falls over. That would not be a responsible thing to do. So, there’s no lack of access to cash right now, but it has been happening at a loss to the company and you can only do that as a company for so long. And that’s why we’ve put together this package.​ 

Cathie Schnitzerling: What if Armaguard can’t restructure its business to make it viable? What happens then?​ 

Anna Bligh: Well, I guess we’ll cross that bridge when we come to it. But what I would say, and I think it’s important – all the parties around the table, including Armaguard, are highly motivated to make this work. Not only do they want to run a successful business, but I think everybody feels very keenly – this is not like delivering beer.​Although there might be people out there who prefer beer to cash. But this is something that is critical to the health of the economy. And everyone around the table, I think, feels a responsibility to get this right. It’s not just a commercial question, although obviously they want to run a successful business. It’s a question of sort of national security and national wellbeing. And so that’s the sort of – that’s the hat that everybody’s wearing when they’re sitting at the table.​ 

Cathie Schnitzerling: Well, we are all very dependent on making sure that it does work and we’re not the big customers, we’re just the small customers.​ 

Anna Bligh: Yes.​ 

Cathie Schnitzerling: Anna Bligh, thanks for joining us here on 612 ABC Brisbane this morning.​ 

Anna Bligh: Pleasure. Thank you, Cathie.​ 

Cathie Schnitzerling: Anna Bligh is the CEO of the Australian Banking Association, talking there about the $50 million deal to help Armaguard – keep them going because their business was failing, Armaguard, which moves cash around the country to keep them going. So, for twelve months at least, to come up with a way to restructure the business so that we can still have cash moved around easily in this country. 

 Ends