Press conference on regional banking

E&OE TRANSCRIPT

JIM CHALMERS, TREASURER: Thanks for coming out relatively early. I wanted to first of all make an announcement with Minister Rowland about regional banking. Then I wanted to update you on some of the economic impacts of the flooding that we’ve seen and are seeing in North Queensland and Far North Queensland. I wanted to briefly touch on Production Tax Credits, and then obviously you’ll want to talk about tariffs on Australian steel and aluminum. I wanted to thank Michelle Rowland for being here, but also Anna Bligh, chief executive of the ABA, and Paul Graham, the chief executive of Australia Post. Because this morning here in Canberra, Michelle and I convened the CEOs of the banks, as well as Anna and Paul so that we would be in a position to make some important announcements this morning about regional banking services. The government has secured commitments from the banks to ensure that banking services remain available in regional Australia. Banks have a responsibility to regional Australia, and we’re making sure that they’re that they are meeting their responsibilities. This is all about making sure that banks stay open in the bush. Since 2017, we’ve seen 36 per cent of bank branches in regional Australia close, and we are taking action today to arrest this decline in regional banking services. Our government governs for the whole country, and we take our responsibilities to regional Australia very seriously, and that’s what this announcement is all about. We are standing up for regional Australia, for the communities and people and small businesses of our regions, helping to secure them the banking services that they need and deserve. We know that if we want a strong national economy, then regional Australia needs to be a big part of the story, and that means making sure that banking services are available to the businesses and workers and people and communities of regional Australia.

And so this announcement today really has two parts. First of all, we recognize the direction of travel when it comes to the digitisation of banking services. We have a whole agenda when it comes to the future of payments and digital services in banks. We know that that’s a big part of making our economy more productive, more dynamic, more competitive. But we also want to make sure that there are still face to face services for people who need them in the bush and people for whom digital alternatives may not necessarily work. So the two packages of commitments that we are announcing today is, first of all, a moratorium on branch closures for two and a half years. What this means is the National Australia Bank has committed to a new moratorium on regional bank closures. Commonwealth Bank and Westpac will extend their existing moratoriums. And now all four of the four major banks will have a position consistent with the conditions that we imposed on ANZ when they bought Suncorp. This means that no additional regional bank branch closures will take place before July of 2027. So that’s a very important announcement, and I am grateful to the banks and to Anna for securing and committing to that announcement today.

The second piece, which I’ll throw to Michelle in a moment about, is about new agreements between the banks and Australia Post. The government has asked the banking sector to increase its commitment to and investment in regional banking and following discussions with the government and with Australia Post, the Commonwealth Bank, NAB and Westpac have all reached new in principle Bank@Post agreements. ANZ has now also agreed key terms on which it will join the service, and this means that we can shore up the financial outlook for Bank@Post, but also, importantly, provide greater certainty and services and choice to customers in rural and regional areas. I also wanted to welcome the decision by Macquarie and also HSBC to start negotiations with Australia Post. Based on Bank@Post services as well.

You would recall towards the end of last year, there were other options and other potential steps flagged as a consequence of some confidential consultation that we were undertaking, that work will continue. We will continue to work with the banks, with stakeholders, we will continue to consult. There is more work to do to secure the best version of banking services for people in regional Australia. But these two announcements are very big, very substantial, very important announcements in their own right. We will continue to make sure that Australians in every corner of our country can access the sorts of services that they need and deserve, and that’s why I’m proud to have worked with Michelle and with the colleagues up here to make these announcements today.

We’ll hear from Michelle and then Anna and then Paul, then we’re going to take questions just on banking. Then we’ll excuse Anna and Paul, and then you can ask me about all the other stuff.

MICHELLE ROWLAND, MINISTER FOR COMMUNICATIONS: Thanks very much, Treasurer. As the Treasurer said, we’re taking important steps as a Government to ensure that face to face banking services remain accessible for consumers and small businesses, particularly in rural and regional Australia.

We understand the importance of access to essential services in our regions, they include postal services as well as banking services. Australia Post is a trusted institution. It connects millions of Australians, and together with participating banks, is assisting in fulfilling the government’s objective. So we welcome the acknowledgement by participating banks of their obligation to ensure that the provision of Bank@Post remains sustainable. Bank@Post will support ongoing banking services through post offices, which, as we know, serves so many regional communities who no longer have a local bank branch. Our approach balances support for innovation and competition in the banking sector with the need to ensure economic inclusion for everyone, irrespective of where they live.

The government recognizes the value of Bank@Post in providing access to basic banking services on behalf of the banks, and that’s why, as the Treasurer said, we are pleased that CBA, Westpac and NAB have reached new in principle Bank@Post agreements to address cost pressures and ANZ has agreed to key terms to join. The government expects these negotiations to be finalized shortly.

We’re also, as the Treasurer said, very much encouraged by the recent engagement with Macquarie and HSBC to commence negotiations with Australia Post to expand access to Bank@Post services. When we consulted the community on the modernisation of Australia Post, the retention of Bank@Post in rural and regional areas was paramount. So I thank Anna Bligh and the ABA member banks, I thank the Australia Post CEO Paul Graham and the Australia Post team for their constructive engagement to reach agreement to continue Bank@Post on a more sustainable footing for the benefit, particularly of Australians who live in rural and regional areas. Anna.

ANNA BLIGH, AUSTRALIAN BANKING ASSOCIATION CEO: Thank you very much, Treasurer and Minister Rowland. Australia’s banks take the need to service all of their customers, regardless of where they live, very, very seriously. I am delighted that we have been able to reach agreement with all of the major banks on a dedicated period of time for a moratorium on the closure of regional bank branches. But also reaching agreement across those major banks to have a better relationship with Australia Post so that face to face banking where it’s required can continue. Australians are transforming the way they bank, and they are doing it at an unprecedented rate. Australians are number three in the world at adopting financial technology. So this means that we’re undergoing a massive transformation in what banking looks like in this country, and it’s not going to look the same in 10 years’ time as it looks now. What this moratorium does is, I think, give us some very much needed breathing space to work more carefully with government and, where possible, through authorisations by the ACCC, for the major banks to work together to determine better ways to service particularly remote parts of what is a very, very big country. So I am very confident that the moratorium will effectively give us that breathing space to look at the things that Australia is good at, finding innovative ways to service very remote locations. So watch this space, I’m looking forward to some very interesting options being considered. But as we see more and more Australians jump online to do their banking, we are going to see a continued digital transformation. Our job collectively is to make sure we don’t leave any Australian behind as that transformation accelerates, and that’s what today’s announcements will do.

CHALMERS: Thanks, Anna. Paul.

PAUL GRAHAM, AUSTRALIA POST CEO: Thank you, Treasurer. Thank you, Minister Rowland. Thank you, Anna. Yes, very happy to be able to stand here today and say that we have reached new agreements with Commonwealth, NAB and Westpac, and look forward to welcoming ANZ to the Bank@Post family, and hopefully shortly, Macquarie and HSBC. As has been mentioned, we provide an essential service, particularly to regional and remote Australia. Bank@Post is focused and targeted primarily at those people who are not digital natives, or indeed, have vulnerabilities, or in many cases, come from backgrounds where English is not the first language and they want and need that over the counter service. Australia Post is very proud to continue to provide that in over 4000 branches nationally, 2,500 in regional and rural, and over 1000 branches where we are the only banking service available to that community. So I think this testifies to the great collaboration that we have had with the banks and also with the government. Team Australia effort to recognize the important role we all play in supporting and delighting those customers and communities. And particularly for us, because a large part of the increase in fees that we will see will flow through to our licensed post offices, who we know are an essential backbone of our network, particularly in regional and rural Australia. So thank you very much for your cooperation.

CHALMERS: Thanks, Paul. So if we take questions just on banking, and then I’ll come back to a few of those other issues in a moment, start at the front, work our way back. Shane.

JOURNALIST: Mr. Graham, what’s the financial arrangements between banks and Aus Post in terms of them connecting, continuing on with Bank@Post and ANZ coming on and possibly HSBC?

GRAHAM: We have over 80 agreements in place with banking and financial institutions for Bank@Post, each of those are struck on a case-by-case basis and commercial in confidence. But we have two elements to that, one is the infrastructure paying for that network, and particularly the technology and the compliance that goes with it. And the second one is the fees, basically paying for the services, particularly those provided by the licensed post offices.

JOURNALIST: Is it beneficial to Aus Post?

GRAHAM: Yes, it is beneficial. And as Minister Rowland mentioned, this creates a more sustainable platform for us, for a horizon, whilst, as Anna said, we work collectively with government and the banks on the longer term solutions in regional and rural Australia.

JOURNALIST: Treasurer, is it possible that the proposal for the rural bank levy could be revisited down the track?

CHALMERS: Despite today’s announcement, we’ve made it clear privately and a moment ago publicly that we think that there’s more work to do, as you know and as your paper covered extensively. At the end of last year, we were in discussions with the banks about what could be done, including that proposal, but other proposals as well. We’ve indicated that the work will continue. But these two announcements are very significant announcements in their own right. They mean that we can continue some of that other work with this clarity in place. Millie.

JOURNALIST: Would you be open to asking the banks to reverse sort of the recent closures that they’ve made in regional areas?

CHALMERS: We’re always working with the banks to make sure that they have a presence in regional Australia. That’s what today’s announcement is all about. Our primary focus has been to arrest the decline that I mentioned: since 2017, 36 per cent of branches have closed – so our first priority, our first responsibility, is to arrest the decline, to get these moratoriums in place, to get the arrangements with Australia Post right so that we can look work on some of those longer term issues at the same time.