Standing Committee on Economics, Finance and Public
Administration
Media release, 6 November 1997
WHAT WILL REPLACE CLOSING BANK BRANCHES?
The Chairman of the Financial Institutions and Public Administration
Committee, David Hawker MP, today released the terms of reference for
an inquiry into the provision of financial services in regional and remote
areas of Australia.
The terms of reference provided to the Committee by the Treasurer are:
the Committee inquire into alternative means of providing banking
and like services in regional and remote Australia to those currently
delivered through the traditional bank branch network.
"The Wallis inquiry served to highlight the rapid change that is taking
place in the provision of financial services and the likelihood that Australians
are facing an array of alternatives to the traditional banking services
that they have known in the past." said Mr Hawker.
"Nowhere is this more evident than in the bush where many Australians
are confronting the closure of bank branches on a daily basis."
"This trend is forecast to continue and it is of critical concern that
individuals and small businesses in the country are given more than vague
promises of the brave new world that technology offers, they need to know
more precisely what it is that the future holds for them."
"Many people are afraid that the only way they will be able to access
the essential financial services that people in the cities take for granted
is through a computer or a telephone and they are far from convinced that
this will adequately meet their basic needs." Mr Hawker added.
With regard to technology, Mr Hawker noted that the Committee will be
looking at just what is envisaged by the banks, credit unions, building
societies and other prospective providers of financial services, including
that the issue of access to appropriate technology and the cost of that
access.
"For example, it is my understanding that many parts of Australia do
not even have proper access to Internet facilities." Mr Hawker said.
"Small business people and farmers in regional and remote Australia
require regular contact with banks in order to conduct their businesses,
are they now expected to make round trips of hundreds of kilometres every
time they need to discuss their financial affairs?"
"Do we now expect local businesses to become defacto banks, holding
sufficient cash for small communities to access through EFTPOS facilities?"
"When will country people experience the benefits of the hot competition
in banking, or are the benefits they will receive all negative?"
Mr Hawker added, "We also regularly hear of new developments in smart
card technology, perhaps this offers the opportunity to overcome the potential
difficulties related to accessing cash, but it too is reliant on an extensive
and sophisticated telecommunications network."
"I also wish to examine the extent to which building societies and credit
unions are in a position to step into the breach and provide services
to rural people and what government may be able to do to encourage new
providers."
"I read with interest a recent article detailing Bendigo Bank's plans
to foster the development of community banks in country Victorian towns."
said Mr Hawker.
Another area that the Committee will canvass relates to an issue raised
in the Wallis report where it was recommended that governments should
examine alternative means of providing low-cost transaction services.
This recommendation relates to the increased recovery of fees and charges
from consumers by banks and other financial institutions.
"The report acknowledges that government has a role to play in ensuring
that consumers are not disadvantaged, and there are many groups such as
pensioners, the unemployed and low income earners who would be severely
disadvantaged by full cost recovery on transaction accounts." said Mr
Hawker.
"The report suggests that the Commonwealth use its large volume of transfer
payments to foster the development of new low-cost transaction services
and the Treasurer has advised the Committee that a number of government
agencies are examining this proposal."
"The Committee will be seeking their advice on this recommendation and
the inquiry will provide an excellent opportunity to explore the possibilities
and obtain feedback from the community."
Mr Hawker noted that the inquiry will focus on the provision banking
and like services, not investment, superannuation or insurance services;
although it should be noted that they are often delivered through banks,
credit unions and building societies.
"It is my intention that this inquiry will address the strong feelings
of insecurity felt in many parts of Australia regarding their future access
to what is an essential service and provide people with a more certain
view of what the future holds."
"Finally I would like to point out that while I have focussed on regional
and remote Australia, many of the problems being experienced in the bush
are also being felt in parts of metropolitan Australia and the issues
that are canvassed in this inquiry will also be relevant to people living
in those areas where banking services have been withdrawn." Mr Hawker
concluded.
The inquiry will be advertised on 15/16 November and the Committee hopes
to commence public hearings early in 1998.
Ends
6 November 1997
Further information: David Hawker MP (Chairman) (02) 6277 4100
Chris Paterson (Secretary, FIPA Committee) 02 6277 4587
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