Senate committee urges Federal Government examine publicly-owned bank, beefing up Australia Post banking

The Federal Government should examine how it could establish a publicly-owned bank, as well as beef up the role of Australia Post in the sector, a Senate inquiry into regional banking has concluded. Self-regulation of the big four banks had failed to shelter regional areas from damaging impacts of branch closures, the committee found in its report released on Friday after a 14-month inquiry — and they should stump up for a levy to cover the establishment of a regional community banking branch program. The Government has also been told to establish a mandatory banking or customer service code of conduct that incorporates a “robust” branch closure process, including consultation with affected communities before a branch is closed, and for the relevant bank to submit reports about the potential impacts of a proposed closure. Under the proposal of the committee, chaired by Queensland Nationals Senator Matt Canavan, branch closures would be subject to approvals by a regulator that could refuse closures and impose penalties. Senator Canavan said the banks had treated rural towns “with contempt” and hundreds of towns that once had branches now had none at all. “In most cases, the banks just upped and left with no plan to help at all,” he said. While the committee report did not recommend the immediate establishment of a publicly-owned bank, a feasibility study should be conducted, it said, and include how Australia Post’s branch network could be used. The big four banks — Commonwealth, ANZ, Westpac and National Australia Bank — have been under scrutiny for years over their regime of regional bank branch closures, citing decreased patronage as customers increasingly use online services. But in regional areas, often with sub-par internet connectivity, towns and councils have argued the loss of bank branches has cost their communities dearly. The CBA — which was publicly owned until being floated onto the stockmarket in 1991 — last year pledged it would pause all regional branch closures until the end of 2026. But subsidiary Bankwest was not covered by this as CBA looked to covert it to a digital-first provider. Westpac too has extended its moratorium on closures until 2027 but the other big banks have pushed through closures, with NAB shuttering 36 this year and ANZ conceding to the Senate inquiry that 16 of its regional closures since 2014 left residents with no nearby services. The inquiry was sparked after 1200 branches nationally closed in regional areas in six years. Many of the responses have been to point customers to use Bank at Post services offered by Australia Post. The Senate committee also recommended all major banks have agreements for Bank at Post — ANZ does not, citing a high cost compared to the lower number of retail customers it has against the other big banks — as well as a Federal Government program to underwrite the cost of establishing “community bank” branches. It wants banks that don’t stump up for Bank at Post to be forced to pay a higher levy for the mooted regional branch program, and for the Australian Competition and Consumer Commission to consider how to can protect access to personal and business banking services in regional and remote areas. The Federal Government already levies the big banks to the tune of 0.015 per cent of the quarterly balance of a bank’s liabilities. In additional comments to the report, Government Senators said they supported an increased role for Bank at Post in handling cash — and supporting the transition away from cheques, which are slated to go by the end of 2028. Nationally, Australia Post has agreements for personal and business banking with more than 80 institutions at more than 3400 of its nearly 4280 post offices. Agreements with Westpac, NAB and CBA are in force until early in the 2030s. Australia Post reported a seven per cent increase in transactions in the 2023 financial year compared to the previous period. State-run banks had calamitous ends in Victoria and South Australia in the early 1990s, while the State Bank of NSW was taken over in 1994 and eventually merged into CBA. The Western Australia Bank was bought in the late 1920s by the Bank of NSW, the forerunner to Westpac.