By Dale Webster
ONE of the most important Federal Government inquiries into welfare issues specific to regional Australia in decades handed down its final report a year ago this week.
The senate inquiry into regional bank closures spanned 15 months, held 13 hearings across Australia and received more than 600 submissions, delivering at the end eight recommendations the senators felt were required to fix the humanitarian crisis they could see unfolding in not only regional areas, but the suburbs of our capital cities as well.
Yet a year on, despite the Government being required to make a formal response within 90 days of tabling, the recommendations are still languishing in a no-man’s-land of neither being accepted or rejected.
The Government clearly did not want this to be an election issue and a series of announcements by Treasurer Jim Chalmers before the polling date was set ensured the key planks of the senate committee’s solution to the problems presented to them were not something he was going to have to deal with at such a critical time.
Instead of formal moves towards establishing a publicly owned bank, banking being recognised as an essential service, a commitment to guaranteeing reasonable access to cash and financial services and an independent Banking Code of Conduct, all we have is another moratorium on closures, with ANZ, the Commonwealth, NAB and Westpac promising not to close any more regional branches until July 31, 2027.
This was the same move they pulled after the last regional banking inquiries more than 20 years ago in an attempt to restore their trashed reputations, the only difference this time being that they have let the treasurer think it was his own idea.
The following is an excerpt from the “Money Too Far Away” report from the Hawker regional banking inquiry in 1999:
“Individual banks made specific commitments.
“In July 1998 the ANZ ‘announced a moratorium on rural branch closures and the allocation of $10 million to develop and implement alternative ways of meeting the banking needs of people in rural areas which have been affected by branch closures. In February 1999, it advised the Committee that it would extend its undertaking and made a commitment not to withdraw from any community in either metropolitan or regional Australia. It also advised the Committee that it would upgrade and extend its existing network of outside agents and that as part of this process would open new agents in about 30 locations, including towns where traditional branches had been closed.
“In November 1998, in announcing a $300 million branch network upgrade, Westpac made a commitment to maintain the current overall level of branch numbers in the network and to leave a face-to-face transactional banking facility in every country town where it currently has a presence.”
As history shows, “solutions” put in place were scrapped after the moratorium periods ended, resulting in some of the most significant cuts to financial services ever seen in regional Australia.
Dr Chalmers also played into bank hands – particularly NAB’s – by announcing he had negotiated for an expansion of Bank@post agreements rather than accept the senate committee’s recommendation to investigate a government-owned postal bank model.
In 2002, NAB was singled out for special mention in NSW parliament for “forcing loyal customers to use post offices” claiming “that there will be no loss of services” when this was clearly not the case.
It did the same throughout the latest senate inquiry, continually trying to justify closing branches by saying the same services could be found at post offices, which was disproven in other evidence.
Witnesses also told of safety and privacy concerns, high charges for basic services and major issues with cash access when banking at post offices.
Dr Chalmers’ announcement – made in joint press conference with the Australian Banking Association – acknowledged none of these details and smacked of the false premise Bank@post is an equitable alternative to a full-service bank branch.
The most damaging proposal of all from Dr Chalmers pre-election however, was a cash mandate that will give express permission for 98 per cent of Australian businesses to refuse cash, a trigger that could set the country on a course to cashlessness faster than anything the banks could have hoped for through their actions alone.
Each one of these moves – the moratorium, the Bank@post deal, exempting small businesses from a cash mandate – has the hallmarks of decisions made by someone having his strings pulled by a smarter, faster opponent.
Considering Dr Chalmers told the Australian Financial Review in 2022 that Australian Banking Association’s Anna Bligh was one of his greatest confidants, this should come as no surprise. (Ms Bligh would later distinguish herself during the senate hearings with an admission she didn’t read a single submission while a member of the Morrison Government’s regional banking taskforce.)
In the same article, Dr Chalmers listed multi-millionaires Matt Comyn from the Commonwealth Bank and former NAB boss Ross McEwan as the people he relied on most during the pandemic for “real-time intelligence” on how lockdowns were affecting people running shops and businesses.
And he didn’t see where the problem was with this.
New broom
The government response to the senate inquiry report is now officially 279 days overdue.
Regardless of Dr Chalmers’ interference, a response still needs to be tabled.
Former Financial Services Minister Stephen Jones was supposed to have done the work but after his retirement from parliament at this year’s election, the job now falls to his replacement Daniel Mulino.
While Mr Jones had no finance or economics background, Dr Mulino is a Yale-educated economist who studied under Nobel Prize for Economics winner Robert Shiller.
He also chaired the House economics committee in the last parliament.
In addition to his academic credentials, Dr Mulino also has a strong social conscience.
As the author of Safety Net: The Future of Welfare in Australia published in 2022, he wrote of “getting better outcomes for vulnerable individuals” by addressing systematic risk.
He makes the case for welfare, “not as an act of charity but as an investment”, according to Bill Kelty in the book’s foreword.
He examines risk sharing in agricultural societies, modern village economies and even families and discusses at length the benefits of income-contingent loans as a public policy tool.
“We have the opportunity to significantly improve the performance of most of our social insurance schemes – our reforms should not be driven by cost-cutting but rather by a desire to achieve better long-term outcomes for our fellow citizens,” Dr Mulino writes.
“A wide range of systematic risks affect society as a whole and it is typically the role of government to manage these risks. These include war, pandemics, economic cycles, automation, population ageing, climate change and very significant droughts and natural disasters.
“Currently governments tend to adopt a reactive approach to many of these risks. Adopting a more rigorous insurance framework to managing these risks will strengthen our capacity to understand the uncertainty that we face and to mitigate and manage the potential for loss.”
Surely a publicly owned bank has a significant role to play in supporting and developing the type of social insurance Dr Mulino is advocating for?
The formation of an expert panel to undertake a feasibility study into the proposal (recommendation two) is the perfect opportunity to also address the role a government bank could play in mitigating some of the systematic risks Dr Mulino discusses in his book.
With the Greens, who again hold the balance of power in the Senate, formally supporting the establishment of a public bank, and Nationals leader David Littleproud on record saying before the election that the Coalition would act on the senate inquiry recommendations if it won government, this report cannot be ignored any longer without some serious questions being asked about the Albanese government wasting public funds on the 15-month inquiry.
The silver lining in this delay may be that we now have a Financial Services Minister who understands both political and economic benefits can flow from supporting the vulnerable rather than leaving them behind.
READ: Safety Net: The Future of Welfare in Australia by Dr Daniel Mulino, available from Black Inc. RRP $36.99
Dale Webster received a grant from the Public Fund for Journalism to investigate regional bank closures in Australia and for this work was named Freelance Journalist of the Year by the Walkley Foundation in 2022. These stories were also recognised by the Melbourne Press Club with a Quill Award. Her data was the trigger for the 2023-24 Senate inquiry looking at the issue and her reporting and research was referenced 17 times in the final report.
This article was originally published on The Regional
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