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Monday, 22 March 1999
Page: 3898

Mr PYNE (1:34 PM) —It is a pleasure to comment today on this report of the House of Representatives Standing Committee on Economics, Finance and Public Administration entitled Regional banking services: money too far away . The information technology revolution has had a profound impact on the way we live and on the way we do business. The pace of change has been rapid and unstoppable. The rewards of changes have been great, but they have not come without some social cost. Rural communities, by their nature, are particularly susceptible to the social costs of rapid change.

Despite the coalition's protests, the former Labor government failed to take action to ensure that rural communities were not unavoidably disadvantaged by these changes in the late 1980s and the early 1990s. The coalition government has worked hard to cushion the impact of further change in regional Australia while simultaneously repairing the decade of rural neglect by the former Labor government. But, more importantly, the coalition government is working to harness technological advances to result in a twofold effect of an improvement of services and a greater access to services for regional Australia.

The coalition government's Rural Transaction Centres program, which was announced before the last election, is a case in point. This initiative will help communities achieve better access to basic financial transaction services. Australia Post has a key role to play within and alongside the Rural Transaction Centres program. Indeed, the nature of this relationship should be extended to include business banking services.

Maintaining a satisfactory level of, and access to, financial transaction services has been a challenge for many regional communities over the last decade. According to the Reserve Bank, 506 bank branches were closed around Australia in the 1997-98 financial year. The arguments appear to be straightfor ward. Financial institutions need their branches to be viable to justify their operation to shareholders, and the community needs access to banking services, particularly business banking services. Both arguments are right. The challenge for government is to support a policy framework that will satisfy both arguments.

In some instances, a rural community cannot sustain the viable operation of a branch of a financial institution under any circumstances. The business is simply not there. In such cases, it is not reasonable to expect financial institutions to provide a level of services which the market cannot support. But, on some occasions, rural customers have learnt of the impending closure of their local branch after the decision has been officially made. The opportunity for the community to achieve the necessary support for the institution has been lost. There is a strong argument that there are some instances where dialogue and cooperation between the institutions and the rural community can not only keep branches viable but also make them more viable. There is a reciprocal obligation on both the community and the financial institution.

Financial institutions need to accept that they play an important role in a community and as such they are obliged to keep their rural branches sustainable. Alternatively, communities need to return this support. In some cases, closure of branches is inevitable. But too often the decision to close the branch is made without regard to the future needs of its customers. Wherever practically possible, financial institutions should give the community as much warning as possible so that alternative arrangements can be made by its customers with minimal disruption.

In situations where community support cannot justify the continued operation of a rural branch of a financial institution, there should be an emphasis on the delivery of other forms of banking services. Automatic teller machines, Internet and telephone banking do not always meet the demands of the entire community.

The recently announced partnership between BankWest and Guild Pharmacies aims to meet these challenges. It is anticipated that approximately 5,000 Pharmacy Guild of Australia banking agencies will operate throughout Australia from the middle of next year. The project appears to be both innovative and responsive to market needs.

If it proves to be cost effective, this marriage will also be of enormous benefit to people in regional communities with disabilities who cannot avail themselves of automatic teller machines and Internet and telephone banking in some cases.

The signs are encouraging but there is still much work to be done. Further reforms to the financial industry can only be legitimately considered when financial institutions are seen to be fulfilling their reasonable social obligations.

In conclusion, Mr Deputy Speaker, may I congratulate the secretariat, particularly Jan Connaughton, and the chairman, the member for Wannon (Mr Hawker), for the excellent work that they have put into this report, and to the entire committee for the work that they also put into the report.