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Tuesday, 2 February 2016
Page: 115

Mr BANDT (Melbourne) (19:22): I rise to speak on the Competition and Consumer Amendment (Payment Surcharges) Bill 2015. For many years now, the Greens have been pointing to the exorbitant amounts being made by banks and credit card companies when people do little more than use their own money, often in situations where they have no choice other than to use a card or have their transaction processed electronically. It has been an excuse for banks, credit card companies and many others to make hundreds of millions of dollars, if not more, off the back of people doing no more than just going about their everyday life. In previous parliaments, we have pushed for reform on this front, and I am pleased that now there is some action being taken with respect to credit cards at least. It could be more, and, to that end, we will be seeking to broaden the bill to cover other areas where people are being similarly gouged.

This bill reflects part of the government's response to the recommendations of the financial system inquiry. It amends the Competition and Consumer Act 2010 to establish a framework to ban surcharges imposed with respect to particular payment methods that exceed the cost of acceptance for those payment methods and to provide the ACCC with additional powers to gather information and issue infringement notices in enforcing the ban on excess surcharges. We are talking about the charges that sometimes appear online or in a shop when you use your credit card. It might be a little note saying an X per cent fee will be applied, or it might be a certain amount. We know that that is more than what it costs the provider to use the service. In other words, someone is making a profit just because you choose to use a credit card. In that respect, we support this bill as the first step in addressing unfair fees and charges that Australians are being forced to pay for financial services.

Since an RBA ruling in 2012, credit card surcharges were meant to have been limited to the reasonable cost to the business of processing the transaction, which for Visa and MasterCard was about 0.8 per cent and for American Express and Diners Club about two per cent. But people would have seen, when they make those transactions, including online, that it is often much higher. It is important to underscore that the Reserve Bank has had powers to crack down on this for some time. Those powers are set out in section 10 of the Payment Systems (Regulation) Act 1998, which includes the setting of Reserve Bank standards on payment systems designated by the RBA for regulation. As the explanatory memorandum makes clear, MasterCard, Visa, EFTPOS and American Express companion cards have all been designated—some have not, but many have. The Reserve Bank standards apply to that system and:

… cover a range of aspects including interchange fees and merchants’ card surcharge arrangements. For instance, under the Reserve Bank standard on merchant pricing, regulated payment system may not prevent merchants from imposing a surcharge on customers who pay with credit cards. American Express and Diners Club have voluntarily undertaken not to prevent merchants from imposing charges on customers who pay with their cards.

The issue is the reasonable cost of using the service and whether or not that is actually been met. The problem has been—and many have pointed this out for some time—it has been left up to the companies to enforce the requirement. As a result, there have been surcharges that are well in excess of that. Many surcharges are as high as 17 per cent, and the worst offenders have been companies like the airlines. In one of the more extreme cases analysed by consumer organisation Choice after the RBA ruling, a 1,479 per cent surcharge was applied to a $132 ticket by Tigerair. That is the kind of gouging that has been going on. As a result, as of March 2015, Australian consumers have been charged a collective $1.6 billion a year, according to MasterCard data made available to Choice at the time. If this legislation works, it will reduce this burden, and that is why the Greens intend to support it. As the explanatory memorandum states:

The measure will also ensure that any cases of excessive surcharging can be readily addressed by the ACCC which will be the primary enforcement agency for the ban.

Under the … Act as it currently stands, there is no specific prohibition against excessive surcharging. However, there are existing provisions that prohibit false and misleading misrepresentations. The amendments will complement these existing provisions of the … Act.

To that extent, it is a good step towards getting proper enforcement of the RBA ruling. The RBA ruling was good. This is not an area where we should be allowed to make profits. You should just be able to charge the customer what it actually costs you to provide that service, that transaction. In that respect, it is good, it is worthy of support, and that is why will support it.

But this is where it does not go far enough: it fails to deal with one of the biggest areas of financial charges that slug consumers every day, and that is ATM fees when you go to the teller machine. If we are doing this for credit cards, we should also do it for ATM fees. Banks are making up to $600 million a year from ATM fees. If credit card operators are now not allowed to make a profit from the use of a card, neither should banks. We know that banks collect around $12 billion in fees from customers every year—that is, fees right across the board. But we also know that Australians are paying over $600 million a year in ATM fees as part of this enormous amount of money acquired from consumers by the banks. Much of that is just going straight to the banks' bottom line. Whilst I think everyone would accept, and the numbers are clear—the use of payWave and online banking services means that there is a decline in ATM use—the amount of fees being paid by consumers is still enormous.

You especially find this if, for whatever reason, you find you cannot go to your own bank but you need to withdraw money. If you go to a bank that is not your own bank, some of the fees there are significantly higher than what it costs the bank to provide that service. The fee to go to another bank could be $2 to $2.50, sometimes up to $3. It is even higher in some regional areas and in areas where access to machines is limited. I have even seen higher fees approaching the $3 mark on some of the private ATMs that are around the place. The RBA says the average fee for a foreign withdrawal—that is, going to a bank that is not your own—is about $2.33. That is up from $2.04 in 2010. When you go to the bank to access your own money, the banks can gouge you with fees of $2 or more when we know it only costs them about 77c for an ATM transaction.

On average, it costs a bank 77c when you put your card in, do your account balance or get your money out and have that all processed, but people are being charged $2, $2.50 and sometimes $3 for the privilege of accessing their own money. These fees are not only unfair but also regressive because they hit people who are taking out smaller amounts or have smaller balances worse. Two dollars and 50c means a lot more to someone with $50 in their account than to someone who might be able to access $1,000 in their account. We know that many people have changed their behaviour and try to withdraw cash as much as possible from their own ATMs. But, as many of us know, there are many times when that is just not possible—for example, where you need the cash, because that is the only thing the shop will accept and the only ATM that is nearby is not one that is your own. You may have made your best endeavours, but you just cannot do it.

The Greens believe that banks should not able to make a profit out of this. If you are going to another bank or going to your own bank, okay, then maybe the bank can charge you the cost of recovering that. But, in an era where you have no choice but to have a bank account and where bank branches are not as easy to get to as they used to be and where banks have a guaranteed stream of money piling into their coffers every day, people should not be charged for the privilege of accessing their own money and banks should not be allowed to make a profit out of people getting their own money out of the bank.

It is worth remembering that the big four banks alone make up to $30 billion in profit every year, and some of that is coming from people paying $2, $2.50 and $4 for an ATM fee when it only costs the bank 77c. According to the RBA, there are now more than 31,000 cash machines around the country, which the RBA says is high relative to Australia's population when you look overseas. Fifty-five per cent of the ATMs in Australia are owned by specialist ATM companies. They are the ones that you might find in a restaurant, in a pub or somewhere else. But banks and other financial institutions own the rest. They own just under half.

While it may be difficult—and we accept this—to limit the fees that private operators are charging, we can take some steps towards regulating what the banks charge. The banks enjoy significant support from the Australian public, especially the big four, because we know they are too big to fail and the government will step in and help them if they ever get into trouble. So, given that support and given the extent to which the government is regulating them already and given that the government is saying that credit card companies and merchants should not be allowed to make a profit out of fees, let's apply the same logic to ATM fees as well.

I will be moving amendments when we get to the consideration in detail stage that will prevent banks from charging ATM fees that are excessive and will require the fees to reflect the reasonable costs of allowing a person to make an ATM transaction. For the benefit of the House I will outline some of those amendments now. The amendments will create a new part in the act, part IVD—ATM transactions—and a new section will be created, section 55N, which sets out the object of the part. The object of the part is to ensure that account holders are not charged for ATM transactions made using automatic teller machines owned or leased by the persons with whom their accounts are held and that amounts charged for other ATM transactions are not excessive and reflect the reasonable costs of allowing a person to make an ATM transaction.

A new division will be created which puts a limit on ATM fees: firstly, by banning any fees charged by banks for use of their own ATMs—because we believe very strongly that, if the bank is getting your money, you should not be charged for the privilege of accessing it and getting it out of an ATM machine—which reflects the current practices of pretty much all of the banks; and, secondly, by requiring the Reserve Bank to issue standards in relation to ATM fees charged by authorised deposit-taking institutions that take into account the public interest and limit them to an amount that reflects the reasonable costs of allowing the person to make the transaction. This will mean that authorised deposit-taking institutions, banks, will be prevented from charging fees that are excessive and do not reflect the standard.

So, in a nutshell, the Australian Greens are supporting this bill, because it says credit card fees should not be in place where intermediaries or the end users are able to make a profit out of you using the credit card. Get charged a fee for using it, sure, but it should not something you can make a profit out of. We say, 'Great idea. It is something we have been pushing for for a while. Let's extend it to ATM fees and make sure banks, which are making record profits, are not able to make a profit out of you accessing your own money. Let's end these $2, $2.50 and up to $3 fees that banks sometimes charge. Let's limit it to what it actually costs the bank, which we know is closer to 77c. Let's ensure that the good principle in this bill is extended and that banks are prohibited from using the fact that, in this day and age, everyone is required to have an electronic bank account as a way of making money out of people just because they want to get their own money out of an ATM.

We support the bill and I hope that the government, because they support the principle of this bill by introducing it, also support the amendments. It is exactly the same principle, but we are just doing it for ATM fees as well as credit card fees.