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Wednesday, 16 February 2000
Page: 11905


Senator LUDWIG (4:40 PM) —I rise today in respect of the matter of public importance dealing with banks, in particular—and I must say, in particular—their closures, high fees and lack of services in rural and remote areas of Queensland. We have heard Senator Chapman talk about the Bendigo Bank, the credit union and the rural transaction centres—six in all—but let me give you some figures about the actual closures in Queensland. There have been 57 closures in Queensland since 1993, 152 since 1997 and 66 last year—40 in remote Queensland. In response—partly in response, because I did also hear about the Bendigo Bank, but I do not know whether it has stretched to Queensland yet—there are six rural transaction centres. If we then find that the rate is going to go—as we are told—to something in the order of 500, at the rate we are going at present I think I will be long retired by the time we get anywhere near that number. However, in looking at and dissecting the actual figures we are then talking about in respect of the banks, their combined profit was over $7 billion—up 14 per cent on the previous year's record of some $6.2 billion. However, some might argue that the banks are entitled to make a profit. They are entitled to be efficient, rationalise themselves and then provide better services. But let us have a look at what they have really done and whether they have measured up.

First of all, I took the opportunity of looking at the banks' pricing structures—their bank fees and charges. In January and February of this year I put together a spreadsheet—some 6½ pages—and some 68 different headings came out, without even counting the subheadings. This is an extraordinary amount when you then try to dissect the National, Westpac, Suncorp, Metway, Commonwealth and ANZ groups as to their fees and charges. It is an extraordinary amount of fees and charges, without even looking at their prices. What the banks have done is unbundled their fees and charges, dissected them into very small pockets and then applied them to their customers. Overall, you can see their trend. Rather than, as in the past, providing bundled services which were free as part of the banking service that the community had grown to expect from them, the banks have decided to split them all up and hide them among a multitude of headings—68 different headings that I have counted so far, and I suspect that that will get higher as I go through—and all the little subheadings underneath them. But what do we hear the ACCC talk about? I go to their `Price Watch' on the GST and it is clear that they have not heard the loud voice of consumers out there on bank fees and charges. They must be the only ones that have not heard it. Everyone else that I have spoken to has heard it. This chamber has heard it and the House of Representatives has heard it, but it appears that the ACCC, which are charged with the responsibility of looking after some of these areas, have not heard it. Under the Trade Practices Act, their objective is to—as set out in the legislation—enhance the welfare of Australians `through the promotion of competition and fair trading and the provision for consumer protection'.

Let us look at what they then talk about with the GST. They say:

GST does not generally apply to bank fees and charges. There will be, however, some cost increases for banks as a result of the GST applying to the prices of certain goods and services that they purchase and use as inputs.

They then go on to say:

At this stage bank costs have not been investigated but any rises are not expected to be near 10 per cent in general. Should there be any attempt by banks to charge excessive fees, they would face massive penalties, as well as further damage to their current image.

In respect of matters that go to the GST, they are prepared and Professor Fels is prepared to take quite a bold forward step but, when we talk about bank fees and charges generally, it seems a little bit timid.

We then go and have a look at what the Reserve Bank have said. In June 1999, the Reserve Bank had a look at bank fees and charges. In the Reserve Bank of Australia Bulletin, under the heading `Bank Fees' on page 2, they say:

Most concern about bank fees centres on the cost to households of running a bank account and making transactions.

In the paragraph above that, they say:

Many people feel that fees have risen too quickly or are too high.

What we now know is that not only does this chamber know about bank fees and charges but the Reserve Bank have already heard the loud voice of consumerism talking about high fees and charges. They have heard it. Professor Fels has not heard it, and this government has not heard it. We then talk about what the effects will be. This Reserve Bank of Australia Bulletin from June 1999 says:

In 1998, this trend was partly reversed. Non-interest income of major banks grew by 20 per cent and, within that, fee income grew by 21 per cent. These growth rates are more than double their previous averages. In the case of fees, the growth appears to have come from three main sources:

fee revenue from housing loans ...

fee revenue from household transactions ...

revenue from merchant-service fees, which increased by 28 per cent.

The Bulletin goes on to ask, `Why have banks' profits remained high?' They have remained high because banks have closed their branches. They have removed services. They have downsized their number of employees. They have then sought to make longer queues outside their banks. As a method of increasing their profitability, they have unbundled, as I said earlier, their fees and put 68 or more categories in to ensure that their fees are there and that they recover profitability from them.

Have they then provided service? Have they actually given the consumer something back in return? On bank info lines, a January-February 2000 Choice article entitled `Hanging on the telephone' summarises it by saying:

Only 23% of our calls to the national telephone information services (info lines) of Australia's four largest banks (ANZ, COMMONWEALTH, NATIONAL and WESTPAC) received complete and correct answers to straightforward inquiries.

So the banks are not even providing service as a consequence. That is the effect. We then look at what this government has said. In an adjournment debate, Senator Troeth highlighted the problem:

Given the undeniable fact that banks have thought it necessary to rationalise or close their services—not only in regional areas, I hasten to add, but also in metropolitan areas—the question arises as to how customers of those banks can access a similar service.

Senator Troeth went on to indicate that rural transaction centres are one mechanism. I have already talked about that one mechanism. It is a very skinny mechanism that this government is seeking to plug that hole with.

What else have they done? They had a Senate Standing Committee on Economics, Finance and Public Administration look at this whole area. They produced something in the order of 21 recommendations. To date the government have been silent about that. In respect of the rural transaction centres themselves, we have heard from Senator Chapman that there are six of them. However, when you look at the rural transaction centres Internet site, it was last updated on 4 November. They have not even kept pace themselves with technology, by the look of it. They then revised that and said that they will be up and running by Christmas. At this rate, it will be some time before they reach their particular target.

The Courier-Mail on Tuesday, 30 November talks about `obscene fees and profits'. In particular, we should also hear from federal Minister for Financial Services and Regulation, Joe Hockey. An article in the Courier-Mail of Wednesday, 22 December 1999 states:

Federal Financial Services Minister Joe Hockey yesterday called on the banks to ensure regional consumers had access to a wide range of banking services.

We then hear from Senator Boswell in the Courier-Mail on Wednesday, 22 December 1999. The article says:

Previous Senate inquiries into the banking sector and rural summits had not achieved significant change, Senator Boswell said. What was needed was an investigation by an authority “with some teeth” such as the consumer commission.

Even he has given up on them. (Time expired)