Senator CHAPMAN (4.43 p.m.) —by leave—I move:

That the Senate take note of the reports.

I wish to speak to the two reports of the Parliamentary Joint Committee on Corporations and Financial Services which were tabled out of session on 15 January 2004: Money matters in the bush and Report on the ATM fee structure. Submissions, additional information and the Hansard transcript of the committee's proceedings were also tabled with these reports. The inquiry into the level of banking and financial services in rural, regional and remote Australia was wide ranging and not only looked at bank branch closures but surveyed the much broader landscape of banking and financial services in country areas. Although the reports describe the problems experienced by people in country areas in obtaining access to adequate banking and financial services, they also discuss and recommend practical means to improve the delivery of such services.

During its inquiry the committee held public hearings in major cities as well as in a number of regional centres and country towns, including Tanunda and Jamestown in South Australia; Yarraman, Nanango, Toowoomba and Boonah in Queensland; and Daly River and Alice Springs in the Northern Territory. We also made field visits to a number of small towns, including Yacka and Port Broughton in South Australia, and Blackbutt and Crows Nest in Queensland.

Most people accept that banking, like the rest of society, has changed and cannot go back to the old ways. Nonetheless, it is a matter of concern to the committee that there are pockets in the Australian community where competition in the retail banking industry is not strong and where the withdrawal of bank branches has created a vacuum in the provision of banking and financial services. Indeed, two enduring images used to describe the impact of the withdrawal of banks from country Australia emerged from this inquiry: the beginning of the end for a small town and the slow death of the community. They capture the frustration and sense of futility experienced by communities who have lost their bank branches. Time and again we heard that, while technology may have ameliorated the difficulties this has created in conducting financial transactions, it has not replaced the gaping hole left in the community by the departure of the local bank manager, who not only was a trusted financial adviser who knew the local people and local economy well but also was a local community leader.

Where banks have withdrawn their branches, residents and businesses experience a number of problems, such as the trouble, anxiety and costs associated with rearranging or transferring accounts, the uncertainty of having to adapt to new ways of banking, and the inconvenience involved in travelling long distances to conduct face-to-face banking. For both individuals and businesses there are also safety and security matters arising from the lack of access to a branch, the loss of economic opportunities, limited choice in obtaining professional advice and finance—especially venture capital—and potential exclusion from the financial world. We found that the branch closure protocol falls short of community expectations, especially its failure to make specific that a bank would consult with its customers and the community when considering a branch closure.

We strongly recommend that the banks incorporate into their branch closure protocols an undertaking to develop a comprehensive community consultation program that would include open discussions about the future services to be provided by the bank. The banks, when closing a branch, should do more to assist their customers and the community. We recommend that a bank give a minimum of six months written notice of the closure of a branch where it is the only bank in a town. At the moment the requirement is 12 weeks. Where a bank gives notice of the closure of a rural or remote branch, we recommend that it release a community impact statement. We also recommend that a clause be inserted in the protocol that makes a clear statement of intention that a bank closing a branch will facilitate the transfer of accounts to another institution of the customer's choice.

In withdrawing from some country towns or downgrading their level or quality of service, the major banks have presented other financial service providers, such as credit unions, building societies and community banks, with an opportunity to fill the void. The committee found, however, that small approved deposit institutions face a number of hurdles in operating or expanding their businesses in rural and regional Australia. Particular concerns are compliance costs and the lack of flexibility in some of the requirements under the FSR Act, and we have recommended that APRA and ASIC, after consultation with the industry, prepare a report on this matter. Australia Post outlets offer potential to expand banking services in rural, regional and remote Australia. The committee accept that financial institutions could do more to use post office outlets to better service small communities and we encourage financial institutions not yet offering giroPost to consider doing so.

The Rural Transaction Centres Program is intended to assist communities to restore services, including banking services, to their towns. We support the program but are concerned about a number of aspects: slow progress, lack of communication between individual RTCs, the low number of RTCs offering banking and financial services and funding for the program. We have recommended a detailed review of this program. Lack of robust competition in rural, regional and remote Australia exposes people in these areas to the possibility of higher costs and charges for using a foreign ATM. We especially examined the proposal to introduce a direct charging regime and have tabled a supplementary report on this matter. Having examined the direct charging proposal, the committee are of the view that there is no case for fee increases in country areas under such a model. We recommend that safeguards be built into the regime to ensure that consumers living in rural and remote Australia benefit from the reforms and do not face fee rises.

The majority of the committee, which includes government members and Senator Murray, believe that commercial commonsense will prevent differential fees from emerging for ATMs in rural areas compared with metropolitan areas; after all, banks do not charge country customers higher fees for their other services. We therefore reject the scaremongering by the Labor Party and the Australian Consumers Association for direct regulation of fees when they suggest that country people may be charged $12 for a foreign ATM transaction in an unregulated market. Regulation should be only a last resort when there is a clearly demonstrated need. We reinforce the recommendation of our earlier inquiry that, irrespective of progress on the introduction of a direct charging regime, a framework for real-time disclosure of ATM fees and charges be implemented as soon as practicable.

The committee was particularly concerned about the lack of direct access that people in some areas of rural Australia have to qualified bank staff with local knowledge. Among a range of recommendations is that banks have designated officers available in their regional centres to look after customers from a particular geographic area and that the officers have direct knowledge of that local community and businesses in the district to more adequately substitute for the loss of the local branch manager.

Without doubt, many benefits come with the use of electronic banking. However, the committee were struck by evidence that some Australians, especially older Australians, are not taking advantage of these technological benefits and may be effectively disenfranchised from the banking and finance world. Education and training programs should go beyond the mechanics of enabling an individual to master the technology; they should be a means of engendering confidence in and providing motivation for people to take up the new technology. We recommend, among other things, that banks actively provide resources to educate customers in the use of and on the benefits of accessing banking services through new technologies.

The committee found that Indigenous people share with other people in rural Australia difficulties in gaining access to adequate banking and financial services. We note, however, that some difficulties are often compounded by their remoteness, lack of financial literacy, socioeconomic disadvantages, cultural differences or a combination of these factors. We make a number of recommendations to improve access to banking and financial services for Indigenous people but stress that the recommendations be placed in an overall policy framework to improve the economic and social welfare of Indigenous Australians.

A number of matters attracted the committee's attention concerning the need for improved measures to ensure that the interests of consumers are protected. We recommended a review of the banking ombudsman; the general availability of a basic bank account to better suit the needs of low-income earners—something currently provided by some ADIs; the provision of account balance information through EFTPOS; and also investigation by ASIC of practices associated with `book up' in an effort to identify and curb unscrupulous conduct. The committee also recommended measures that could be taken to encourage banks to become more involved as the invigorators of economic life in communities in rural, regional and remote Australia.

Overall, our recommendations are intended to improve competition in the retail banking industry, strengthen consumer protection and encourage the financial services sector to assume a far more active and responsible role in promoting the economic welfare of people and their communities in regional, rural and remote Australia. I am confident that, if governments and the banking and financial services industry adopt and implement our proposals, they will make a major difference to both the reality and the perception of the level of services available to rural, regional and remote Australians.

May I thank all those who assisted our inquiry, especially those rural and remote Australians who appeared before the committee and, of course, Dr Kathleen Dermody and her staff from our committee secretariat, who all worked tirelessly to assist in this inquiry.