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Government to open its transactional banking to competition.
THE HON JOHN FAHEY, MP
Minister for finance and Administration
GOVERNMENT TO OPEN ITS TRANSACTIONAL BANKING TO COMPETITION
I am pleased to confirm that Commonwealth departments and agencies will, from 1 July 1999, have the oppor tunity to market test their transactional banking arrangements. This will enable them to choose the service providers that can best meet their business needs in terms of cost and quality of service consistent with the Government’s policy objectives.
Transactional banking services include the provision of accounts, payment and revenue collection processing, and related account and transaction information services.
At present, only Commonwealth-owned companies and independent statutory authorities, established as separate bodies corporate, are able to choose their own banking arrangements.
This initiative further supports the Government’s wider public sector reform agenda including its commitment to a more businesslike, performance oriented, public service. Central to this commitment has been the devolution to agency chief executives of responsibility to deliver high performance outcomes in competition with potential private sector providers.
The Commonwealth’s central bank account and foreign exchange business will remain with the Reserve Bank of Australia (RBA) to facilitate central cash and debt management operations. The Commonwealth’s balances and foreign currency transactions are also integral to the RBA’ s central banking and foreign reserves management responsibilities. The RBA will remain free, subject to competitive neutrality principles, to bid to provide transactional banking services to Commonwealth agencies, as well as to other governments, in a competitive environment.
The market testing of banking service provision is expected to be implemented on a phased basis from 1 July 1999. Details of the arrangements to apply when banking service providers are chosen by Commonwealth agencies will be developed by the Department of Finance and Administration in consultation with providers, the RBA and the agencies.
31 July 1998
Media contact: David McLaclan, John Fahey’s office 02 6277 400