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Rural Australia feels "deserted" by banks.



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Media Release

 

National Farmers’ Federation, Australia

 

RURAL AUSTRALIA FEELS “DESERTED” BY BANKS

 

NR 75/98

2 July 1998

 

The National Farmers’ Federation has raised the issue of the introduction of a Community Service Obligation for financial service providers, similar to those of Telstra and Australia Post.

 

The NFF gave evidence today to the Financial Institutions and Public Administration Committee Inquiry into the provision of banking services in regional and remote areas of Australia.

 

NFF’s Director of Economic Policy, Todd Ritchie, said there were about 600 communities in rural and regional Australia without physical access to a financial institution.

 

“Agriculture is currently going through a difficult period as a result of extreme weather conditions, generally low commodity prices and the Asian crisis”, Mr Ritchie said.

 

“At a time when the sector needs support from the banking system, a succession of rural bank branch closures has led many in the industry to assume that the banking system is deserting it”, he said.

 

“While technological innovations and the arrival of alternative credit providers may fill the void left by these closures, this is by no means certain and in any case will take a significant period of time”.

 

“Banks do not appear to take the needs of rural communities or the broader rural sector into account when making decisions to close branches, with decisions based only on the profitability of individual branch offices”, Mr Ritchie said.

 

“At a time when rural and regional Australia is losing banks, the Government is now effectively handing back almost $200 million to the banks, with the unwinding of the Non Callable Deposit system previously administered by the Reserve Bank”, he said.

 

“These funds have been considered an implicit licence fee on banks. Part of the funds could be used to provide better and alternative services to rural and regional Australia”.

 

Mr Ritchie said the closure of bank branches had far reaching effects, because people in rural communities had to travel greater distances to access bank services.

 

“When people travel to larger centres they also conduct other business there, reducing the viability of local businesses and other service providers in their local centres and placing the sustainability of rural communities at risk”, Mr Ritchie said.

 

NFF House

14-16 Brisbane Avenue

BARTON ACT 2600

P0 BOX E10

Kingston ACT2604

AUSTRALIA

Tel 61 6273 3855

Fax 61 6273 2331

 

 

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