Thursday, 11 March 2010
Australian Payments System
That the Senate—
- notes that:
- in 2000, the Payments System Board of the Reserve Bank of Australia (RBA) and the Australian Competition and Consumer Commission (ACCC) conducted a study into one aspect of the Australian payments system, the networks for automated teller machines (ATMs), credit cards and debit cards to determine the economic efficiency of these networks and whether they were delivering the best possible service at the lowest cost to end-users,
- the study found that the actual cost of ATM transactions was around 50 cents, and
- the current average cost of an ATM transaction from a ‘foreign’ ATM directly charged to consumers is up to $2;
- recommends that, given that the actual operation costs of processing ATM transactions is likely to have decreased in the past decade, the RBA and the ACCC undertake another review of the cost of ATM transactions to update the information of transaction costs to customers; and
- calls on the government to ban the $2 bank ATM fee and instead cap ATM fees at a level that reflects the actual cost of processing the ATM transactions.
I thank the Senate. The stability of the Australian banking system has been recognised consistently by both the IMF and the OECD, but the financial crisis created significant challenges for competition in our banking market. The government remains committed to ensuring that our banking system works for Australians and not against them. The government’s banking guarantee and the direct investment of up to $16 billion in the RMBS market have supported banking competition through the global financial crisis, which hit smaller lenders particularly hard, helping them to put competition pressure on the big banks. Home lender AMP was recently even able to reduce its basic variable interest rate for new home loans by a full 10 basis points, attributing the cut directly to the government’s action. The government has also introduced the toughest laws governing consumer credit that Australia has ever seen, with wide-ranging powers to overrule unfair terms in mortgages.
Regarding ATM fees, the government has full confidence in the reforms introduced by the independent Reserve Bank. The government notes that the Reserve Bank will be conducting a review of the effect of ATM reforms 12 months from when they were introduced in March 2009. The review will consider the effect the reforms have had in the market, including the fees charged and the fee-free arrangements financial institutions have entered into for their customers, along with the effect of these changes on customer behaviour. The outcome of this review will be published in the RBA’s June 2010 Bulletin. In light of this impending review, it is appropriate to formally oppose the notice of motion.
by leave—I would like to make a short statement. This is a government frozen into inaction by its reverence for the four big banks. The Prime Minister, despite all his posturing about take-home pay through the global recession of the big financiers, has done nothing. Banks made huge profits throughout the recession, while Australians were suffering and many lost their jobs. At one end of the scale, we have bank CEOs taking home $5 million or $10 million and, at the other end, we have pensioners fronting up to ATMs to withdraw $20 and the banks charging them a $2 private tax—that is, 10 per cent. It is wrong. You do not get that in Britain, but you get it in Australia. The reason you do not get it in Britain is that there they keep a much closer watch, and take action, on the banks’ activities, particularly rip-offs like this one. The Reserve Bank has found it costs 50c to handle such a transaction, and the banks are charging $2. It is totally wrong for low-income earners.
The government should stop that sort of disgraceful action, which is a regressive private tax. Let them charge what it costs, at the most. But the government says: ‘Put it off. We won’t take action. We’re not going to defend our Labor patch, which is looking after people who are struggling and making sure they get a fair go from the banks.’ The government should be supporting this motion. The Greens will continue to take action to get a fair go from banks for consumers at the lower end. We have supported government action to help the big end of town through the recession; it is about time some of the poorer people got a go as well.
That the motion (Senator Bob Brown’s) be agreed to.