Wednesday, 23 June 2021
Statements by Senators
Banking and Financial Services, Nuclear Energy
To those watching and listening: you and I may not often think about the issue of debit payments, but it's an issue that affects just about every Australian every day. About 70 per cent of the six billion transactions made annually in Australia use debit cards. These are mainly made under a dual network, like Mastercard or Visa with EFTPOS. They're tapped when you go to your local supermarket, petrol station or pharmacy or when you're having a cheeky rum and coke down at the Pig 'N' Whistle. Every time a transaction occurs, through the magic of technology, the merchant pays—and by 'merchant' I mean a small business and, ultimately, the customer.
With dual network cards, merchants theoretically can choose to use the lowest-cost payment network, which is usually EFTPOS. This is called least-cost routing. However, fewer than 10 per cent of all transactions are routed through the lowest-cost debit network because, more often than not, banks are tardy in proactively offering least-cost routing to merchants—that is, small businesses. But using the lowest-cost payment network saves hundreds of millions of dollars a year and delivers significant benefits for individual businesses. For example, an independent supermarket can probably save around $26,000 a year, a petrol station can save 12½ grand and a newsagent can save $3,000. That's a significant saving if you're running a small business. While these benefits do vary, users of least-cost routing report cost reductions of around 35 per cent. So it would make sense to set the lowest-cost payment network as the default for these dual network debit card transactions. It would make sense to ensure hundreds of thousands of businesses don't face the cost burden of higher transaction fees in store and online. But many small businesses who want to do so are refused by the banks. This is unacceptable. When will the banks wake up and stop ripping off people? Is it time for another royal commission or Senate inquiry?
Worse, however, is that now some banks are withdrawing dual-network debit cards and EFTPOS, which eliminates choice and prevents merchants from accessing least-cost routing altogether. The first problem is that this will further increase merchants' transaction costs and force some to surcharge their customers. It will also affect the ability of consumers, of customers, to withdraw cash or have Medicare claims paid on the spot. The second problem is that least-cost routing is unavailable if a customer waves their mobile phone or device rather than tapping the actual physical debit card. This is because in Australia these devices are not provisioned to allow least-cost routing; they only use the international scheme. So again merchants, small businesses and, in the end, customers end up paying. As these payments become more common, merchants end up paying more and more, hitting the customer. The third issue is that the international schemes are putting in place new rules and fees that make it very hard, if not impossible, for businesses to use least-cost routing for online card-not-present transactions like monthly payments for memberships and subscriptions. Again small businesses have to incur these higher transaction fees, increasing their costs and making it harder to compete against the bigger operators.
These issues should come as no surprise. The Reserve Bank, in its draft retail payments review consultation report last month, made clear these concerns. They said that 'a widespread shift towards SNDCs'—single-network debit cards—'could threaten the viability of LCR', and that if EFTPOS cannot compete 'its potential exit from the market would result in a significant lessening of competitive pressure in the debit market and would likely result in an increase in both interchange rates and scheme fees, impacting all merchants.' In other words, it's going to cost customers more and it's going to hurt small businesses. So small businesses cannot afford for these issues not to be fixed.
Whilst I am strongly against red tape and I am strongly against additional regulation for the sake of regulation, I am for small business and I am for the customer. Unless banks are prepared to do this, to set the lowest cost payments network as the default, I will be calling upon my government to do something about it. This could include, firstly, making dual-network debit cards mandatory as part of every bank's social obligation to competition in Australia; secondly, setting least-cost routing as the default option for all merchants in all payment channels, including tap and go, mobile wallets and online transactions; and, thirdly, there being full transparency of all merchant fees. So I call upon banks and I call upon the Australian Banking Association to wake up and to help. Banks have huge profits, and if they don't help, then I will be asking the Treasurer, Mr Josh Frydenberg, and my government to support these changes. We in the Liberal and National parties must always be on the side of small and medium businesses, we must always be on the side of the owners and employees of small and medium businesses and we must always be on the side of customers.
I would also like to touch upon the issue of nuclear technology and nuclear energy, which is back again in the news. I'm proud to say that I am someone who for some time has been pushing the case for a national conversation about the benefits of nuclear energy and nuclear technology for Australia. In Australia, we have a third of the world's uranium. We are a geologically stable country. With the advances in modular power units, I strongly believe that we should be looking at nuclear energy as part of our road map to zero emissions. If we want safe, reliable and affordable energy, then it is crazy for us to not have a public discussion and a public debate about the advantages of nuclear energy. I, for one, strongly think we should have nuclear energy in Australia. But I also understand that this will be a hard conversation to have if those on the left of politics in Australia, who are often the loudest in clambering for zero emissions are the same ones who refuse to allow an adult intellectual conversation about the one form of energy which actually does have extremely low emissions.
I call upon those on the Left to have this conversation about nuclear energy in Australia. Let's start by lifting the ban on nuclear technology. We do have a third of the world's uranium. We are geologically stable. We are a stable liberal democracy. It goes against all reason for us to not lift the ban. It goes against all reason for us to not have that conversation and to not have nuclear technology and nuclear energy in Australia.
Finally, I am sure you would be disappointed if I didn't mention my good friends at the Australian Broadcasting Corporation. I reiterate my calls for the Australian Broadcasting Corporation, for there to be a review into the governing act and to the charter of the ABC. The ABC essentially is an analogue model operating in a digital age. We need to ensure that this taxpayer funded organisation with over a billion dollars a year is giving benefit and value to the Australian taxpayers who fund it. We should shift the staff out of the inner city offices. We should sell off triple J. We should allow ads to be on the ABC to help fund it. We should open up the staff recruitment process. The ABC doesn't have a God-given right to exist. It exists because the taxpayers of Australia pay for it, and, if the taxpayers of Australia, and those in Queensland who are increasingly upset with it, want to have value for money, then it's time for the ABC to wake up. Otherwise it is time for— (Time expired)