Seniors banking on making regional branch closures an election issue
National Seniors Australia (NSA) wants the steady decline in regional and rural banking services to be a headline issue at the next federal election due by May 17.
This long-running issue in the regions and the bush came to the fore again late last year when it was reported that Treasury was privately consulting with the major banks about a new levy, called a community service obligation, that would help resuscitate banking outside the major cities.
Banks with a small regional presence would pay the levy to banks with a large footprint. The obvious big losers in such a proposal would be digital disruptors such as Macquarie and ING that have no physical presence in the regions.
While a levy would get the NSA’s support, chief executive officer Chris Grice (pictured) wants a holistic debate on this critical issue, arguing seniors have been a casualty of branch closures across Australia, especially in rural and regional areas.
The NSW branch of the Country Women’s Association (CWA) strongly concurs, with president Joy Beames saying the loss of any service in a rural and regional area can contribute to an erosion of the social fabric of the community, making it harder for these areas to retain residents and attract new people.
“Being forced to travel long distances to do banking in person is not only unacceptable. It’s just not possible for many people, particularly older people.”
APRA figures presented to the Sente Standing Committees on Rural and Regional Affairs and Transport, which handed down its report Bank closures in regional Australia in May 2004, gave factual credence to these arguments by the CWA and NSA.
Between 2016–17 and 2021–22, closures outside the major cities declined nearly 30 per cent to 1682 branches, with the impact being even greater in remoter areas where they fell, an average, 7.7 per cent each year. Most of the closures were by the Big Four – Commonwealth, Westpac, ANZ and National Australia.
It prompted the committee to recommend that the government establish a commission to investigate the feasibility of establishing a publicly owned bank. “In investigating this, the panel should examine options including but not limited to a stand-alone public bank or one associated with and using the branch network of Australia Post,” the report said.
It also recommended the development of a mandatory banking code of conduct that incorporated a robust branch closure process to be administered by a regulator with expertise in consumer protection.
While no government is likely to consider a public bank, extending the role of Australia Post – also recommended by the Senate report – could be a more viable option and one that would have the support of retiree and rural organisations such as the CWA and the NSA.
Currently, seniors in regional and rural Australia can access more than 80 banks and financial institutions, including CBA, Westpac and NAB at 1,800 post offices, but the services offered are limited to deposits, withdrawing money and making balance inquiries.
As Beames says, Australia Post has assisted some communities with basic banking needs after branches have closed, and that has been welcome. “But it’s not the equivalent of a branch, and it doesn’t satisfy the commitment banks should have to their customers, regardless of their post code.”
Grice says it is worth examining whether giving Australia Post a banking licence is a viable policy option to ensure seniors in regional and rural areas get better access to financial services.
“Is it the right solution? I’m not certain. What I do know is seniors do need to be able to talk to somebody, and if the banks don’t have a branch, then that’s not going to happen. We all appreciate it’s a digital era and many seniors are not averse to using technology, but they are times when they want to speak to someone.
“In this respect, I do think the banks have a social responsibility. When you consider that the government guarantees bank deposits to the tune of $250,000, then they are helping underwrite those banks’ earnings, so their approach to branch closures shouldn’t be strictly driven by the numbers.”
When reports began circulating about Treasury’s levy proposal to improve regional and rural banking services, it was speculated that some banks would put rural and regional bank closures on hold if a levy was ruled out.
What that offer fails to acknowledge is that regional Australia has become the nation’s destination of choice, according to the latest Regional Movers Index report, with data showing that city dwellers are continuing to relocate out of metropolitan areas while regional Australians are increasingly staying put.
Data from the September 2024 quarter report shows city-to-regional relocations are sitting at 19.8 per cent above the pre-Covid average and 1.8 per cent above the average recorded during the height of lockdowns, Regional Australia Institute chief executive officer Liz Ritchie says.
“With the continuing strong jobs market across regional Australia, increasing city property prices and ongoing cost-of-living pressures, it’s no surprise the regions remain desirable.
“It’s vital this demographic shift is recognised, and regional communities are provided with the infrastructure, services and support they need. As a nation, we must acknowledge that we are in a new era of migration where regional Australia is at the forefront.”