Australia Post may be poised to replace retail banking services that are swiftly becoming scarce.
“Australia Post stands ready to provide these services, and we would welcome the opportunity to work with the banks to consider how we could do this in a financially sustainable way,” a spokesperson for Australia Post told the inquiry.
A submission to the inquiry from the LPO Group—an organisation representing post office licensees—has urged the government to expand the reach of Bank@Post, an Australia Post service that allows customers to conduct basic retail banking activities like depositing cash, withdrawing funds, and checking account balances.
“It (AusPost) is often cited where there is a bank closure that most services are still available online,” the submission said.
Thousands of Branch Closures Across Australia
According to the inquiry, over 2,100 Australian bank branches have closed across the nation since 2017, a 39 percent reduction in major cities.
Residents of rural areas are still heavily reliant on brick-and-mortar banking services, given that cash is more prevalent for use in everyday transactions.
Analysis conducted by AreaSearch—a location advisory service—of 3,197 bank branches nationwide found that the average branch services 8,200 customers per branch, while regional branches on average serve 4,600.
Senators vs. Banks
Officials from Treasury and the Reserve Bank of Australia (RBA) came under intense questioning from senators Gerard Rennick, Matt Canavan, and Malcolm Roberts on the role of government departments in maintaining regional bank branches.Mr. Rennick wanted to know why banks aren’t being forced to uphold essential services in spite of significant public funding.
“How is it that the taxpayer has to stump up this sort of money to the banks and yet there is no obligation imposed upon them by the government to meet their social license of providing essential services to all Australians?” Mr. Rennick asked.
“Many people would like to believe we live in a capitalist society whereby people risk their own capital. I note that the banks have had a very generous funding facility from the RBA/Treasury.”
Australia’s commercial banks are, in essence, publicly funded, mainly through open market operations. When the government wants to expand the money supply, it does so by selling government bonds to commercial banks, which are then purchased by the RBA with newly printed money.
When new money is injected into the banking system and thus the economy, it places upward pressure on prices, meaning everyday consumers essentially pick up the tab through inflation.
As part of a policy response to the COVID-19 pandemic, the Morrison Government established a term funding facility (TFF) in late 2020 to offer low-cost funding to commercial banks.
This allowed commercial banks to access cheap credit from the RBA to stimulate the economy during a period of economic downturn, although the efficacy of the scheme was negated by COVID-19 mandates that imposed restrictions on small business operations and consumer spending.
This allowed commercial banks to weather the negative economic effects spurred by the pandemic.
Since then, interest rates have risen considerably to suppress inflation, partly created by cheap credit offered during the pandemic. As a result, the profitability of Australia’s biggest commercial banks from lending is considerably high.
