Regional Bank Closures

Adjourned debate on motion of Hon. R.A. Simms:

That this council—

1. Notes with concern that:

(a) Westpac has decided to close their branch in Coober Pedy, leaving the community without a bank; and

(b) at least 22 regional towns have been left without a bank branch including Burra, Kapunda, Mannum, Maitland, Peterborough, Roxby Downs, Tailem Bend, Tumby Bay and Willunga.

2. Recognises the adverse impact of the closure of banks on regional communities and in particular the impediment it places on community and business activity.

3. Condemns the closure of bank branches in the regions and calls on Westpac to reconsider its decision to close its branch in Coober Pedy.

4. Calls on the Malinauskas government to formally raise the matter with Westpac and advocate for the retention of bank branches in the regions.

(Continued from 22 February 2023.)

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (16:17): I indicate that the government will be supporting this motion. I also note that this is a complex issue with no easy answers. Closures of regional banks have occurred while there have been governments in place of various persuasions, because private banking corporations have prioritised profits over social responsibility to their regional customers, even while some banks continue to record record profits.

Nevertheless, we cannot absolve banks from being called out when it becomes clear that they have abandoned regional communities, who have been often been longstanding and loyal customers. Changing the behaviour of profit-driven banks and the way they serve or fail to serve regional communities, however, is a difficult ask. When a regional bank branch closes, the consequences are significant. It means more than the loss of jobs within the branch and the loss of access for customers to face-to-face banking. It means that the on-costs, in terms of time and travel to the nearest bank to undertake tasks that could have been done locally, become a burden for the community.

The latest example of the bank closure in Coober Pedy will mean residents will need to drive over 500 kilometres to access similar services. It also means a loss of the sense of security that many people have from banking with their local branch. The retirees who spent their lives helping to build their regional communities or raise families and who are often loyal longstanding customers have all now been left high and dry. For some, there will be difficulties in accessing online services, whether it be through lack of confidence, lack of the technology required, or connectivity issues. Simply replacing face-to-face banking with online services in regional communities does not always work.

There are many more ways that people are adversely affected by these decisions. In essence, it makes regions harder to live and work in when major sectors such as banking corporations should be doing all they possibly can to grow our regions sustainably. Despite being able to meet the needs of many locals, post offices often do not have the ability to offer like-for-like services as banks, with limitations on the amounts of withdrawals or deposits or other services.

I have informed the chamber previously that the South Australian government will be making a submission to the Senate Inquiry into Bank Closures in Regional Australia, and I encourage others to do so. We will also be advocating in other fora. Again, I indicate support for this motion.

The Hon. N.J. CENTOFANTI (Leader of the Opposition) (16:20): I rise on behalf of the opposition to signal our support for this motion. However, I do have an amendment to this motion, and I have liaised with the Hon. Mr Simms on this amendment. I move:

Leave out paragraph 1: subparagraph (b) and insert new subparagraph as follows:

'(b) Many regional towns have been left without a bank branch;'

This amendment really just simplifies paragraph 1(b), as there was some confusion in regard to the accuracy of the individual towns listed. I do not believe this amendment detracts from the sentiment of the motion and, again, I would just like to place on the record that the opposition is certainly supportive of the sentiments of this motion.

I would like to talk about the importance of banks to certain people in regional communities in Australia, and more specifically in South Australia, and the troubling trend of banks withdrawing their services from regional centres in this part of the country. In the last six months alone, 92 bank branches were either closed or were locked in to close in rural and regional Australia, including a number in South Australia such as Mannum, Tailem Bend, Kapunda, Kingston and, of course, Coober Pedy.

Banks are an essential part of our financial system. They provide crucial services such as savings accounts, loans and investments. However, their importance goes beyond just financial services. Banks are also essential for building and strengthening regional communities. They are often the backbone of small towns and rural communities, providing critical support to farmers, to small businesses and to families.

Unfortunately, we are seeing a troubling trend of banks withdrawing their services from regional centres in South Australia. This trend is alarming and it is having a devastating impact on many people who live in these communities. Recently, we saw an example of this trend in action when Westpac announced it would be leaving Coober Pedy. Westpac's decision to leave has had a significant impact on the people of Coober Pedy, who now have limited access to financial services. This is just one example of the many towns and communities across South Australia that have been affected by the trend of banks withdrawing their services.

A single bank—in this case Westpac—should not be blamed for the trend of closing banks in regional South Australia. This is an issue that affects all of the four major banks. Whilst I can understand the honourable member's focus on Westpac, given the recent decision in Coober Pedy, the opposition do want to make it clear that we do not think a single bank should be singled out, and that all of the major banks have played a significant role in the trend of regional bank closures around South Australia, and indeed around the nation.

The federal Senate's Rural and Regional Affairs and Transport Committee is currently undertaking an inquiry into regional bank closures, including the branch closure process, the reasons given, and the economic and social impacts of bank closures on customers and regional communities. It is our view that it would be far better for existing banks to hold off on moving out of regional areas until the outcomes and recommendations of this federal inquiry, which is due to report in December 2023—that is, the end of this year.

The opposition feel so strongly about the essential nature of banks within regional communities that we, unlike the government, have been proactive. I, as shadow minister for regional South Australia, have written on behalf of the opposition to all four of the major banks, urging them to hold off on any further bank closures until the outcomes and recommendations of this inquiry are known. In addition, we have also asked for the four major banks to consider reopening some of the branches that have been shut down in recent times across South Australia.

I do want to recognise and place on the record that recently Westpac, BankSA and the Commonwealth Bank have stated publicly that they will not close further branches, pending the completion of this inquiry. I believe that is a responsible and sensible approach and should be acknowledged, because the importance of these key services to regional Australia cannot be overstated. We must do more to recognise the critical role that banks play in our regional communities. This means making sure that banks are not allowed to withdraw their services without a comprehensive plan in place to ensure that the people of these communities are not left without access to financial services.

We must work together to find a solution that protects our regional communities and ensures that they have access to the financial services they need. But it is not just about the financial services; it is also about the impacts on regional communities. When banks leave, they take away jobs and economic opportunities from these regional communities. They leave people without access to financial services, which can be particularly challenging for small businesses and particularly challenging for farmers and producers that rely on loans and other financial products.

We call on the Malinauskas government to take our lead and formally raise the matter with the major banks to ensure they commit to no further bank closures in regional South Australia, pending the completion of the federal inquiry. Labor has shown time and time again that they are more interested in metropolitan Adelaide than supporting regional communities. The minister signalled in this chamber that she is happy to sit by as banks withdraw their services from regional centres without any real plan to support these communities.

It is time for the government to take action and protect the people of regional South Australia. We need a government that is committed to supporting regional communities, a government that will not allow banks to withdraw their services without a comprehensive plan in place. Banks are essential for building and strengthening these communities and we must do more to recognise this fact.

The trend of banks withdrawing their services is troubling and it is having an absolutely devastating impact on many people in our regional communities. We need a government that is committed to supporting regional South Australia and protecting the people who live in these communities.

The Hon. F. PANGALLO (16:26): I will start the speech by saying that it is my work and based on my research, although who knows where banking will take us in the future with the use of artificial intelligence, which is already being used in US courtrooms and where there is a push to actually have AI lawyers conduct limited proceedings for clients. So do not rule out having to deal with AI bankers to apply for loans, credit cards and to carry out other types of transactions.

The Hon. R.A. Simms: Good luck with finding an ATM.

The Hon. F. PANGALLO: I will explain that shortly, Mr Simms. How times have changed, and so quickly. Once upon a time in the last century, when I was a young cadet newspaper journalist, I did my banking at the Hindley Street branch of the National Bank, where I had a personal banker. I could pick up the phone and speak to him, pop in for a chat about getting a loan for a car or a house and advice on financial matters. I appreciated the convenience of having direct face-to-face contact with a real person who actually knew you.

In regional areas, banks were an essential part of the community fabric: a conduit for business and personal transactions. They would have supported sport and service clubs. Four things you would find in a country town were a pub, a bank, a post office and a general store.

The Hon. C.M. Scriven: And a footy club.

The Hon. F. PANGALLO: And a footy club, yes, no doubt, and a tennis club and a netball club if you want to go on—but sporting clubs, yes, absolutely. Fast forward to 2023 and the digital age is transforming our lives and communities.

Banking has led the charge in shifting resources and investment from bricks and mortar facilities to online services and, in the process, steadily closing branches in mostly cities and also in regional areas. In the meantime, the big four—Commonwealth, ANZ, Westpac and NAB—continue to post record profits for their shareholders. Australian Prudential Regulation Authority data shows banks, building societies and credit unions have cut the number of branches across Australia from 5,816 in June 2017, to 4,491 in June 2021, with 575 closures being in regional areas.

Branches in regional and remote Australia fell from 2,471 in June 2017 to 1,896 in June 2021. Automatic teller machines are becoming harder to find: numbers have fallen from 13,814 in 2017 to 7,757 in 2021. There were only 5,292 ATMs in Australia's major cities in 2021, compared with 10,052 in 2017, including the removal of almost 3,000 since 2019. ATMs in regional and remote Australia dropped from 3,762 in 2017 to 2,465 by June 2021.

According to the Australian Banking Association, over-the-counter transactions at major banks have dropped up to 68 per cent over the past five years. A 2021 survey of banking habits found that 64 per cent of regional Australians did their banking online, compared with 32 per cent who visited the branch. There were more than 3,500 banking-at-postal services, including 1,800 in rural and remote locations that allowed customers to deposit cash and cheques, withdraw money, check their balance and conduct other minor banking services at Australia Post.

Westpac, which has a third of its branches in regional areas, says 96 per cent of its transactions are now done digitally, with 84 per cent of consumer and business digital banking taking place on a smartphone or tablet, compared with 68 per cent five years ago. We are moving closer to the cashless society. I have been told that one bank soon intends to announce the end of processing cheques.

Westpac plans to close another 20 regional and suburban branches in South Australia, Queensland, New South Wales and Victoria, although they have been put on hold while a Senate Standing Committee on Rural and Regional Affairs continues to take evidence. Coober Pedy in the Far North of our state is one of them and, as the Hon. Robert Simms has highlighted, at least 22 regional towns no longer have a bank. Westpac's chief customer engagement officer, Ross Miller, told the Senate inquiry that its customers do not want to travel and prefer to do their banking business at any time of their day, in their homes or at work.

The NAB told the same inquiry that only 3 per cent of its customers used its branches (or what is left of them) in 2022. But what about the elderly, the disabled and other vulnerable groups who do not have or are unable to use internet and mobile phone services? Where does it leave customers in Coober Pedy, where communications are not up to city standards? The nearest branch would be hundreds of kilometres away.

Regional communities are feeling it the most, with the Finance Sector Union accusing banks of failing to consult with their communities before closing their doors. The South Australian and Northern Territory secretary of the Finance Sector Union, Jason Hall, said pushing customers to digital banking is hugely beneficial to the bank's bottom line. As one resident in a rural New South Wales town put it, branch closures are motivated by pure greed, accusing the Commonwealth Bank of having no loyalty to small regional towns.

A survey of more than 6,000 people by consumer organisation Choice found that farmers are forced to drive a five-hour round trip to access face-to-face banking services, older Australians are having to pay a $3 fee every time they withdraw their own money, and people are having to take time off work and losing income to conduct their banking. Choice says the closure of bank branches had a knock-on effect, with people more likely to do their shopping in larger towns when they did their own banking.

Choice, financial counsellors and community legal centres want a moratorium on regional bank closures, fee-free ATMs, more mobile banking services and specialist assistance for First Nations communities. In its submission to the Regional Banking Taskforce, Choice said branch closures in regional Australia have created banking deserts where consumers, small business and community organisations are unable to conduct basic banking services in person, including establishing accounts, paying bills, depositing money or cashing cheques.

I saw the impact it is having when I visited Burra a couple or so years ago, just as they were losing their only bank, the ANZ. The people of Burra say coupled with the closure of regional rail passenger services decades ago, the town's population has dwindled and businesses have closed, while others are struggling to survive.

While modern banking might have its advantages, there is also a sinister side emerging, going almost unchecked. Sophisticated scams and cybersecurity breaches are draining millions from unsuspecting Australians. A day does not pass when I do not get an anonymous SMS message that bears all the hallmarks of a scam.

One constituent recently told me of their devastating experience that saw them lose their entire savings. They had received a phone call from a person sounding like a legitimate representative of their bank (Bendigo). They were able to provide some personal information, which initially did not make them sound suspicious. The scammer told the person that $1,000 had already been taken from their Bendigo account and there was a risk the remainder would be drained.

The scammer persuaded them to shift their balance into another bank account, which they had created. Suspecting something was wrong, the customer quickly called the bank to halt the transfer—it was only a matter of minutes—only to be told it was too late. Sadly, the police, for some reason, would not even take their report, despite it being a criminal offence that was committed. The bank involved would not accept any responsibility, even though the money had been shifted through one of their own accounts.

I commend the motion and thank the Hon. Robert Simms for moving it and for highlighting an ongoing issue that is impacting on rural Australia.

The Hon. C. BONAROS (16:37): I rise briefly to speak in support of the Hon. Robert Simms' motion regarding regional banking laws, and in particular I wish to talk about the closure of the Westpac branch in Coober Pedy. As the daughter of an opal miner, I spent a good deal of my childhood there and it is a town that I love and know very well. I have been contacted by a lot of family, friends and locals in Coober Pedy asking, 'What are we going to do about these bank closures?' and it is really difficult to try to tell them that as members of parliament we can apply pressure but we cannot make them stay there.

We have had those discussions, but I think it is lost on us a little bit—and other members have alluded to this—the impact that this has in towns like Coober Pedy. It is particularly concerning how that closure will disproportionately affect elderly and vulnerable customers. In Coober Pedy's case, the next local bank is 540 kilometres away in Port Augusta. It threatens the lucrative international buyer market for opal dealers, as buyers do not have ready access to cash money, and to the opal industry that is absolutely critical.

There are concerns residents will not have access to cash or online banking during power outages. Just recently, we had a situation where the town ran out of cash altogether in the ATMs. This is the opal capital of the world. It relies on international and interstate buyers and sellers and it relies on tourism. The alternative, frankly, of using the hybrid Australia Post model with a deposit of $7,000 and withdrawals of $2,000, simply does not work.

I can assure you there is a lot of investment made in cash in Coober Pedy in those transactions. Even at the tourist level, you might go in and buy a ring that is going to cost you well in excess of those two figures combined, so it simply does not work, and that is putting aside all the other issues the locals are confronting, in terms of losing their bank.

It has been relayed to me that they are anxious about travelling the long journey to Port Augusta with weekly takings or earnings, but, as we know and everyone has alluded to, this is one of many places where this is occurring. Between 2017 and 2022, 1,600 banks were closed, most in regional Australia. Since September last year, banks have closed, or signalled their intention to close, a further 90 regional banks.

I like the way they point the finger at online banking and the cashless economy, but we know that that comes with challenges and it is not as easy as we have it here in the city. If something goes wrong with our online transactions or our cashless economy transactions, we waltz into a branch. We find one—if you can find one as they are few and far between now, but you will find one—and we can address our issue. That is simply not a practical reality of living in a rural or remote country town.

I think we should be asking those banks who are clearly saving a motser in terms of profits by removing face-to-face banking why they are not routinely covering the losses to customers from internet fraud, which routinely raises as a result of those transactions. My colleague has pointed to scammers who are capitalising on that virtual world of banking, with Scamwatch reporting more than about $53 million lost this year alone.

I am very grateful that there is the Senate inquiry underway. I am very grateful that a number of members of parliament, together with the Hon. Robert Simms, at a federal level and at a state level have spoken out in support of this in an effort to see what, if anything, can be done. With respect, the light at the end of the tunnel is not post office solutions. We join the Hon. Robert Simms and all members of parliament in calling on our state government to advocate on behalf of our regions to find a workable solution and make representations on behalf of our regional communities to that extent.

The Hon. S.L. GAME (16:41): I rise briefly to support the motion from the honourable member. Twenty-two regional towns have been left without local banking services. This motion addresses commercial banking in particular, but we know it is one component of many service issues affecting regional and rural towns. Many are already without post offices, the saleyards are under threat and the more bypasses we build the more small businesses lose out on passing trade.

This motion calls on a commercial entity to reconsider their departure from Coober Pedy. Our regions are resilient and the people in country South Australia know how to live through flood, drought and bushfire. Although resilient, hardworking and dedicated to growing the food and fibre utilised by us all, some regional clients may not have the digital literacy to shift to a purely online model of service.

The example given by the honourable member noted that Coober Pedy clients unable to use online or phone banking services due to digital literacy or simply through poor reception and connection would need to travel to either Alice Springs or Port Augusta, a 500-kilometre one-way trip. That is a 10 to 12-hour drive round trip if the roads are good. That is absolutely unacceptable.

We need strong advocacy to promote and rebuild services in our regions. Towns deserve services. Our agricultural heartland deserves the same treatment as those eating the food and using the fibre produced from our rural communities. This government needs to prove it cares for our country constituents and put pressure on corporates to reinvest in our towns.

The Hon. R.A. SIMMS (16:43): I want to thank all my colleagues for their contributions: the Hon. Clare Scriven, the Hon. Nicola Centofanti, the Hon. Frank Pangallo, the Hon. Connie Bonaros and the Hon. Ms Game. I recognise that all parties and indeed all members in this place are supporting this motion and I really welcome that. It demonstrates the depth of concern that runs through the parliament and indeed through our community about the actions of these banks and it is one that crosses partisan divide. I think all members of this place are very concerned about the actions of the banking sector and the disregard they show for vulnerable members of our community.

It is worth noting some of the events that have unfolded over the last 24 hours. Yesterday, the Reserve Bank of Australia lifted the cash rate by 0.25 percentage points. This means the cash rate in Australia is now at an 11-year high of 3.6 per cent. This surpasses all the interest rate hikes that we saw since the 1990s, and this is the 10^th successive interest rate hike in a row.

We know that the big banks are already passing these interest rates on to their customers. They are doing this despite the fact they are making enormous profits. The Commonwealth Bank made a profit of $5.1 billion for the second half of 2022. The NAB made a $2.15 billion profit for the fourth quarter of 2022. Westpac made a $5.3 billion full-year cash profit in November 2022, and ANZ made $6.5 billion in its full-year cash profits in October 2022.

They are making these huge profits, they are hiking up interest rates, and while they are making these huge profits and hiking up interest rates they are shutting down regional banks and they are dudding their customers in those communities of vital services. They are not recognising the role that these institutions should play in terms of offering a community service. I think it is outrageous. What we are seeing is corporate greed, and I welcome the clear message that this motion will send.

I indicate that we will be supporting the amendment put forward by the honourable Leader of the Opposition, and I appreciate her speaking to me about that. The honourable member made a fair point in that she noted the fact that the motion mentions one particular financial institution. That was because the decision regarding Coober Pedy was imminent at the time the motion was originally crafted, but as all members have identified, this is a matter that extends beyond one institution. It relates to all four of the big banks.

Hopefully, this will send a very clear message that, as members of parliament, we stand shoulder to shoulder with the community and we will fight for their interests against these big institutions and their corporate greed. With that, I commend the motion.

Amendment carried; motion as amended carried.