Think tank calls for the creation of a public bank at post offices

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Restricted access to cash and higher bank fees and charges are behind a new push to create a public bank in Australia.

The coronavirus pandemic has accelerated the move to online banking, but many older Australians still prefer to make their transactions face-to-face and this is becoming more difficult every month.

According to NAB chief executive Ross McEwan, the COVID-19 situation has resulted in a rapid take-up of digital banking, but as a result banks are closing branches all over Australia like never before.

ATMs have also seen a decrease in usage, which started before the pandemic, and banks are slowly shutting them down, too.

With the access to cash, which is still preferred by many older Australians, becoming more difficult, leading think tank Per Capita has released a discussion paper calling for Australia Post to be able to act like a public bank to secure essential banking services.

The paper makes the case for the creation of a full national savings and loan public bank in Australia and would start by providing Australia Post with an Authorised Deposit-taking Institute (ADI) licence.

The Banking Royal Commission found that many Australians did not have adequate access to basic financial services, and that even those who did are often ill-served by our existing financial institutions.

“Just as we would not leave the creation and maintenance of our health system or our roads entirely in private hands, we should not leave our banking services, financial infrastructure and financial stability entirely in private hands,” the paper explains.

“The establishment of a postal banking service in Australia would, by operating within the existing infrastructure footprint of Australia Post outlets nationwide, provide banking services to Australians who are currently underserviced by the existing banking sector.

“With a social benefit mandate, such a bank could also improve banking services across the country by setting new standards for financial products and services that other banks will have to meet if they are to compete.”

The Greens took a similar policy to the last federal election, calling for the creation of a People’s Bank that would use the Reserve Bank of Australia (RBA) to provide basic low-risk banking services to the public online, over the phone or through Australia Post.

The Greens proposal also included a low-cost mortgage option for homebuyers.

The Per Capita model, called PostBank, proposes a phased-in approach, which would start with the opening of basic savings and transaction accounts and would be followed by credit cards and personal loans, then the introduction of mortgages and commercial lending.

According to the Per Capita paper, the phased-in approach allows for a staged rollout of new services with profits and capital from one stage funding the rollout of the next phase.

New Zealand found itself in a similar situation to Australia with high bank fees due to the concentration of power among the big four banks.

To combat this, in 2002 the New Zealand government introduced Kiwibank with 211 branches mostly in post offices. By 2008, KPMG concluded that banking fees and charges in New Zealand were lower, at least partly as a result of the competition provided by Kiwibank.

Within five years more than 500,000 customers (out of a population of four million) had moved their money to Kiwibank and, according to Roy Morgan research, it quickly became one of New Zealand’s most trusted banks and remains at the top of customer satisfaction surveys.

The Commonwealth Bank first came into existence as a public bank, do you think the time is right for Australia to have a public banking option? Would you use it if it were available?

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Written by Ben

33 Comments

Total Comments: 33
  1. 0
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    My local chemist includes an Australia Post service which offers some banking facilities. Turning all AusPost franchises into banking entities has security implications.

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      I totally agree with you in regards to the security implications.

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      I don’t believe that security is such a big issue. Until recently our local newsagent operated as a branch of Westpac and I don’t recall any security problems there at all. Its 6km to our local P.O and 12 to our nearest bank which is not in a shopping area so needs a special trip. its a total pain when we receive the occasional cheque to pay in. With ATMs and bank branches closing I would use bank facilities at a local post office even though I do most transactions online and use cards for most purchases.

  2. 0
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    I rarely go inside my bank branch already, so why would I want to go to the Post Office? I’ve been inside my local post office once in the past 2 years.

    I have a Concession account with my bank which has NO interest, or FEES at all, unless I overdraw my account, which is an impossibility. I also have 2 other savings accounts which pay interest for my ‘put away for a rainy day’ accounts.

    My bills (phone & electricity), and insurance renewals are e-mailed to me, so that I don’t have to wait for ‘snail mail’ to have them delivered.

    All my banking is done on the internet.

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      Yes I rarely go to the Post Office and never go to my bank, everything is paid online, and any time I need cash I get it when I do my grocery shopping.

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    Back when we were all younger, most large towns had 8 banks, one of them federally owned and one of them state owned. They were all regulated by the Reserve Bank which set interest rates and any changes were immediately made by the banks. Amalgamation in the ’70’s and deregulation in the ’80’s changed all of that as well as the sale of the state banks and the Commonwealth by various governments. There is no control over what the banks do and therefore no real competition to attract customers with all decision of the banks seeming to be geared to profits for shareholders.

    I find it ironic that we now want to open a “People’s Bank” after governments of various sides and levels closed those banks which would have kept the private banks in line as there would have been genuine competition. Now politicians who closed all of those banks are expected to do an about face and create a competitive alternative and to do this will not be as easy as adding an extension to the counter at your local post office. We read time and again that the local post office is being closed and mail is being made available at a local retail out let which doesn’t home deliver. The posties will be delivering every second day if Australia Post has its way and now the Greens want to use Australia Post as a bank. Will that mean that banking can be done every second day?

    The bird flew the coop starting in the ’70’s and the death knell was finally rung in the ’90’s. Yes, it would be nice to have a local bank once more (our area had 6 at one stage, now zero) but the practicalities are that firstly it would be too costly and secondly, no government of any level is really interested.

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      Australia Post already has this capability to some degree. If you are a customer of ME Bank, you can deposit and withdraw cash at any Australia Post branch that is labelled “Bank at Post”

  4. 0
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    Absolutely YES, YES, YES, YES !!! As a Kiwi in Ozland I am proud of the actions that the NZ Govt took in establishing Kiwibank. Pity the Australian dipshits at the top did not take their cue from this earlier. I personally have no need to visit a branch as I do all my banking digitally, only occasionally using an ATM to deposit that rare commodity, CASH, to my bank account. HOWEVER, the writer is quite correct in stating that many older Australians (or pseudo Australians) are exceedingly BADLY served by the commercial banking sector, this suggestion should be immediately taken up by Australia Post and elevated to a high profile requirement.

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      Yes fearlessfly, there is a lot we can learn from New Zealand and the most important thing is that New Zealand is unicameral. Australia has states and territories most of which have a lower house and an upper house and are autonomous in most things. We have a federal government of a lower house and an upper house which has little control over the states and territories. The elected government of New Zealand makes a decision and it is enacted as law without any reference to any other party whilst Australian politicians have to wheel and deal to get a lot of legislation approved without amendment.

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      Hello Horace, I dare not comment with my thoughts on the Governance of Australia, it’s far too great a joke !

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      Everything old is new again.
      The Post Office was operating as an agent of the Commonwealth Bank in the 1960s, I know, as as a serviceman my banking was always done at the military post offices on every major base, including Navy and Air Force bases. The ‘Blacklight’ signature in my passbook and my military ID card was all I needed to make a small withdrawal at virtually any post office, including those in tin-pot little towns where the local store was an agency of the post office and Commonwealth Bank. In those days we were paid in cash so had to get to the post office to deposit into our savings, bloody inconvenient.

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      I forgot to note that the military post offices were staffed by PMG (remember Post Master General) civilian staff with a military postal orderly attached to handle OHMS (remember On Her Majesty’s Service) official mail.

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      Who is a “pseudo” Australian please?

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      Maggie, a “Pseudo Australian” is a person who was not born in Australia, I am one of them.

  5. 0
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    Somehow I can smell a rat. The banking system we have is already totally inefficient with difficult access to management ,if any at all. Our post offices are already overloaded with non postal services so we can’t rely them to handle our money as well!
    It’s time the banking sector provide better customer service with easier access to our money and services expected from the banking system in general. The way this is going the people do not have access to cash or services so in the event of emergency, power failures or need to face to face service not being available, the consumer is left in the dark with no controll of their accounts.

  6. 0
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    Sorry but setting up a bank costs many, many millions of dollars, if not tens of millions of dollars. Suggesting a new bank be set up isn’t likely to be a good enough business proposition for anyone to invest in to get it going.

    In times past some banks had agencies in Post Offices, e.g., Commonwealth Bank and the Rural Bank of NSW. However, when these public assets were privatised (during the Reagan/Thatcher period of the misnamed ‘economic rationalisation’) these services were withdrawn from Australia Post as they “were no longer a sustainable business proposition.”

    Remembering that both these examples were government-owned when the agencies were in place at post offices, it was easy to do as the Post Office was, and remains, government-owned, and bank agencies were just part of the “service” (remember that word?) offered.

    Many local post offices throughout the country these days are franchises, but the model doesn’t work as effectively as they had done in the past because the way we all do business and communication today has changed dramatically. So maybe some further rationalisation may be needed?

    One of the nations public owned services that still remains in public ownership is the local shire or municipal council. These offer local services to local communities. One way for it to defray its costs would be to hold a banking agency in those more remote locations. Specifically in those regional towns where banks have been disappearing for a decade or so. The shire/council office is there; the staff are there; they are community service operations, so the costs of setting up an agency for an existing bank (preferably a not for profit one) would likely make sense in that community. Canada did something along these lines many decades ago when it’s equivalent of ‘building societies’ were given a banking license.

    In addition, there would be other opportunities to leverage existing shire/council infrastructure by making available other government services through these service centres. For instance, “Service NSW” has been spending millions on rationalising government services through a single combined agency. Renting space in remote locations for these service renders it loss making and should be outsourced to local shires/councils in regional areas.

    As for the report you quote, piffle.

  7. 0
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    A bank at a PO would only be useful to me if it had an ATM. That’s about the only reason I go to a bank, other than on the rare occasion when I need a bank cheque.

  8. 0
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    Post Offices charge for banking facilities. I don’t pay fees for any financial services and would object strongly to having to do so. ATMs are brilliant and at least one bank absorbs fees worldwide even when using a foreign machine. The major Aussie banks co-operate in providing fee-free withdrawals. Long live ATMs!

  9. 0
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    Many Australia PostOffices already offers some banking services for three of the ‘big four’.
    Having last visited a physical bank office 2 years ago, unless you are a business that still uses cash, I query the need for such places anymore.

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      I found going into a bank very useful some years ago. Someone in Europe had tried to book a charge to Paypal, and because my paypal account had not been reactivated the charge had been directed to my bank account. Luckily the bank notified me, so I went into the branch, reported the problem, and deactivated my credit card. I don’t think that could have been done through an ATM.
      New card issued in about a week, and loss covered by the bank.

  10. 0
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    Reminds of the suggestion some years back that the Commonwealth Bank and Australia Post combine to provide “combined service”. Ideal name would have been “Compost”.

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