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

Allowing Australia Post to take deposits could secure essential banking services.

Sydney Post Office in Bondi suburb

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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    COMMENTS

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    Unikat
    4th Aug 2020
    10:14am
    My local chemist includes an Australia Post service which offers some banking facilities. Turning all AusPost franchises into banking entities has security implications.
    SuziJ
    4th Aug 2020
    10:54am
    I totally agree with you in regards to the security implications.
    Mondo
    4th Aug 2020
    11:34am
    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.
    SuziJ
    4th Aug 2020
    10:52am
    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.
    Janie
    4th Aug 2020
    4:09pm
    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.
    Horace Cope
    4th Aug 2020
    11:01am
    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.
    fearlessfly
    4th Aug 2020
    11:10am
    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"
    fearlessfly
    4th Aug 2020
    11:08am
    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.
    Horace Cope
    4th Aug 2020
    11:20am
    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.
    fearlessfly
    4th Aug 2020
    11:31am
    Hello Horace, I dare not comment with my thoughts on the Governance of Australia, it's far too great a joke !
    Eddy
    4th Aug 2020
    5:11pm
    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.
    Eddy
    4th Aug 2020
    5:25pm
    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.
    Maggie
    5th Aug 2020
    10:54pm
    Who is a "pseudo" Australian please?
    fearlessfly
    6th Aug 2020
    9:28am
    Maggie, a "Pseudo Australian" is a person who was not born in Australia, I am one of them.
    Willhedickus
    4th Aug 2020
    11:17am
    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.
    Waiting to retire at 70
    4th Aug 2020
    11:20am
    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.
    Fedup
    4th Aug 2020
    11:53am
    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.
    BillW41
    4th Aug 2020
    12:06pm
    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!
    fearlessfly
    4th Aug 2020
    12:10pm
    Never paid any fees at all when accessing my ME Bank account through an Australia Post branch
    Garyand
    4th Aug 2020
    12:29pm
    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.
    Golden Oldie
    4th Aug 2020
    12:53pm
    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.
    LFC
    4th Aug 2020
    1:07pm
    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".
    fearlessfly
    4th Aug 2020
    4:50pm
    Love it !!
    shaper
    4th Aug 2020
    3:19pm
    If we changed our bank as pensioners we cannot get another credit card from any of the other banks,so if the Australia post office were to have a bank would they allow us to have a credit card
    Pete
    4th Aug 2020
    3:28pm
    After banking loyally with Suncorp for almost 30 years, first one nearby local branch was closed, followed by the one nearest to us, this one becoming automated only. As an eighty+ year old, face to face banking service is very necessary. On making representation to Suncorp about this situation, I was met with no sympathy apart from a referral to another branch over 10 kms distant. I then transferred my banking to Heritage, what a breath of fresh air! Interestingly, within months the automated Suncorp branch was back with a full staff compliment. Too late for me.
    robmur
    4th Aug 2020
    3:49pm
    I carry about $30 in my wallet. I can't remember the last time I actually paid for something with cash. For about 40 years all our bills are direct debited. Never had a problem with any facility in that time. Set up well before I retired. I never use a credit card. If I used one I would always pay the full amount owing each month. Credit cards are the BANKS MONEY. We use a DEBIT CARD which is our money, which gains interest and easily topped up if the account is running low - and that never happens. Wouldn't use a Post Bank if they came available.
    shaper
    4th Aug 2020
    5:06pm
    Dear Robmur We have always has a credit card ever since they first started in fact I got our first one for free with a $50 credit on it. I did once use a debit card and that ended up being used my some else and we had a terrible time trying get all our money back from the bank.So No Thanks I will continue using my credit card as that way if its stolen or some one uses it instead of us, the bank then gives all the money back.I know this because our card was used in the USA while we were still here in Oz, they used it at the casino and also on bills for food and drinks,but after the bank let us know and we could let them know we have never been to the USA,within a week we had a new card and all moneys replaced.
    Janie
    4th Aug 2020
    4:06pm
    This is nothing new, I worked at several Post Offices over a period of 18 years and we did lots of banking for different Banks, including Commonwealth and Bendigo and also Credit Unions. It was always a concern to me that we didn’t have the type of security that banks have had for years. I guess some of the other banks could get on to the Post Office system because it seems that banks no longer want customers inside. Most of them want their customers to do everything online, which is fine if everyone has Internet, but some people choose not to.
    BillW41
    5th Aug 2020
    1:47pm
    I'm approaching 80 and use three credit cards to my advantage, each one for a different period each month, and pay each one off the day before its due date. I have a fourth used only as a debit card to draw cash. Although it doesn't mean much these days, I therefore maximise the interest paid on my savings account. Regular bills (including credit card balances) are paid on line, covered by pension and annuity deposits. It all works well.
    Maggie
    5th Aug 2020
    11:04pm
    It interests me that you have all those credit cards. Would not one do the job?

    If there's an advantage in having many (yes I am aware that it's an easy way to spend money you don't have!!!) I would love to know.
    Priscilla
    5th Aug 2020
    8:46pm
    I always go into my bank to access my account and to withdraw money. Bank branches need to stay open to enable people access to their money. Many many people do not do internet banking or use ATMs. The use of many cards entails fees and this is not acceptable. People keep saying that cash is no longer used, but everywhere I go I use cash and businesses are happy to receive cash. The only company I have come across that does not use cash is Miss Maud - so we don't go there. The governments need to ensure that bank branches are available to the public.
    Valerieaj
    6th Aug 2020
    9:55am
    No way am I going to use those "bad excuses for a $2 shop" to do my banking. They cannot even deliver my post correctly.
    BillW41
    14th Sep 2020
    4:18pm
    I'm a bit late in answering Maggie - sorry about that. As I said in my previous post, each card covers a different segment of the month therefore avoiding the need to transfer savings account funds until each due repayment date. My cards are all fee-free and I never pay interest. It's not a case of spending money I don't have but of using the banks' money while preserving interest on my savings account.


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