New public bank mooted as remedy for rural branch closures

It could be a stand-alone public bank or one using the branch network of Australia Post, a Senate committee has recommended.

Without any intervention from government, the wave of closures is set to continue, the committee said after an inquiry lasting more than a year.

"The loss of services is so dire, we must seriously consider the recommendation for a Regional Community Banking Branch Program comprising a public-private partnership to help local communities establish banking services," Mallee MP Anne Webster said.

Queensland state MP Robbie Katter said his party had promoted the concept of a Rural Bank for years

"Why should it be legal in this country of ours to be denied the right to access to a bank, or cash, by a profiteering corporation in the city?"

The Senate report found Australia's major banks had told rural communities not to worry when they started closing hundreds of branches across the country.

New technology has replaced the old, Automated Teller Machines can do the same job as the human tellers they were familiar with, perhaps even better.

The report says of the 2100 bank branches closed in the past six years, more than a third were across regional Australia - about 800 in total.

Unfortunately, half of the much vaunted ATM's in regional and remote areas were axed over this time as well.

"When banks close their branches in regional areas, the impact on individuals and communities can be devastating and far-reaching, especially when it is the last bank in town," the report found.

As MP's discovered during their recent blitz on supermarket monopolies, there is not a lot they can do about interfering with business decisions.

When the branches went, the ATM's were unplugged as well.

One possible solution - which still remains on the table - was for banks to make use of the last business with their lights still on, the post office.

But often they were found to have closed as well, or not have the expertise to pursue banking options.

This committee still has a major emphasis on expanding banking services at the remaining post offices.

The committee heard the banks promised to set up regional "hubs" in nearby, more populous towns so rural people could still have face-to-face contact with those holding their money.

Many of those have closed also.

The committee still saw a future of banks "sharing space" and co-locating into a single regional office.

There were suggestions of council banks, that national public bank or public postal bank, funded and backed by government.

It wanted the Australian Competition and Consumer Commission to become more involved in the issue.

It also recommended the government develop a mandatory code of conduct in relation to branch closures..

Today, online banking is all that's left which the committee was told was an issue with unreliable internet services in the bush.

The long-running Senate inquiry began in February last year and received 609 submissions and held 13 public hearings:

This committee agreed its investigation was just one in a long line of similar bank probes which had done little stop the closures.

One of its first decisions was to ask banks to pause bank closures until its investigation was complete, the committee said some did, some did not.

Fewer people are using cash these days, although the committee found that most that did lived in rural areas.

Officials from the Commonwealth Bank told the inquiry the "continued support and distribution costs of cash" are up to $400 million per year, at an average of roughly $40 per customer.

Customers who do not use cash are subsidising those that do, the bank argued.

The committee was also told the uniqueness of the agricultural industry requires specialised banking knowledge distinct from that of the cities.

In a minority report, ALP senators on the committee said the challenges for rural communities are present not just in the banking sector but also in other sectors such as retail and legal services.

"We are concerned, however, that some of the recommendations of the committee do not directly address these challenges and could have unintended consequences on existing service provision in the regions, thereby reducing competition in the banking sector and diminishing access to services," the Labor senators said.