The Minister for Financial Services and Regulation
21 October 1998 - 26 November 2001
21 March 2001
SUBJECT: ACCC-RBA Interchange Fees
MINISTER HOCKEY: [first part of grab inaudible] The average Australian family spends over $15,000 a year on credit cards and it is important that those families, it is important that small businesses are protected. It is not good enough that the international credit card agencies to run a cartel in Australia. We have given the Reserve Bank all the powers it needs, now we need to go forward and to break open the cartel that has worked to the disadvantage of small business and consumers.
REPORTER: What about the suggestions that banks are going to make up these charges elsewhere. What will you do then if they do this?
MINISTER HOCKEY: The reaction of the banks is going to be watched very closely. The average Australian spends $6000 a year on their credit card. It is not good enough that small business and consumers pay for, what is an international credit card cartel. We believe the Reserve Bank has all the powers it needs to react, not only in the interests of small business, but also in the interests of consumers.
REPORTER: Will you chase them if they try to make up the charges elsewhere?
MINISTER HOCKEY: The banks are on notice that they can't try to recover lost profiteering from credit cards, in other areas of their business.
REPORTER: The Reserve Bank has not appeared to be too interested in stepping in to this issue. Do you think they will act as you expect them to?
MINISTER HOCKEY: I spoke to the Governor of the Reserve Bank this morning. It is a co-ordinated Government approach. The co-ordinated Government approach involves the ACCC, the Reserve Bank and the Federal Government giving the Reserve Bank all the powers it needs. In 1998 we passed legislation for the payments system that enabled the payments system to be opened up to competition. That power has been given to the Reserve Bank and can be used appropriately by the Reserve Bank.
REPORTER: Are you under more pressure to re-regulate the banking industry, especially as you head into a Federal election?
MINISTER HOCKEY: Well, not at all, because the good news here is that the Government gave the Reserve Bank the powers in 1998, particularly in relation to the payments system. Now we have an opportunity to use that in relation to credit cards. It is not an easy step forward to open up any of the payments system to competition. It is in the national interest to have a payments system that is secure, that is reliable, that has major institutions standing behind it to honour various debts. Now, you only open up that system with some trepidation, if you have a better system. The Reserve Bank-ACCC report indicated that the banks are profiteering from the interchange fees. Now we are saying that the banks have to be held more accountable to consumers and to small businesses and for the average Australian who spends $6000 a year on credit cards the fees should be lower.