Jim Chalmers:
Thanks for coming out relatively early. I wanted to first of all make an announcement with Minister Rowland about regional banking. Then I wanted to update you on some of the economic impacts of the flooding that we’ve seen and are seeing in North Queensland and Far North Queensland. I wanted to briefly touch on production tax credits, and then obviously you’ll want to talk about tariffs on Australian steel and aluminum.
I wanted to thank Michelle Rowland for being here, but also Anna Bligh, Chief Executive of the ABA, and Paul Graham, the Chief Executive of Australia Post. Because this morning here in Canberra, Michelle and I convened the CEOs of the banks, as well as Anna and Paul, so that we would be in a position to make some important announcements this morning about regional banking services.
The government has secured commitments from the banks to ensure that banking services remain available in regional Australia. Banks have a responsibility to regional Australia, and we’re making sure that they’re that they are meeting their responsibilities. This is all about making sure that banks stay open in the bush. Since 2017, we’ve seen 36 per cent of bank branches in regional Australia close, and we are taking action today to arrest this decline in regional banking services.
Our government governs for the whole country, and we take our responsibilities to regional Australia very seriously, and that’s what this announcement is all about. We are standing up for regional Australia, for the communities and people and small businesses of our regions, helping to secure them the banking services that they need and deserve. We know that if we want a strong national economy, then regional Australia needs to be a big part of the story, and that means making sure that banking services are available to the businesses and workers and people and communities of regional Australia.
And so this announcement today really has 2 parts. First of all, we recognize the direction of travel when it comes to the digitisation of banking services. We have a whole agenda when it comes to the future of payments and digital services in banks. We know that that’s a big part of making our economy more productive, more dynamic, more competitive. But we also want to make sure that there are still face‑to‑face services for people who need them in the bush and people for whom digital alternatives may not necessarily work.
So the 2 packages of commitments that we are announcing today is, first of all, a moratorium on branch closures for 2 and a half years. What this means is the National Australia Bank has committed to a new moratorium on regional bank closures. Commonwealth Bank and Westpac will extend their existing moratoriums. And now all 4 of the 4 major banks will have a position consistent with the conditions that we imposed on ANZ when they bought Suncorp. This means that no additional regional bank branch closures will take place before July of 2027. So that’s a very important announcement, and I am grateful to the banks and to Anna for securing and committing to that announcement today.
The second piece, which I’ll throw to Michelle in a moment about, is about new agreements between the banks and Australia Post. The government has asked the banking sector to increase its commitment to and investment in regional banking and following discussions with the government and with Australia Post, the Commonwealth Bank, NAB and Westpac have all reached new in principle Bank@Post agreements. ANZ has now also agreed key terms on which it will join the service, and this means that we can shore up the financial outlook for Bank@Post, but also, importantly, provide greater certainty and services and choice to customers in rural and regional areas. I also wanted to welcome the decision by Macquarie and also HSBC to start negotiations with Australia Post. Based on Bank@Post services as well.
You would recall towards the end of last year, there were other options and other potential steps flagged as a consequence of some confidential consultation that we were undertaking, that work will continue. We will continue to work with the banks, with stakeholders, we will continue to consult. There is more work to do to secure the best version of banking services for people in regional Australia.
But these 2 announcements are very big, very substantial, very important announcements in their own right. We will continue to make sure that Australians in every corner of our country can access the sorts of services that they need and deserve, and that’s why I’m proud to have worked with Michelle and with the colleagues up here to make these announcements today.
We’ll hear from Michelle and then Anna and then Paul, then we’re going to take questions just on banking. Then we’ll excuse Anna and Paul, and then you can ask me about all the other stuff.
Michelle Rowland:
Thanks very much, Treasurer. As the Treasurer said, we’re taking important steps as a government to ensure that face‑to‑face banking services remain accessible for consumers and small businesses, particularly in rural and regional Australia.
We understand the importance of access to essential services in our regions, they include postal services as well as banking services. Australia Post is a trusted institution. It connects millions of Australians, and together with participating banks, is assisting in fulfilling the government’s objective. So we welcome the acknowledgement by participating banks of their obligation to ensure that the provision of Bank@Post remains sustainable. Bank@Post will support ongoing banking services through post offices, which, as we know, serves so many regional communities who no longer have a local bank branch.
Our approach balances support for innovation and competition in the banking sector with the need to ensure economic inclusion for everyone, irrespective of where they live. The government recognizes the value of Bank@Post in providing access to basic banking services on behalf of the banks, and that’s why, as the Treasurer said, we are pleased that CBA, Westpac and NAB have reached new in principle Bank@Post agreements to address cost pressures and ANZ has agreed to key terms to join. The government expects these negotiations to be finalised shortly.
We’re also, as the Treasurer said, very much encouraged by the recent engagement with Macquarie and HSBC to commence negotiations with Australia Post to expand access to Bank@Post services. When we consulted the community on the modernisation of Australia Post, the retention of Bank@Post in rural and regional areas was paramount.
So I thank Anna Bligh and the ABA member banks, I thank the Australia Post CEO Paul Graham and the Australia Post team for their constructive engagement to reach agreement to continue Bank@Post on a more sustainable footing for the benefit, particularly of Australians who live in rural and regional areas. Anna.
Anna Bligh:
Thank you very much, Treasurer and Minister Rowland. Australia’s banks take the need to service all of their customers, regardless of where they live, very, very seriously. I am delighted that we have been able to reach agreement with all of the major banks on a dedicated period of time for a moratorium on the closure of regional bank branches. But also reaching agreement across those major banks to have a better relationship with Australia Post so that face‑to‑face banking where it’s required can continue.
Australians are transforming the way they bank, and they are doing it at an unprecedented rate. Australians are number 3 in the world at adopting financial technology. So this means that we’re undergoing a massive transformation in what banking looks like in this country, and it’s not going to look the same in 10 years’ time as it looks now. What this moratorium does is, I think, give us some very much needed breathing space to work more carefully with government and, where possible, through authorisations by the ACCC, for the major banks to work together to determine better ways to service particularly remote parts of what is a very, very big country.
So I am very confident that the moratorium will effectively give us that breathing space to look at the things that Australia is good at, finding innovative ways to service very remote locations. So watch this space, I’m looking forward to some very interesting options being considered. But as we see more and more Australians jump online to do their banking, we are going to see a continued digital transformation. Our job collectively is to make sure we don’t leave any Australian behind as that transformation accelerates, and that’s what today’s announcements will do.
Chalmers:
Thanks, Anna. Paul.
Paul Graham:
Thank you, Treasurer. Thank you, Minister Rowland. Thank you, Anna. Yes, very happy to be able to stand here today and say that we have reached new agreements with Commonwealth, NAB and Westpac, and look forward to welcoming ANZ to the Bank@Post family, and hopefully shortly, Macquarie and HSBC. As has been mentioned, we provide an essential service, particularly to regional and remote Australia.
Bank@Post is focused and targeted primarily at those people who are not digital natives, or indeed, have vulnerabilities, or in many cases, come from backgrounds where English is not the first language and they want and need that over‑the‑counter service. Australia Post is very proud to continue to provide that in over 4000 branches nationally, 2,500 in regional and rural, and over 1000 branches where we are the only banking service available to that community.
So I think this testifies to the great collaboration that we have had with the banks and also with the government. Team Australia effort to recognize the important role we all play in supporting and delighting those customers and communities. And particularly for us, because a large part of the increase in fees that we will see will flow through to our licensed post offices, who we know are an essential backbone of our network, particularly in regional and rural Australia. So thank you very much for your cooperation.
Chalmers:
Thanks, Paul. So if we take questions just on banking, and then I’ll come back to a few of those other issues in a moment, start at the front, work our way back. Shane.
Journalist:
Mr Graham, what’s the financial arrangements between banks and Aus Post in terms of them connecting, continuing on with Bank@Post and ANZ coming on and possibly HSBC?
Graham:
We have over 80 agreements in place with banking and financial institutions for Bank@Post, each of those are struck on a case‑by‑case basis and commercial in confidence. But we have 2 elements to that, one is the infrastructure paying for that network, and particularly the technology and the compliance that goes with it. And the second one is the fees, basically paying for the services, particularly those provided by the licensed post offices.
Journalist:
Is it beneficial to Aus Post?
Graham:
Yes, it is beneficial. And as Minister Rowland mentioned, this creates a more sustainable platform for us, for a horizon, whilst, as Anna said, we work collectively with government and the banks on the longer‑term solutions in regional and rural Australia.
Journalist:
Treasurer, is it possible that the proposal for the rural bank levy could be revisited down the track?
Chalmers:
Despite today’s announcement, we’ve made it clear privately and a moment ago publicly that we think that there’s more work to do, as you know and as your paper covered extensively. At the end of last year, we were in discussions with the banks about what could be done, including that proposal, but other proposals as well. We’ve indicated that the work will continue. But these 2 announcements are very significant announcements in their own right. They mean that we can continue some of that other work with this clarity in place. Millie.
Journalist:
Would you be open to asking the banks to reverse sort of the recent closures that they’ve made in regional areas?
Chalmers:
We’re always working with the banks to make sure that they have a presence in regional Australia. That’s what today’s announcement is all about. Our primary focus has been to arrest the decline that I mentioned: since 2017, 36 per cent of branches have closed – so our first priority, our first responsibility, is to arrest the decline, to get these moratoriums in place, to get the arrangements with Australia Post right so that we can look work on some of those longer term issues at the same time.
Nothing else on banking? Thank you, Anna and Paul.
Just wanted to touch on a couple of other issues before we take your questions.
First of all, when it comes to the flooding in North and Far North Queensland, our focus remains on the human cost of what we’re seeing – in light of recent flooding, the danger is still present in North and Far North Queensland. We still have weather warnings, we still have communities severely impacted. We have roads cut. That has implications for supply chains and for things like the delivery of groceries. I want to pay tribute again to Jenny McAllister, who has been briefing us daily on developments in North Queensland and North Queensland at the same time. Our primary focus is on the human cost of what’s happening there, but we’re also starting to get our heads around the economic cost as well.
The cost to the budget will become clearer in time. We’ve made it very clear to the Queensland Government, with whom we are working very closely, that we will be there for the people of North Queensland and Far North Queensland when it comes to rebuilding their communities – those priorities are determined by the Queensland government, but we know that we will be making a serious financial commitment to those communities to help them recover and rebuild and get back on their feet.
We have also sought some initial analysis on the economic cost of what’s happening up there in Queensland. We know that the flood‑affected region accounts for about 4 per cent of agricultural production in Australia. That means there will be some economic impacts. We have some initial estimates from Treasury. These are just the first crack at these estimates, but we expect lost economic activity due to the floods to reduce GDP in the March quarter by about 0.1 per cent – that might not sound like a lot, but at a time when growth is not especially thick on the ground in our economy, that is not inconsequential.
As we always see with these sorts of events, there’s typically a bounce back in subsequent quarters, which comes from the rebuilding effort. But in the context of an economy which is already quite soft, another 0.1 per cent of activity in the quarter we’re in now will make a difference.
The floods may also put some upward pressure on prices, but in quite a limited, narrow range of products. We don’t expect the floods to affect the overall aggregate CPI, or our overall aggregate forecasts for inflation, but it would be easy to see prices for things like bananas and sugar to be most likely impacted because of the loss of crops. Treasury estimates that up to 20 per cent of Australia’s banana crop could be affected, so you can see that there might be quite narrow but significant impacts on some goods, like bananas and sugar, but we don’t expect the overall impact on inflation to be substantial in aggregate.
We also know that there are those supply chain issues that Jenny McAllister is working on with our support. The Bruce Highway is obviously subject to prolonged disruptions, and there’s some major damage in some of those networks, and that will have economic implications as well, but I wanted to give you a sense of our early thinking on that.
Next one is the production tax credits passed the Senate last night. I’m very grateful to Senate colleagues for passing that really important legislation. This is all about strengthening our economy and our industrial base by making it easier to maximise the opportunities that come from cleaner and cheaper energy, so the production tax credits for hydrogen and critical minerals are a really important part of our Future Made in Australia agenda. They are a substantial investment. They’re not about replacing private investment, they’re about incentivising private investment so that we can become an indispensable part of the energy transformation that’s taking place around the world.
Very grateful to Senate colleagues for the very important progress that we made last night on those production tax credits, and they will make a meaningful difference. We want to build Australia’s future with cleaner and cheaper energy, and these production tax credits will help us do that.
Now, the final point I wanted to make, before I take your questions, is on the conversation that was happening when we came in between Prime Minister Albanese and President Trump. That conversation was still underway as at about 8:30 this morning – I want to make it clear that the Prime Minister will update you on that conversation in due course later today. I don’t want to make predictions about that conversation, which was taking place when we came here, but I will say this, the Australian‑American economic relationship is a mutually beneficial one, and our job is to continue to ensure that it benefits both sides.
The Americans have run a trade surplus with us for a long time, since the Truman administration in 1952, and that means that the Americans do really well out of the economic relationship with Australia, as does Australia. We will continue to stand up for Australia’s national interest. We know as a trade‑exposed economy that we do have an interest in making sure that the global trading system is maintained. We have indicated to you before that Australia has a lot of skin in the game when it comes to the possibilities of escalation escalating trade tensions around the world. So the conversation between Prime Minister Albanese and President Trump is happening this morning in that context, obviously, our steel and aluminium industries are very important to us. We will continue to stand up for them and for Australia’s broader national economic interest as well.
Happy to take some questions.
Journalist:
What’s the status of the Budget on March 25 today? Is it on, or is it scheduled? Or is it planned? And I know you’ve said in the past, you won’t be throwing money around. But what sort of magnitude of cost‑of‑living belief can people expect?
Chalmers:
We’re working towards a Budget on March 25 and the Expenditure Review Committee met last night. Michelle is a member of the ERC. We met last night. We are working towards a Budget towards the end of March, and what we’ve made really clear is the defining feature of that Budget, just like the defining feature of the first 3, is responsible economic management.
What we’ve been able to do is provide substantial cost‑of‑living relief at the same time as we’ve delivered 2 surpluses, we’ve got the Liberal debt down while we’ve provided that cost‑of‑living help, so people should expect from a fourth Labor budget the same sorts of things they saw in the first 3: helping people, where we can do that in a responsible way. But our focus right now is on rolling out the cost‑of‑living help that’s already budgeted for.
Journalist:
It’s not unexpected that the government, the US Government, would have put tariffs on steel and aluminium. Did your Treasury model at all? What the economic effects on Australia would have been in those tariffs?
Chalmers:
First of all, you’re right that these are significant developments, but they’re not especially surprising developments. A lot of these proposals were flagged in the American election campaign, and that gave us the opportunity to do a heap of work with Treasury and with DFAT and other agencies to try and get a handle on the potential impacts. I’ve not gone into all of the detail of that, but I have indicated to you previously and to colleagues here that there are 2 sets of impacts here: there’s the direct impact of any tariffs, and there is the broader impact of escalating trade tensions involving the Americans, the Chinese and others.
The Treasury looked at both of those sets of possible implications for us, not always in the most specific sense, trying to pre‑empt every number or every percentage, but we’ve got a pretty firm handle. From all of that work that we did before the election, we expect changes in policy from a new administration. We’re confident we can navigate them. We all are well placed and well prepared to deal with announcements coming out of DC, and part of that effort is engaging directly, as the Prime Minister has this morning with President Trump.
Journalist:
Are you contemplating there’s a real chance this time around that no country will get an exemption from Trump on steel and aluminium tariffs?
Chalmers:
I’m not here to make those kind of predictions or to pre‑empt the report that the Prime Minister will give on his conversations later today.
Journalist:
The Coalition has called the increase to the public service wasteful under Labor. Part of that work was supposed to go hand‑in‑hand with reducing the outsourced labour bill. Do you think you’ve got the balance right on that? And are you confident that a second audit of the public service will show that progress against the Morrison government?
Chalmers:
Yes, I’m confident we have got the balance right. And public service numbers are driven by a couple of things. First of all, the terrific work that Katy Gallagher is doing converting money that we used to spend on contractors and consultants into rebuilding capacity in the public service, that’s one important input. And the other one is there’s been a whole bunch of work that we’ve had to do to clear backlogs in areas like veterans’ claims. I pay tribute to Shane in the front row for the work that he’s done covering that. It’s shameful, frankly, when we came to office and saw the backlog of veterans who hadn’t been treated with the respect and dignity that they deserve after serving our country in uniform. And so some of these numbers are driven by our efforts to support veterans and so those are a couple of the drivers.
In terms of the longer term, we are confident that we’re getting the balance right. It always requires ongoing attention. When we came to office, there was an over‑reliance on contractors and consultants, the public service had been hollowed out, and Katy’s good work, with the support of all of us in the Cabinet has been to try and turn that around.
Journalist:
Australia has a number of expat industrialists who are close to President Trump. Have you attempted to speak to either the likes of Anthony Pratt or Gina Rinehart to advocate on Australia’s behalf?
Chalmers:
I haven’t spoken to either of those 2 people that you nominate. The discussions I had yesterday were with Rio Tinto, the global chair and the Australian CEO, because obviously they can give a good sense of potential impacts, including the fact that the story is complicated somewhat by the fact that some of our Australian steel and aluminium companies have got a presence in the US, they’ve got a presence in Canada, and so there is an element of complexity, and so my consultation has been with the business community, and obviously conferring with colleagues as well. I haven’t spoken to those 2 people that you mentioned.
Journalist:
Joe Courtney, a Democrat congressman, has said that this threat to tariffs is an insult to a key strategic ally like Australia. Do you share that sentiment, particularly given that Australia went to the US this weekend and put a huge down payment on AUKUS?
Chalmers:
Well, a couple of things about that. We choose our own words. And my view of this is that this is a mutually beneficial economic relationship, and the job of both sides is to continue to make it so. I’ve met Joe Courtney a few times, he’s a terrific guy, and he’s a wonderful friend of Australia but we would describe the situation differently. We’ll continue to work with American counterparts to make sure that we can stand up for Australia’s national economic interest and make sure that this mutually beneficial relationship continues to be so.
Journalist:
Your recent RBA reforms have effectively given a new megaphone to the Governor. Do you think that’s made it more difficult for you to tell a coherent narrative around the economy and government spending? And if I can just one additional – are you confident that news bargaining incentive is not the type of discriminatory tax that is being targeted by the Trump administration?
Chalmers:
On your first question, I think it is overwhelmingly a good thing that the Reserve Bank Governor has taken up the opportunity recommended in the Reserve Bank reforms to talk the Australian people through the decisions that are taken by the Reserve Bank Board. I think that is overwhelmingly a good thing. It’s one of the recommendations of the Reserve Bank review that has proven already to be a very good development, so I support it 100 per cent.
On your other question about news media bargaining code, obviously around the world in light of what’s happening with the OECD tax negotiations and arrangements, countries are looking at what alternatives there might be to that big multilateral solution that was proposed by the OECD. My job is to focus on that part of it. Michelle and Stephen Jones focus on the news media bargaining code for reasons that you are aware of.
I think at a time when there’s a new administration in the US all of these issues come into play. All of these sorts of issues come into play and that’s why we’re seeing, I think, countries around the world, not just Australia, look at the new administration in the US and making sure that our policies and priorities continue to serve that mutually beneficial relationship and that our national interest is well represented, whether it’s in tax, whether it’s in media policy, right across the board.
Journalist:
Question to Minister Rowland. Heston Russell is in Canberra today, he is meeting with a whole lot of politicians. Will you meet with him and what do you think of his push for a truly independent inquiry into what happened?
Rowland:
Well, firstly, I can confirm I have received a meeting request which is under consideration. But I’ll make this point, the ABC has operational and editorial independence but that does not mean that it is not above scrutiny and accountability, and we know that the report was handed down recently, there are avenues for Mr Russell if he wishes to pursue matters within the regulatory framework as well as other legal avenues which he may wish to pursue. So whilst I acknowledge that the ABC in this matter does have operational and editorial independence, it does need to acknowledge where it has made mistakes, it does need to be transparent, and it does need to be transparent and accountable to the Australian people.
Journalist:
And a truly independent investigation, is that, is that right?
Rowland:
Well again, I note that this investigation was undertaken by a highly respected individual. I am aware also from reports that Mr Russell disputes that. That is a view that he is entitled to hold but the principle remains true that the ABC must have editorial independence but at the same time, that accountability.
Journalist:
Minister Rowland, will the federal government consult with the Trump administration on the news media bargaining incentive to help make the case that it’s not a discriminatory tax?
Rowland:
The government has made it very clear that this is not targeted at any specific country, and in fact, this is not a scheme designed to raise revenue, it’s designed to incentivise commercial deals, that is the whole point. So this builds on the existing news media bargaining code that is in place. Treasury and the government will continue to consult on this because again, as a matter of principle, this is important for ensuring that Australian publishers are properly recompensed for the work that they undertake. That principle remains true.