COMPERE: The banks are under renewed pressure tonight with the Democrats raising the prospect of tough new laws to ensure that they provide a minimal level of service in the bush.
Democrats Leader, Meg Lees, says the big four banks are making $20 million a day in net profit, while continuing to deprive rural customers of basic financial services.
Only two weeks' ago the Prime Minister ruled out taking a big stick approach, saying threats would not achieve anything. But along with Telstra, banking is emerging as a sensitive, political issue.
The Financial Services Minister, Joe Hockey, spoke to Mark Willacy in our Canberra studio.
MARK WILLACY: Mr Hockey, are you as concerned as Senator Lees about the need for banks to lift their game in the bush?
JOE HOCKEY: Well, Mark, banks have social obligations which we've talked about, but it's got to go beyond just banking. We've got to talk about all sorts of financial services being available to people across Australia, irrespective of where they live. That is personal loan facilities, that's credit card facilities, that's stock broking and insurance facilities, and also deposit taking facilities.
MARK WILLACY: So if the government is this concerned about services in the bush, why don't you agree with the Democrats and regulate to ensure some minimum level of standards out there in the bush?
JOE HOCKEY: Well regulation is certainly not the answer. We are in a rapidly changing world. If Meg Lees wants to take us back to the days when banking was your local bank branch, 10 am to 3 or 4 pm Monday to Friday, when you could only access your bank accounts at your local bank branch that is not the world that we want for Australians in the 21st century.
MARK WILLACY: But that's a basic that the people in the bush don't have at the moment. That surely would be a start, if they even had that.
JOE HOCKEY: Well, to be fair there is more access to banking services today than ever before. In 1989 there were around 38,000 access points across Australia for financial institutions. Today it's nearly 300,000 access points. So today you can get your money out 24 hours a day, seven days a week, at a vast range of different locations from the local corner store in a country town to your local post office, and it's not just basic banking facilities that are available.
However, we do accept that banks have a social obligation, and I'm talking about all the financial institutions have a social obligation, and what we are going to do is work closely with them to try and come up with a better access regime and a better service regime that responds to the needs of people across Australia.
MARK WILLACY: Well if we stick with the big four banks, because they're earning the big profits - $20 million a day in net profit according to the Democrats are they meeting those basic obligations that you're talking about?
JOE HOCKEY: Well, let's touch on bank profits for a moment. We can all be reassured that financial institutions in Australia are essentially making profits. Financial institutions make profits when the economy is performing well. They make losses when the economy goes into recession like they did in 1990. And it wasn't that long ago that institutions like Westpac lost a hell of a lot of money and so the credit that they provide, particularly to start up small businesses, dries up.
We want our banks to be profitable. We want them to take risks, particularly with small businesses and start-up businesses. That's healthy for Australia.
MARK WILLACY: But what about their obligation to Australia, Minister? Are they meeting those obligations you're talking about?
JOE HOCKEY: Well, I think the banks and financial institutions have a responsibility to explain to Australians the changes in financial services. We are going through a massive revolution in the delivery of financial services in this world where e-commerce is going to change the nature of commerce generally right across Australia.
What concerns me most of all is that people in rural and regional Australia not only have basic banking facilities but they have basic access to electronic commerce in a world that is going to be dominated by internet transactions in 10 years.
MARK WILLACY: Just briefly, Minister. Because the banks were leaving the bush in droves, last election the government promised 500 rural transaction centres. Now 16 months later just 23 have opened. Why are you moving so slowly on this?
JOE HOCKEY: Well the rural transaction centres which are the responsibility of Senator MacDonald are responding to the absence of basic transaction facilities, particularly in very small regional and rural Australian towns. They are being placed where needed, where appropriate. What we want to do is try to get at the private sector to respond as quickly as possible to the needs of the broader community.
Now, I've just spent two weeks in the United States convincing the most significant corporations there that distance no longer matters when doing business with Australia. The same principle applies to rural and regional Australia. New technology allows us to cut the barrier of distance.
MARK WILLACY: Minister, we'll have to leave it there. Thank you.
JOE HOCKEY: Thank you, Mark.
COMPERE: The Financial Services Minister Joe Hockey was speaking to Mark Willacy in Canberra.