27 March 2001

Interview with Philip Clark, 2GB, Sydney


SUBJECT: Free Banking Accounts for Low Income Members of the Public

PHILIP CLARK: News that the banks are set to offer some low fee accounts for disadvantaged people in the community and also, more importantly to give people more notice of branch closures has got to good news, or isn't it?

JOE HOCKEY: Oh, no, it is good news and it's taken too long to get there but the banks are, I believe starting to respond to community concerns and the fact that they're offering no fee accounts to five million Australians is a step in the right direction.

PHILIP CLARK: Yes, what are these accounts going to mean?

JOE HOCKEY: Well, these accounts provide people who are most disadvantaged in the community with low cost, or in some cases no cost banking and I think that provides people with the sort of service that they expect as a basic banking service. But of course many people also expect more from their banks and the full range of services will continue to be supplied and that's come about, Philip, through competition.

It was not long ago when we didn't have, for example, mortgage originators in the market offering cheaper home loans, only recently we launched Elders Rural Bank which has 140 branches in rural and regional Australia overnight.

It's not long ago that building societies and credit unions were restricted to only one or two branches. Today they can now compete right across Australia. All as a result of the reforms that we've undertaken in the Government.

PHILIP CLARK: I know, but if we'd had so much competition that was working and it would work in consumers favour and it just hasn't because we've seen branch after branch close and not just in country towns but in suburban parts of Sydney as well.

JOE HOCKEY: Well, that's right. We have seen branches close and I've often been a strong critic of the banks of that. But if they are closing and that's a trend that no-ones stopping. I mean, not even the Labor Party's pledging to stop that then we've got to replace them with other banks and other branches and, you know, it's only last week that I opened a Bank of Cyprus bank branch at Hurstville and who would have thought 15 years ago or 10 years ago that the Bank of Cyprus would be opening a bank branch in suburban Sydney.

PHILIP CLARK: Well, they might be opening a branch, but that's not the answer to what' s been a systematic decimation of the majors, the four majors branch networks.

JOE HOCKEY: Well, no, it's not but it's a step in the right direction. I mean, they're going to open up 10 branches over the next two to three years around Australia and if you get a few of those Bank of Cyprus's or you're getting a few credit unions and building societies that are starting to expand their operations or the Bendigo Bank, which is opening up community bank branches, then you start to get a response from the community and the banks start to respond to community concerns.

PHILIP CLARK: Yes, well banks responding to community concerns would be a new one, I must say. I see, I mean, I see the Labor Party yesterday said, though, that they would get stuck into it if they were in the government, they'd have a much more aggressive stance against the banks.

JOE HOCKEY: Well, the Labor Party can say this but their history proves that they've never done it and the last three years of the Labor Government, 500 bank branches closed and after 13 years in Government, two days before the 1996 election, Labor put out a statement staying that they were going to monitor bank fees and charges.

It is very difficult, Philip, to regulate banking because it's not just the big four you're regulating, it's the smaller players that you have to regulate as well and more regulation crushes competition. The more regulation you have, the less competition you have and our government is strongly committed to delivering competition, we want the banks to think about the community. Thankfully they've started to do it and, as I said, this is the first step in what I would hope to be a number of steps from major financial institutions to start delivering better services to the community.