But let's bring in Joe Hockey, Minister for Financial Services and Regulation and, Minister, welcome to the program.
JOE HOCKEY: Good evening, Sandy.
COMPERE: Nice to have you with us.
JOE HOCKEY: Sorry. I was caught up in the House, that's why I'm running a little late.
COMPERE: No, that's fine you've finally made it.
Now the Government has accused Labor of plagiarising the Bankers Association's action plan that the banks are certainly not calling for re-regulation which is what Labor is threatening. Isn't the plagiarism claim just a bit of a political shot?
JOE HOCKEY: Well no, because I don't know if David Bell's prepared to say a bit more about this but I understand that the Bankers Association briefed the Labor Party last week and the Labor Party brought forward their policy well ahead of schedule and in fact their policy had a whole lot of initiatives that the Australian Bankers Association has been discussing with the government for some period of time.
So, you know, a very large chunk of the Labor Party's policy is very, very similar, suspiciously similar to what the Australian Bankers Association briefed them was going to be released this week.
COMPERE: Oh well let's turn to the wider picture. Is there a case for re-regulation of the banks if they don't give consumers a better deal?
JOE HOCKEY: Well, Sandy, I don't think there is. And I'll tell you why because we've been going down the path of deregulation over the last few years and deregulation means that other players can come into the field and I heard Pamela from Brisbane a little bit earlier who was talking about her local credit union and I say to you, Pamela, it all strings to your right arm on that because we in the last two years have brought the credit unions from being just limited to State legislation and State supervision under the Commonwealth regime so now they can operate anywhere in Australia.
The credit unions can now offer cheque accounts which they couldn't do under Labor four years ago, and the credit unions are actually competing at a grass roots level and in many cases filling the vacuum that some of the banks are leaving.
So I'm actually encouraging the credit unions. I'm encouraging building societies. They provide a very important service and what we're focusing on is how we can get more competition into the market the same way that we got competition in to home lending and you had all those Aussie Home Loans and RAMs and Wizard come on to the scene and they've delivered lower home mortgages - well the same can be done for basic banking.
COMPERE: Minister, do you believe the proposals announced by the ABA on Monday do enough to address community complaints about banks?
JOE HOCKEY: Sandy, I've always said it's a first step but it's an important first step and what I've been trying to do to get across in the last few days is the banks deserve criticism when they cop criticism but they also deserve credit when they deserve credit and the sea change in the attitude from banks over the last, you know, few months, focusing on what they did last Monday was evident when they started to talk about social obligations.
I mean we've never heard that from the banks before. Banks talking about an obligation not just to shareholders but an obligation to the broader community and if you can change the mindset of the people in the board rooms and the chief executives to think about the community and not just shareholders, then it's easier to get a whole lot of concessions out of them over the longer term.
Simply regulating them, simply regulating them is not the answer because you're never going to get the regulation right
So what happens if it turns out to be just window dressing and I mean I'll use the example that we've used a couple of times on the program and that is the so-called free account but you're only allowed to use six transactions a month which is way below the national average?
Well I mean if it's not enough then the banks are going to cop that criticism and I'd expect them to react to it. And in fact we'll do what we can to get the banks to react to it.
The danger with regulation, Sandy, is that it's going to catch those credit unions that Pamela was talking about before. It's going to catch the building societies. It's going to catch the small banks which are now trying to get off the ground like Bendigo Community Bank, such as Elders Rural Bank, which now has 230 branches in rural and regional Australia.
The regulation, the heavy handed regulation is going to start to crush those people because even though you might have good intentions with regulation for the big four banks it always catches the little people.
COMPERE: Well what is your government doing to help stem the tide of the ever increasing fees and charges, branch closures, and not to mention credit card interest rates?
JOE HOCKEY: Well the main thing in that about credit card interest rates is for the first time we are taking what is an important step forward to break open what has become a bit of a cartel where credit card companies and banks have been charging what the ACCC described as excessive fees and charges for credit cards and the interchange credit cards.
Now it's not an easy step forward, Sandy, because I think at the end of the day everyone wants the banks to be reliable, to be solid and to be profitable, and when you open up a credit card or interchange system you need to do it very carefully so that any new entrants satisfy criteria that means that they'll honour those credit card debts. So it's a very cautious but important step forward to open it up to competition.
In relation to branch closures, the simple fact is that there has been a trend for now nearly ten years of branch closures right around the world. We have long argued with the banks that you need to have a dual strategy. It needs to be a clicks and bricks strategy.
The clicks strategy is supporting Internet banking which has two and half million customers today. Four years ago there were no customers.
In relation to ATMs as I think someone else was mentioning on your program there were 7,000 five years ago, today there's nearly 11,000 ATMs.
The same with Eftpos. A hundred thousand terminals three years ago. Today there's 320,000 terminals.
So that's the clicks strategy.
The brick strategy is that the banks need to respond to local community concern and I applaud, for example, ANZ Bank which has put in place a moratorium and has had it in place for I think about a year, that they will not close any rural and regional branches - that's ANZ Bank.
Now some of the other banks are moving in that direction. Others are refusing to move in that direction. You've got to keep the pressure on them to maintain face to face services and I think that's one of the recommendations that the ABA put out last Monday.
COMPERE: Minister, thank you very much indeed for your time. It's been good talking to you.
JOE HOCKEY: Thank you, Sandy, any time.
COMPERE: That's Joe Hockey, Minister for Financial Services and Regulation. This is Australia Talks Back and we will come back to our guests, to David Bell and Louise Petschler in just a moment.