NADIA MITSOPOULOS:
Well, cash has been a big topic of discussion on the show this year. So those of you who still use it may be pleased to hear that the federal government is going to mandate cash, so it means businesses will have to accept cash for essential items and the government will put this out for consultation before settling on a final plan. But if you do run a business, do you still want to accept cash and are you one of the 1.5 million Australians still using it? I would really like to hear from you this morning on 1300 222 720. Let’s get more first on how this will work, with Stephen Jones, who is the Assistant Treasurer. Good morning, Minister, thanks for joining me.
STEPHEN JONES:
Good morning, Nadia, good to be back with you.
MITSOPOULOS:
Why are you bringing in this mandate?
JONES:
Look, I’ve spent a lot of time travelling around regional Australia and talking in seniors’ forums throughout the country, and one thing that comes up time and time and time again is that people want to maintain the ability to use cash. They know what the direction of travel is, they know that digital payments have taken off, but they see their legal tender, they see the $20 in their wallet, and they want a legal right to be able to continue to use that legal tender and have it accepted for essential goods and services. We’re responding to that need from Australians, we think, you know, there is an absolutely a need here that people should be able to continue to use it and that the economy to cash should be maintained.
MITSOPOULOS:
What constitutes an essential item?
JONES:
The sorts of things that you would normally think of, so your groceries, access to pharmaceuticals, petrol, those sorts of things are absolutely the things that we have in mind when we think about essential items. To some of the comments you made in your introduction, we want to make sure that we don’t try and boil the ocean here, so you know, want to make sure, that you know, in relation to small businesses that we put in place the appropriate carve‑outs, that’s why we’re going to go through a couple of months of consulting over the details of this before we put any regulation in place early next year. But we want to send a clear signal to both those businesses who are considering their position and the consumers who want their right to use cash to be maintained.
MITSOPOULOS:
Stephen Jones, the Assistant Treasurer, is my guest this morning, talking about the fact that the government will mandate cash, which I’m sure for some of you who still use cash is music to your ears. 1300 222 720 is the number. I particularly do want to hear from businesses if you want to still deal in cash and what the cost of dealing with cash is for your business, and I’ll get to some questions on that with you in a moment, Minister, but could you give us a run‑down, and I appreciate you still have a consultation process to go ahead with, but what sort of businesses would likely fall under this mandate? Is it supermarkets, petrol stations?
JONES:
Obviously supermarkets, your big Coles and Woolies, your petrol stations, your pharmacies, those sorts of things. If you bundle all of that stuff up, well, you’ve got pretty close to three‑quarters of the all the essential items, probably more in those 3 areas, and I’m sure that people have other ideas about other things that should be included in there. We want to make sure that we get it right, we get the margins right without including every activity within the economy within a mandate. Importantly, around about 94 per cent of businesses are already handling both cash and digital payments. So for the vast majority of businesses this will mean status quo.
MITSOPOULOS:
Would businesses be able to apply for an exemption?
JONES:
That’s one of the things that we’ll have included in the consult, you know, what would constitute an exemption? But the model we have is, instead of including everybody in there, just specifically targeting the obvious places, and you know, having a bit of a discussion about what might be on in the edges, but for of the rest of them, they wouldn’t be included. As I say, again, about 94 per cent of businesses are already doing this, so it shouldn’t cause a major change for the most of businesses. There might be some issues with banks, I’ll be frank, and some banks having stopped, you know, taking and dealing with cash, which sounds odd when you say it like that, but some of them have stopped.
MITSOPOULOS:
Well, a lot of them have stopped, particularly in regional WA here, and you are talking to a statewide audience. So just on those issues, first of all, is it expensive for businesses to keep dealing with cash, because we have heard time and time again from small family‑run businesses about the cost of actually having to go and deposit cash in a bank if they have one near them.
JONES:
Yeah, of course, there is a cost in dealing with cash. You’ve got to have a cash register, you’ve got to have a float, you’ve got to go to the bank to get your cash and then you’ve got to tally it up at the end of the day and then you’ve got to go back to the bank at the end of the week and deposit your takings. So yes, there’s a cost in all of that, the costs of using cash are quite opaque, the costs of using digital payments are very transparent, ‘cause they appear on your bank statement.
MITSOPOULOS:
So if a business, a small say family‑run business was to say, ‘Look, it’s actually not worth me financially to continue using cash because of the cost burden’, would they possibly be able to get an exemption?
JONES:
Some of – these are the things we’re working, we will work through in the consultations, Nadia. You know, the obvious things that will be in sight will be your supermarkets, your pharmacies, your petrol stations, they’re obviously going to be included within, and then there will be a whole bunch of things that are on the margin that we’ll go through a consultation process on. When, you know, I – there is no doubt that, you know, there’s been a decline in the use of cash. For some people, it’s because of convenience, for some people it’s because they feel like they don’t have options, because it’s harder to get an ATM, or harder to get access to cash, and for some people it’s just their preference. My kids don’t have a wallet, they just do everything on their phone. But that’s not everyone, and we appreciate that we’ve got to be able to accommodate to all needs. There’s one other thing. Can I just make this other point?
MITSOPOULOS:
Sure.
JONES:
It’s providing a right to those people who want to use it, but many of your listeners will have had the situation where they fill their bag up, they go to the counter, and the EFTPOS machine is down or the electronic payment system’s down, and they’ve got to abandon their transaction. What we’re proposing will ensure that we still have the muscle memory, if you like, the capacity within the system to maintain cash as back‑up, as well as for something that is wanting to be continued to be used by those consumers, and I think that’s important as well.
MITSOPOULOS:
Because technology fails us, as we’ve seen.
JONES:
One hundred per cent, 100 per cent. If the system goes down, you still need a back‑up system, and therefore, you need all of that rail, all of those rails and capacity to be in place.
MITSOPOULOS:
Minister, what about the cost of moving cash. Armaguard is the last one left doing that, and it’s actually been propped up by the banks and retailers to the tune of $50 million. Will the government have to at some point step in, in these businesses, and continue to pay for that service?
JONES:
When we talk about the government stepping in and paying for something, what we actually mean is taxpayers, because we don’t have a magical source of money. So we’re keen to ensure that the users of those services are paying for it, which is why, you know, the biggest users in the country; your banks, your big supermarkets, Australia Post is a handler as well, so working with them to ensure that that’s where the cost is appropriately borne and to ensure that we have a viable cash distribution system in the country, very important to ensure, particularly in regional and remote Australia that they have access to cash collection and distribution mechanisms, otherwise it all falls apart.
MITSOPOULOS:
You’re also going to phase out cheques. Can you tell us more about how you’ll manage that transition?
JONES:
Look, the use of cheques has declined by around about 90 per cent over the last decade. They’re really used in a minority of transactions. I know, myself, when I hand out cheques on school award nights there’s a large proportion of them that never get cashed, ‘cause people just aren’t familiar with this them. So, in some countries the banks just withdrew and stopped using them, which caused all sorts of troubles. We were keen to ensure that didn’t happen here in Australia, we wanted an orderly transition out, so a couple of key things here: from June 2028 banks will stop issuing cheques, and a year later, September 2029, they’ll stop being accepted. Some of the biggest areas of transition will have to be government, state and federal, that use cheques, they’re big users of cheques, they will transition out of that, but a lot of other businesses will have to transition their processes as well. Plenty of timeline so that people can make the transition. Most people already have, but there is a need for us to have an orderly transition out.
MITSOPOULOS:
The Australian Financial Review is today reporting that in response to a backlash of regional bank closures, and we’ve had a lot of them close here in WA, banks would have to – well, they would have a regional banking service obligation where banks would pay a levy to keep branches and ATMs open in the bush. How might this work?
JONES:
What I can confirm is that we are looking at options to ensure that bank services continue to be available to Australians where they live. So we are absolutely doing that, I’m not going to hide from it. I’m not going to say, well, this is one option, or this is another option, ‘cause we’re working through what is going to work and what’s the most sensible way of doing it. But we have heard loud and clear from Australians, from suburbs to remote and regional Australia saying, everyone’s shutting up shop, we can’t get access to a person, we need to be able to respond to that, and we’ve got to do it in a way that we don’t place obligations on the last man standing in town, so again, we want to ensure that we deal with this in a sensible way. Yes, a lot of Australians have transformed to doing their banking online, but even those Australians will need to have access to a bank branch at some point, and other Australians who, that’s just how they want to deal with their business, including people depositing cash, by the way, so we’ve got to ensure that we’re proactively having arrangements in place so that when we – we don’t turn around and everyone’s gone, and that we’ve got a crisis on our hands.
MITSOPOULOS:
But so what you’re looking at, from what I can understand, is that banks would have to provide a baseline of minimum services and expenditure according to their size and their market share, and then if they cannot meet that, they would then have to be able to offset their deficit by funding services for other institutions. Is that kind of it in a nutshell?
JONES:
Again, you’re a good journalist, and you’re going to want to try and pin me to one particular option. What I can tell you is that we are looking at options, what I can’t at this stage say is this is a favoured option here or there, okay? You’re doing a good job, I’m not critical of you, but I can’t say we’re going with this option or that option at the moment, okay?
MITSOPOULOS:
Well, Stephen Jones, Assistant Treasurer, I’ll take the compliment, and I thank you very much for your time.
JONES:
Great to talk to you. Bye bye.
MITSOPOULOS:
Good on you. He is the federal Assistant Treasurer.