Rural and Regional Affairs and Transport References Committee
25/03/2024
Bank closures in regional Australia

Senator RENNICK: Hi, guys. I just want to respond to a statement you made earlier that the RBA’s not responsible for cash, and that’s the responsibility of the banks. There was a time once when the RBA was responsible for managing the retail banks, and then obviously that got separated with APRA. But there was also a time when the RBA was responsible for cash distribution. So do you think it’s a bit rich for the RBA to wash their hands of what was once their responsibility to manage both the banks and cash distribution?

Ms McPhee: My apologies. I must have misspoken. The RBA is absolutely responsible for wholesale banknote distribution. We’re the sole issuer of banknotes, and we do take that obligation very seriously. We also have a commitment to ensure that Australians who want access to cash can have access to it. So I wouldn’t agree with the statement that we’re washing our hands of it.

Senator RENNICK: So, given that you’ve accepted it’s your responsibility, if the banks close their branches in the regions, do you accept it’s your responsibility to step up and provide cash to those businesses in the regions or outer metropolitan centres where they need it?

Ms McPhee: We’re responsible for the wholesale banknote leg of the cash cycle. So that’s selling the notes from our depot in Victoria to the banks, and the banks then distribute those notes as they need to for their own businesses and their retail customers. That’s the leg of the cycle that we have responsibility for, and we absolutely accept our obligations in that leg of the cycle.

Senator RENNICK: This is the problem. You’re now saying, from what I’ve just heard then, that you’re not responsible for the retail distribution. You’re just responsible for the wholesale distribution to the retail banks, who then distribute onwards. What happens when the retail banks disappear and pull their branches from the regions?

Ms McPhee: We don’t have any responsibilities in how the banks set up their branch networks. As I say, we’re responsible for wholesale banknote distribution. The banks are responsible for the retail leg.

Senator RENNICK: Okay. We’re going in a circular argument here, because initially the RBA included the CBA. The original bank set up by Andrew Fisher was the RBA and the CBA, and over the years all these powers have been devolved into various little groups, including APRA and the RBA, now that the CBA is a private bank. Who is going to help the people in the regions who need cash? You’re saying it’s not your responsibility. The bank is saying, ‘We’re in the private market; we can do what we like.’ And I don’t know where APRA are, but they clearly don’t seem to be holding the banks to account to meet their community and social licence to provide cash into the regions. You don’t think it falls back on the RBA to provide cash, even if retail banks don’t do it?

Ms McPhee : The RBA is not responsible for the retail leg, as you said. It’s based on the banks, and they distribute those funds. But the RBA has committed in its corporate plan and is also working with the government as part of its strategic roadmap on payments to ensure that cash is available to those who need and want to use it. There’s a range of strategies being worked through for that, which is why we’re very focused on the fragility of the wholesale banknote distribution network. It’s to ensure that is sustainable for the future, because that is the first leg that gets the notes from ourselves to the banks. We’re working very hard to ensure that that is a very stable leg of the cycle.

Senator RENNICK: Do you know what you’re going to suggest? What are you working on? You’re saying you’re working on something to get cash out to the regions. I know that, under the Constitution, the federal government is responsible for legal tender. It has got a responsibility to distribute legal tender to whoever needs it. If they don’t have access to electronic payments, as a lot of people in the regions don’t for various reasons—and as older people aren’t comfortable using electronic payments, and as immigrants who can’t speak English as their first language don’t necessarily feel comfortable using electronic payments—the federal government has a responsibility to get cash to those people who want it or need it. Do you accept the RBA, as the only bank left under the federal government’s remit—even though you yourself are independent—has a responsibility to get cash out to the people that need it?

Ms McPhee: What I can say is that the bank is working with the industry, acknowledging that there are considerable fragilities in the bank cash distribution network. We’re working with the industry and various other players to ensure that we can put a framework in place where we have long-term stability of that ecosystem. We haven’t settled on an answer yet, but I believe you would have noted that the governor has said that various models are being looked at overseas. This is very much an international issue where cash usage has declined to the point where the infrastructure that underpins it is experiencing considerable fragility. So we’re working with the industry to try and find a solution to that. We haven’t got an answer today for you, but we’re working to find one.

Senator RENNICK: Is a public bank one of the options you’re looking at, like the old-fashioned Commonwealth Bank before it was privatised?

Ms McPhee: We’re working with industry, and we don’t rule anything in or out. We’re still working to get a solution.

Senator RENNICK: Why are you working with the industry? They’ve shafted the people. They’ve basically broken their social licence to serve the people. They make a lot of money. They make a combined $30 billion a year. It’s not a question of you working with the industry; it’s a question of you taking the whip hand to the industry and saying, ‘Do your job or we’ll do it for you.’

Ms McPhee: We’re working with the industry because there are a number of players. Cash distribution is a very complex system, and we’re working with all the players to ensure that we can set up something sustainable.