Fatal flaws: what regional Australians need to know about cash plan

ABOVE: Protecting the right to pay with cash. Picture: CLARE SEIBEL-BARNES

THERE are fatal flaws in the Federal Government’s draft cash mandate laws and they can be traced back to Prime Minister Anthony Albanese's refusal to respond to Senate recommendations to fix the banking crisis in regional Australia.

The first two recommendations from the senate inquiry into regional bank closures – to protect cash access and begin steps to re-establish government banking services – were never meant to be rolled out in isolation, yet a Treasury official admitted in Estimates earlier this month that the committee’s report had been used as the basis of “initiatives” the Government has announced since the inquiry wound up in May 2024.

The cash mandate would have to be considered one of these.

While a good idea in principle, the problem is that the regulations have been written in such a way that without restoration of banking services, it is highly likely businesses in bankless towns will be eligible for exceptional circumstances exemptions on the basis of difficulties in obtaining cash floats, depositing business takings and the cost of maintaining cash service.

An exemption would give supermarkets and fuel outlets express permission from the Government to refuse cash, rather than the current situation where refusal is more complex and responsibility lies with the business owner.

The Government was warned this would be an issue by MGA Independent Businesses Australia (formerly Master Grocers Australia Ltd) in the first round of consultation earlier this year.

“There are challenges associated with managing (depositing, withdrawing, general security) cash in rural and regional areas relative to urban-based businesses,” chief executive David Inall said in the group’s submission.

“This challenge is exacerbated in those instances where there is no bank in town, or any banking services that remain are offered with reduced services, or the bank is not one where you typically conduct your business banking. Furthermore, in these circumstances, there are challenges in terms of managing the cash float that is required to facilitate seamless business operations.

“Security services that transport cash are expensive, and in many instances, are no longer operating. Use of ATMs can be expensive. They can be unreliable and difficult to service in regional locations. In instances where there are no banking facilities in town, cash must be moved via unsecure means to larger regional centres.”

Comments made by NAB chief executive Andrew Irvine at an event during the first round of consultation indicate cash is a factor in why banks bail on regional towns.  

“The cost of cash is real. Think about it, you’ve got two guys in an armoured car driving around, with guns ... a country that’s thousands of kilometres in size moving cash,” he was reported as saying in the Sydney Morning Herald.

“There are 20 or 30 depots in this country moving and sorting and doing all that stuff with cash and, physical cash including coins, and coins in barrels are heavy. None of that is visible to people, but that all costs money. So the question of course is who’s going to pay for that?”

More to the point, Mr Irvine, who pays for that in all the towns NAB has left without a bank?

The draft legislation acknowledges this point and says exceptions would be considered if accepting cash payments meant the price of goods would have to be hiked to cover the cost of cash delivery.

Takeaways

With only 14 days to research, write up and allow time for readers to consider information, it has not been easy to report accurately on the implications of these proposed new laws.

Treasury has been asked whether difficulty accessing banking services would be considered an “exceptional circumstance” (with the situation in Queenstown, Tasmania, where Bendigo Bank recently closed the town’s last bank given as an example) but has provided no response.

Journalists have also been hampered by restricted access to round one submissions, with just 52 of the 4000-plus received published and none from individuals with lived experience or expertise on this subject.

What can be reported is:

• The cash mandate will now only apply to supermarkets and fuel outlets after the government dropped its confusing list of “essential services”;

• Small businesses will still be exempt based on income;

• Individual franchisees will have income assessed at group level;

• Cash payments will be capped at $500; and,

• Any affected business may be granted an exemption for exceptional circumstances.

In the time available, it has been impossible to get a full picture of how this will play out across regional Australia but it can be confirmed that the small business exemption will mean one of the places that the Government will not ensure the right to pay for food and groceries with cash is protected is in Aboriginal communities in Far North Queensland.

The senate report into regional bank closures made special mention of the importance of cash in Indigenous communities.

The verdict on the draft?

In these circumstances – with its small business and exceptional circumstances exemptions and nothing being done to put banks back into regional communities – the cash mandate has the potential to accelerate the demise of cash, rather than support its continued use.

As reported eight months ago in Hard NO to cash mandate that will do more harm than good, there is a big difference between being given a nod from the government to refuse cash and the less palatable option of “putting up a sign and asking frontline staff to explain how purchase contracts work to irate customers 20 times a day at the risk of being abused”.

In an alternative reality where the Government had respected the work put into the senate inquiry and accepted all the recommendations members of its own party had helped craft, this proposed legislation would help meet the desired outcomes.

As it stands, it has the potential to work against everyone except those who stand to benefit from the demise of cash.

The draft legislation can be viewed here.

Treasury has invited public submissions, although Assistant Treasurer Daniel Mulino has said only industry feedback will be considered.

Questions are being asked by many whose submissions have not seen the light of day whether only industry feedback has been considered from the beginning of this process.

The closing date for lodgment is this Friday, October 31.

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COMMENT

The Government response to the final report from the Senate Standing Committee on Rural and Regional Affairs and Transport inquiry into regional bank closures is 430 days overdue as of October 26, 2025.

The only way the cash mandate legislation should be let through the Senate is if the Albanese Government agrees to the eight recommendations from the inquiry, starting with the commissioning of an expert panel to investigate the feasibility of establishing a publicly owned bank.

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