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  • Writer's pictureDale Webster

Trust is something that is hard to win but easy to lose

Updated: May 16

ABOVE: ANZ Chief Executive Shayne Elliott decided to announce the closures of the Bega and Katoomba branches in NSW ahead of the inquiry winding up. Portland in Victoria will also be closed.

IF there was ever a time to take a close look at the relationship Australia’s major banks have with the word “trust” it is now.

After more than a year of hearings nationwide and an unprecedented 600-plus submissions, the Federal Senate Inquiry into Regional Bank Closures concludes this month and the committee will table its final report on May 24 (postponed from May 16).

When the inquiry was called in February last year, the senators on the Rural and Regional Affairs and Transport Committee wrote “respectfully” to all banks and asked that they “postpone any further closures of regional branches until the conclusion of the inquiry”.

“I am sure you understand that this is essential to the integrity of the inquiry and will help mitigate any negative effects these closures may be having,” chairman Matthew Canavan said.

Of the four major banks that are largely the focus of the inquiry, NAB refused the request and has closed 53 branches since the inquiry was called.

Westpac agreed but played “pick and choose” with which branches it would save of the ones it had already announced it would be closing, as well as splitting hairs over the definition of “regional”, tallying up nine closures over the 15 months.

The Commonwealth Bank played the same game with language and despite publicly defining the Sunshine and Gold Coasts as regional centres for marketing purposes in its Regional Movers Index published in partnership with the Regional Australia Institute, closed three branches in these areas during the inquiry.

ANZ agreed to the moratorium, however, more than a week out from the official end of the senators’ deliberations, it reneged on its promise, dropping news that it will be closing its branches in Bega and Katoomba NSW on October 23 and Portland Victoria on October 9.

From a trust point of view, the breaches of the commitment could be considered misdemeanors.

Westpac and the Commonwealth have argued that the branches are outside the scope of the agreement because they are in major regional cities and highly populated areas. (Hmmm ...)

ANZ could even use the justification that the actual written commitment specified the original December end date of the hearing before it was extended to May this year (but it would be embarrassing for the bank if it did resort to stooping so low).

The important thing to consider here is context.

If the banks can’t be trusted on something as simple as this when they are the focus of a government inquiry, what are they going to do when it’s over?

Their behavior has been under intense scrutiny for more than a year – the most since the Banking Royal Commission in 2018 – yet they are still prepared to push against the ropes and see what they can get away with, demonstrating as they have done in the past that given an inch, they will take a mile.

There are lessons in history that demonstrate a pattern.

Twenty years ago, when the issue of regional bank closures was last looked at by the Senate in what is known as the “Money Matters in the Bush” inquiry, the banks were trusted in the final report to continue self-regulation on the condition that they take their community service obligations seriously.

It was clear that the senators meant this to mean stop regional branch closures.

Regional Australia had already lost a third of its banks since 1975 but that exercise in trust saw another 1000 banks closed, 160 towns left with no banking services at all and the Senate reconvening last year for this inquiry to deal with the exact same economic and welfare issues as it was in 2004.

The final crisis that triggered this latest Senate inquiry was the result of the banks being again trusted in 2021-22 to sit on a government taskforce looking at regional bank closures, with the findings the banks helped develop giving the green light to their own branch closure agendas.

Nearly 100 regional branches were closed in as many days after the taskforce’s final report was released, prompting Senator Gerard Rennick to put a motion to the Senate on February 8 last year to establish this inquiry.

As the tabling of the final report approaches, we can only hope the senators have done their homework and do not fall for the same rhetoric from the banks as their predecessors.

There is good reason to hope they won't.

Over the past 15 months, the committee has heard how the 'big four' banks’ actions in withdrawing face-to-face services from regional communities have consistently caused distress, economic hardship and – if you look at the emissions generated by the road and air travel of customers forced to leave their own communities to find a bank – are even damaging the environment.

A solid case has been built that banking is an essential service and should be officially recognised as such, or the government needs to intervene in the form of a new government bank on welfare grounds.

Given the appetite for radical reform displayed by some of the senators during the course of this inquiry, the banks have taken a big gamble in their choice of behavior while it has been underway.

They have won no friends on this committee.

It’s going to be a very interesting report.

Download list of regional bank branches closed since inquiry began

Regional bank branches closed since senate inquiry was called on February 8 2023
Download PDF • 193KB

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