Transcript
Senator ROBERTS: Thank you for attending today. My questions initially go to the Reserve Bank and, if there’s time, to the ACCC. To the Reserve Bank, cash is legal tender. Isn’t it part of a bank’s social licence and a
duty of a bank to provide access to legal tender?
Ms McPhee: The banks obviously do provide cash services. They’re services that they provide to their customers in their own business models. The Reserve Bank doesn’t have any mandate to legislate or to regulate
access to cash services, so that’s really a matter for the banks, as is providing those services to their customers. Banks will usually provide the services their customers are looking to access, and, as long as customers want to access cash services, banks should provide them.
Senator ROBERTS: I’m not experienced in your area, but I would’ve imagined that, as part of being a bank, it would’ve been a requirement to be able to provide legal tender, such as cash. Is that not correct?
Ms McPhee: There’s no obligation to provide legal tender services that I’m aware of for the banks, but I’m not an expert in that space. But, certainly, the position that we see is that many members of the Australian public still want to use cash as a means of payment, and they access that cash from their banks. Consumers still want to use cash, although a much smaller proportion of consumers wish to use cash. But there are still consumers who do use it and need to use it, so that is a product that the banks need to provide to their consumers because the consumers demand access to it.
Senator ROBERTS: Okay. I would’ve thought it was a responsibility, almost a condition, of having a banking licence, but let’s continue. In your submission, you state:
- The cash share of payments by consumers in regional areas fell from 35 per cent in 2019 to 14 per cent in 2022 …
What is the measure you used for cash share, please? The Reserve Bank isn’t notified when someone buys a cup of coffee at a cafe with cash, for instance. How did you arrive at these figures?
Ms McPhee: I might hand that to my colleague.
Mr Fisher: I believe the numbers that you’re talking about most likely come from our Consumer Payments Survey, which is something that the Reserve Bank does every three years where it asks people to essentially fill in a diary of every payment that they make over the course of a week. So we have quite detailed information spread across different demographics and different locations of how people are making their payments. I don’t have those precise figures in front of me, but, when we’re talking about the cash share of payments, then most often we’re referring to the results of that Consumer Payments Survey.
Senator ROBERTS: Could we get those figures on notice, please?
Mr Fisher: Yes, of course. The numbers I do have in front of me are that the cash share of payments in 2022 was a little under 10 per cent for people living in regional and remote areas. Actually the 2022 survey showed that that wasn’t all that different from people living in the major cities, but that’s not to say that some people don’t use cash much more intensively, including in those regional and remote areas.
Senator ROBERTS: And it doesn’t show the severity of not being able to access cash. For some people it is crucial, because they do everything in cash.
Mr Fisher: That’s right, and one thing we do from the Consumer Payments Survey is that you can classify people into how intensively they use cash. What that shows is that something like one in 20 people during that
survey week use cash for all their in-person payments, and it does show that certain demographic groups tend to use cash a lot more intensively than others, even though those shares have been declining over time.
Senator ROBERTS: The evidence is clear, from previous hearings of this committee, that banks are trying to drive down the use of cash, destroy the use of cash. That’s quite clear. Cash could be circulating more than you state, without your knowledge. Does this figure provide air cover for the banks’ war on cash, without having a solid basis in fact, apart from a survey?
Mr Fisher: I can’t comment on the issue of whether it’s providing cover for the banks. What I can say is that the survey is designed to be very comprehensive. It’s the best measure of cash use that we have. It surveys a
significant number of people, and a lot of effort by the survey firm goes into making sure that it is representative of the Australian population so we have a reasonably good picture, a good snapshot, at a particular point in time, of how people are using cash across the economy.
Senator ROBERTS: I understand, just as a side point, that the Reserve Bank of Australia has done work on establishing a digital currency. That’s correct, right?
Ms McPhee: Like many central banks around the world, we are doing some experiments and some analysis of a digital currency, but we are still working through that, and there are no direct plans to establish a digital
currency.
Senator ROBERTS: Let’s go back to the cash figures. A merchant who can’t deposit cash in their bank because the bank has been closed, and who can’t deposit in an ATM because their ATM has been ripped out, is
not going to accept cash they can’t bank, can’t use to pay suppliers, insurance, advertising and rent. Isn’t it true that regional merchants are no longer accepting cash because they can’t use that cash in their businesses?
Mr Fisher: What I might speak to there is the analysis that we do, some of which I believe might have been in our previous submission. Our overall assessment is that access to cash, in terms of the distance that people have to travel for withdrawal and deposit services, hasn’t changed a great deal in recent years. The nature of those services may have changed, though. If a bank branch has closed, people may have to either travel a little bit further to access full branch-style services or switch to an alternative source of cash access. I think it is reasonable to say that the elements of what you can call the cash cycle are interrelated. Cash use, cash access and cash acceptance are all, I guess, pieces of the total cash-use puzzle.
Senator ROBERTS: That’s a very important point you’ve made. If the banks want to drive people off cash so they can get fees and greater income from handling digital transactions then they can use what you just said.
Mr Fisher: I can’t really speak to the motivations of the banks, but I think it’s reasonable to suggest that there are different elements of the cash-use cycle that are related. We’ve published some analysis on the different
elements of the cash-use cycle in one of our bulletin articles, which I’d be happy to provide to the committee if that’s of interest.
Senator ROBERTS: Thank you. Let’s get back to the alternative sources of cash to banks in some towns. Isn’t it true that post offices have a role to play in providing cash? But they are not banks. They do not have after-hours ATMs, when most people take out money.
Mr Fisher: In the analysis that I referred to a moment ago talking about the distance to cash access points, one of the reasons that the distance most people have to travel on average—we say ‘on average’, but it’s different the further remote you go—hasn’t changed a great deal in recent years is the strong geographic coverage of alternatives like Bank@Post outlets. I think it is a relevant question as to whether those offer full branch services. I definitely think that’s a relevant question. Those alternative means of accessing cash that I mentioned a moment ago might not be perfect substitutes for full banking services, for example.
Senator ROBERTS: So there is a need for potentially a post office or a people’s bank to have a greater role than they do right now to provide full banking services.
