Australia Post Flies in the Face of a Cashless Agenda

Australia Post’s Bank@Post is expected to fill the hole left by banks closing branches in many rural and regional towns around Australia. I asked Group CEO and Managing Director, Paul Graham, for his views about how that’s going so far. His forthright response confirmed what bank closures mean in the communities where Australia Post is left to try and pick up the pieces. It is not the automatic solution the banks have suggested during the bank closures inquiry, which I knew from constituent feedback through my office.

Customers, explained Paul Graham, are looking for a broader scope of services than they are equipped to deliver. Small businesses particularly feel that they’re not able to access what they used to through their banking branches. Provision of cash has become an issue. Whilst there are those who say cash is going to die, Mr Graham certainly doesn’t see that in many demographics and areas of Australia.

With support from banks, Australia Post could extend the range of banking services. Whether for small businesses, the provision of cash, or even managing large numbers of gold coins following fundraisers, Australia Post rightly sees its over-the-counter Bank@Post services as essential.

More regional and remote towns are being left without a bank. Coober Pedy is a good example of a cash town given the nature of its work. Australia Post is now flying cash into that town on a weekly basis because the banks have all left.

There is obviously a vacuum left by the bank closures and post offices are well positioned to fill it with the right support.

Transcript

Senator ROBERTS: Thank you for appearing tonight. My questions are fairly short. At the Senate inquiry into regional bank branch closures, I asked Westpac CEO Mr King, ‘How much do you pay Australia Post for a community representation fee?’ The response on notice was: Westpac is happy to provide a specific figure, including the Community Representation Fee, however our contract with Australia Post requires both parties to agree to the release of any commercial details within the contract. Westpac would agree to Australia Post providing these details to the Committee. Are you happy to share those details today or on notice?

Mr Graham: No, we are not. Those are commercially confidential. We have a number of agreements with many banks and institutions. They differ from bank to bank. That would disclose what we believe is
commercially sensitive information.

Senator ROBERTS: Westpac is happy for you to disclose their contract.

Mr Graham: Again, they may be happy but that’s one side of the contract. We have contracts with over 81 financial institutions and would not be comfortable sharing that sensitive information.

Senator ROBERTS: I asked the Commonwealth Bank the same question and also on notice received the same reply, as one would expect from an oligopoly. Are you able to share the Commonwealth Bank’s community representation fee today or on notice?

Mr Graham: No, Senator. We will take the same approach to that. As I say, we have many contracts with many banks. It is commercially sensitive. Disclosing what one bank pays versus what another bank pays would create commercial risk for Australia Post.

Senator ROBERTS: How so? The bank is happy.

Mr Graham: In that we are negotiating with 81 different companies and, if they were aware of what other companies are paying, that would put us under a very difficult commercial situation.

Senator ROBERTS: Show them the high-price contracts.

Mr Graham: It would be good if we could do that, but it’s unfortunate the way that the negotiations would work.

Senator ROBERTS: It would help you if you picked the top one. Are you happy with the fees you’re receiving from your banking partners in Bank@Post for providing their customers with services?

Mr Graham: When the Bank@Post agreement was put in place three years ago, the scope of that was for what we would call rudimentary or very basic consumer banking services—the ability to deposit some money and take out some money. It’s fair to say that since that service has been put in place and since we’ve seen an increase in the number of bank closures the pressure that has been placed on our post offices that provide Bank@Post has increased. Customers are looking for a broader scope of services. Small businesses particularly feel that they’re not able to access what they would traditionally access through their banking branches. And the provision of cash has become an issue. Whilst a lot of people say cash is going to die, we certainly don’t see that, particularly in certain demographics and also in certain neighbourhoods where cash is still prevalent.

When we were set up, we were never established, from both a physical and a service perspective, to deal with cash. We’re happy to extend the range of services we provide to our customers at Bank@Post, be it small business or the provision of cash, but we would need that to be funded by the banks. A good example is Coober Pedy. It is a cash town given the nature of its work. We are now flying cash into that town on a weekly basis because there are no banks remaining in Coober Pedy.

Senator ROBERTS: I’m very pleased to hear that you’re supporting cash and keeping it alive. A lot of people are starting to swing back now, because they know it’s essential for freedom. Would Australia Post like to offer a wider range of banking services from an existing partner, such as Suncorp? If so, what services would you like to provide?

Mr Graham: As I referred to in my previous answer, we are seeing an increasing desire by regional towns, particularly when we are the only banking service remaining, to increase the range of services for small business—be that cash floats for the local hairdresser or the local coffee shop. One example recently was a footy team and the Country Women’s Association both ran a gold coin fundraiser over a weekend and our post office was inundated with 1,800 gold coins on the Monday. It was never equipped to handle that type of cash. We see there’s an ability for us to increase the range of services we provide, certainly for small businesses, and for the provision of cash for those small businesses. However, that would need an investment—in some cases in physical infrastructure, for safes and security, and also additional systems and training for our team—which we are prepared to do. That would obviously require support from the banks to enable those services to be extended.

Senator ROBERTS: So you’d welcome something like Suncorp, which is for sale right now? It’s sale to ANZ was blocked.

Mr Graham: We provide services to Suncorp today through Bank@Post—they are a Bank@Post customer—and 81 other financial institutions.

Senator ROBERTS: I’m not asking you to commit to Suncorp or anything like that, but does the concept of having a bank with branches already, albeit not as many as you have, appeal to you?

Mr Graham: That’s a question of policy, which is for the government. We’re very happy to provide our over-the-counter services, which we are well-equipped to do, certainly for basic banking services. But as I said, if we were to extend the range of those services we would need to look at those post offices on a case-by-case basis. A town in the Snowy is another case in point where the last bank left and our post office there does not have disability access, so, again, that challenge comes on Australia Post and we work with the banks to try to solve that. We see over-the-counter services and providing Bank@Post services, particularly in regional and remote areas, as essential services and we continue to be invested in those services.

Senator ROBERTS: Something Christine Holgate did a very fine job of doing was to listen to and address the problems of the LPOs—the licenced post offices. We haven’t heard much from them lately, so that is probably a pretty good sign, but I’d like to know what you think of your relationship with the LPOs. How’s that going? They’re fundamental.

Mr Graham: Yes, they are. They make up more than two-thirds of our branch network. They are partners in our network. We deal with both the key associations. I think our relationship is a very positive one. We are very transparent on what we are doing, the investments we’re making. We’re currently rolling out our PostPlus new point-of-sale system through every post office in the country—the largest single investment that Australia Post has ever made, over $250 million. This will create efficiencies for both our corporate and licenced post offices, and also create a better service experience for our customers.
Our relationship with them is healthy. We certainly listen to them. We spend a lot of time out in their post offices, understanding their needs and their challenges. I also spend a lot of time out; it’s one of the best parts of my job. But we also see, in certain areas, where they are financially challenged because of the reduction in foot traffic, because of the digitisation of services, and, as I mentioned in my opening address, certainly metropolitan areas where there can be significant overlap, we do see cannibalisation of licenced post offices by their fellow licensees in some of those areas. It is a changing financial environment for many of them, and we look to continue to support them where we can. Bank@Post certainly helps, as does the growth we’re seeing in our parcel business, and also investing in new systems which helps them become more efficient and better at serving their customers.