Back to the future on banking?

A Senate committee has recommended the re-establishment of a publicly owned bank to ensure all Australians have access to financial services.

The Federal Government’s Standing Committee on Rural and Regional Affairs and Transport has handed down its final report, which includes investigating the establishment of a public bank similar to the original Commonwealth Bank of Australia.

The Commonwealth, which was privatised in 1996, was set up in 1911 to serve as a public bank, with an emphasis on giving all Australians access to banking.

In the first instance, the Senate committee, chaired by Senator Matt Canavan, recommends the establishment of a Regional Community Banking Branch Program (RCBBP).

The RCBBP would help underwrite the establishment of community bank branches providing in-person services in regional, rural, and remote Australia.

Under the proposals, local communities would help raise the capital to establish a branch, with contributions from the Federal Government.

Funding would also come from the Major Banks Levy, which is currently imposed on the Commonwealth Bank, ANZ, Westpac, National Australia, and Macquarie banks.

The committee further recommends that the government investigates the formation of a new publicly owned bank, which could use the Australia Post network.

The recommendation would be a change to the existing Bank@Post program, which was originally set up to provide Commonwealth Bank services at post offices.

It now provides services from more than 80 institutions, including every major bank except ANZ. The Senate committee wants the Federal Government to force ANZ to join the program or face higher payments under the Major Banks Levy.

The committee also recommends making the voluntary Banking Code of Conduct mandatory.

Among other things, this would mean that banks undertake “meaningful” consultations with communities and local businesses before they close any more branches.

Banks would also have to fund the transition to new banking services for people affected by branch closures.

The report notes that more than 2,100 branches closed between 2017 and 2023 and claims that in many of these instances there was insufficient community consultation.

The report states, “The committee recommends that the Australian Government adopt a policy recognising access to financial services as an essential service.

“To this end, it should commit to guaranteeing reasonable access to cash and financial services for all Australians.”

National banks linked to post offices are the feature of many advanced economies to ensure access to banking services. Some have been around for many years, others are a relatively new phenomenon.

England established the Post Office Savings Bank in 1861, which continues today as the National Savings and Investment (NS&I) bank.

Banca Posta was established in 1999 following restructure of the Italian Post Office.

Kiwibank was established in 2002 as a wholly owned subsidiary of New Zealand Post Limited and has grown to service over 800,000 people.

La Banque Postale was established in 2006 as a subsidiary of the national postal service, La Poste to service banking needs of people in France.

With so many international examples, doesn’t it make sense to consider establishing a national banking service with ties to Australia Post?