Yahoo Finance CBA, Westpac, ANZ, NAB, Macquarie bank customers could face extra $370m in fees
Nationals Senator Matt Canavan has proposed increasing the major bank levy to keep rural bank branches open as nearly 800 close across the country.
Customers of Australia’s five biggest banks could be hit with an extra $370 million in fees and interest rate increases in order to keep rural and regional banks up and running. The proposal comes ahead of the Senate inquiry into rural bank closures handing down its final report today.
Inquiry chair and Nationals Senator Matt Canavan has flagged a higher levy on major banks as a way to keep branches open. According to costings by the Parliamentary Budget Office, a 10 per cent increase to the major bank levy would raise $495.8 million between 2024 and 2027.
But the estimates predict a large chunk of that extra expense from the increased levy, which currently applies to Commonwealth Bank, Westpac, ANZ, NAB and Macquarie Bank, would be passed on to customers.
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“The Parliamentary Budget Office (PBO) assumed that 75 per cent of the increase in the levy would be passed on to consumers through mechanisms such as increases to fees on banking products, increases to interest rates on mortgage products, or decreases in interest payments on savings,” the office said.
“This is because the levy is anticipated and ongoing, meaning it can be factored into prices and charges for bank services and products, and over the longer run the incidence of bank levies tends to fall on consumers.”
The major bank levy was initially introduced in 2017 and applies to banks with more than $100 billion in total liabilities. Because of that threshold, it currently captures Australia’s five biggest banks. The levy rate is currently set at 0.015 per cent and is paid each quarter.
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Regional Australia has lost 798 branches in the five years to June 2023, according to APRA figures, with closures accelerated during the pandemic. Westpac has placed a moratorium on rural bank closures until 2027, while CBA has extended its commitment until 2026. ANZ and NBA have not made similar extensions.
Banks say the shutdowns are due to an increase in digital banking and a drop in face-to-face transactions at branches. But these closures mean some residents have to travel hundreds of kilometres away to access cash and do their banking.
Tom Price, a town in Western Australia’s Pilbara region, lost its last remaining bank branch in 2022. Residents are now faced with a 700-kilometre round-trip to get to their nearest bank in Karratha.
Community members and council staff told the senate inquiry some business owners were now flying to Perth with suitcases full of cash to make deposits. Other residents have reported being robbed after stashing cash in their homes, while scams and elder abuse are running rife.
“None of this would be considered acceptable if [it] occurred in metropolitan centres,” the shire’s president Audra Smith told the inquiry.
“So why is this inequality condoned and tolerated in small regions and remote communities?”
Bank closures are also putting pressure on Australia Post’s more than 3,400 Bank@Post outlets, including more than 1,800 in rural and remote locations, with the postal service spending $4,000 a week to fly cash out to one town. Commonwealth Bank, Westpac and NAB currently have relationships to provide banking services through post offices. ANZ does not.
The committee is due to hand down its report today following 13 public hearings that heard from the Big Four banks, farmers, councils and communities over the last year.
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