The Senate Inquiry into Bank Branch Closures in rural Australia revealed the devastating effects of bank closures on country communities. The report, released on May 24th, made eight recommendations aimed at protecting the future of regional banking services. These include requiring banks to meaningfully consult with affected communities before closing branches and granting regulatory powers over proposed branch closures.
The inquiry committee spent a year traveling across rural Australia, hearing from local businesses, farmers, and elderly residents about their struggles after losing their local bank. Remote business owners were forced to travel long distances or fly with large amounts of cash to conduct banking transactions. Farmers lost access to expert agribusiness knowledge, while elderly individuals faced challenges in obtaining cash and the risk of scams.
Community groups also reported difficulties in procuring cash floats for events such as fairs, sporting games, and fundraisers – essential components of rural social life. The closure of a Westpac branch in Tennant Creek, which left local residents, including many Indigenous elders, scrambling to use digital services they had little experience with, was cited as an example of the dire consequences of such closures.
The committee’s report expressed the depth of community concern and feelings of abandonment and disrespect from banks. Key recommendations included urging the federal government to develop a mandatory code of conduct for meaningful community consultation before bank branch closures, and granting regulatory powers to approve or defer any closure requests, as well as penalize non-compliant banks.
Many witnesses suggested the idea of a public bank, possibly utilizing the Australia Post network, which could be investigated by a government-established expert panel. The committee also recommended setting up an underwriting program for community banks funded through an extra levy on major banks. This would provide support to locally established banks that have lost significant business due to branch closures.
The inquiry report noted the failure of the current model of banking industry self-regulation to protect regional Australia from the negative impacts of bank branch closures. In the five years leading up to June 2023, rural Australia lost 798 branches, with increased closure rates during the COVID-19 pandemic. Banks have cited rapid adoption of digital services and a decline in face-to-face transactions as reasons for these closures. However, major banks have resisted proposed obligations to maintain regional branches, arguing that it would stifle innovation and change in the banking sector.
The Senate Inquiry report highlights the urgent need for reform in the way bank branch closures are managed, with a focus on preserving essential services and supporting local communities in rural Australia.